China's 'China Shock 3.0,' driven by artificial intelligence (AI), robotics, and biotechnology, is expected to significantly impact the global economy.
Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, stated that "China Shock 3.0 has already entered its initial phase," according to the South China Morning Post on October 15. She is also a senior researcher at the Brussels-based think tank Bruegel.
Garcia-Herrero noted that while China does not produce advanced semiconductors, it is developing its own AI hardware and software. She anticipates that after meeting domestic demand, China will begin exporting these technologies. AI products are expected to be exported alongside data centers and cloud services, and the entry of humanoid and industrial robots into the global market could surpass previous industrial shocks.
The first phase of China Shock began in 2001 with China's accession to the World Trade Organization (WTO), leading to a surge in exports of clothing, home appliances, and electronics driven by low labor costs. The second phase, China Shock 2.0, expanded into advanced manufacturing, including electric vehicles, batteries, and solar panels. China leveraged its large production capacity, supply chains, and price competitiveness to increase its global market share, challenging established players.
The potential impact of China Shock 3.0 lies in the fact that China's competitiveness is shifting from mere price advantages to technology and productivity. AI encompasses semiconductors, computing infrastructure, and cloud services, which could alter the competitive landscape across industries. In particular, robotics could accelerate automation in manufacturing and change labor demand. Biotechnology may pose a threat to existing global companies in drug development and bio-manufacturing. China Shock 3.0 suggests that competition for global industrial leadership is entering a new phase, extending beyond China's export expansion.
Meanwhile, on October 14, the General Administration of Customs reported that China's cumulative trade surplus for September reached $938.1 billion. This indicates that the trade surplus for the year is expected to exceed last year's record of $1.189 trillion. China's exports in September increased by 36.3% compared to the same period last year.
* This article has been translated by AI.
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