Illustration: Xia Qing/GT

The term "China Shock" has gained renewed currency in US policy discourse, , with recent warnings in the New York Times of a "China Shock 2.0." The first wave, it claims, came in the early 2000s, unleashing a flood of low-cost manufactured goods that allegedly devastated US manufacturing. The second, they argue, is now gathering pace. This time, it's in the form of China's growing dominance in advanced technologies, threatening America's competitive edge in frontier sectors like artificial intelligence, biotech and quantum computing.

This narrative is seductive. It provides a neat, causal explanation for decades of industrial decline and social dislocation, and it offers a politically useful external villain to blame. It enables a not-so-subtle race-baiting behind a veneer of academic respectability. But seductive though it may be, the "China Shock" trope is not just deeply misleading, it's politically paralyzing. By externalizing responsibility and framing industrial decay as an exogenous shock - sudden, unexpected and imposed from the outside - it obscures the deeper, structural causes of American deindustrialization and misdirects attention away from the powerful domestic forces that have driven economic dislocation for decades.

In truth, US industrial hollowing long predates 2000 - the year China joined the WTO. The erosion of manufacturing jobs, productive capacity and regional economic vitality began in earnest in the 1960s and accelerated in the 1980s and 1990s. This was not due to Chinese competition. It was the result of transformations in domestic corporate strategy and the ascendancy of finance capital. This was not "shock therapy" inflicted by foreign trade partners. That's a cop out. It was "rentiers' revenge" - that is, the systematic reorientation of the American economy away from production and toward asset appreciation, capital mobility and shareholder value maximization via the expansion of fictitious capital. By the time China emerged as a major global manufacturing power in the early 2000s, the damage had already been done. In short, China entered the global industrial game as US elites and "captains of industry" were abandoning it.

These processes are rarely mentioned in "China Shock" narratives. That's not some unintentional oversight. Doing so would be an inconvenience. Ignoring these realities also serves as a deflection. By blaming China, policymakers and economists can avoid confronting the politically inconvenient truth: The US industrial decline was orchestrated from within. The culprit is not foreign competition, but the domestic alliance of finance, policy and managerial capital that systematically dismembered the productive base.

The "China Shock" trope has proven politically useful because it externalizes blame. This externalization has serious policy consequences. If the problem is framed as foreign trade and competition, then the response is predictable: tariffs, reshoring, investment in "strategic" sectors and export controls. But if the problem is rooted in domestic financial structures and corporate governance, then the remedies are entirely different. And frankly, far more politically challenging and less palatable.

Ironically, what China's rise reveals is not a threat at all. It is a mirror. China pursued industrialization through tools that the US once used but then abandoned: long-term planning, capital controls, national champions, investment in public infrastructure and massive workforce upskilling. Finance has been put to the use of the real economy, rather than the other way around. 

If China poses a challenge, it is not because it is cheating. It is because it has shown what can be achieved when finance is subordinated to productive investment and national development goals. The real shock is not what China did, but what the US stopped doing. 

The China Shock narrative is a convenient alibi for American elites. It allows them to displace blame for decades of economic mismanagement onto a foreign scapegoat, while avoiding the hard work of structural reform. But scapegoating China will not restore US manufacturing. It will not rebuild broken communities or reverse decades of underinvestment. Only by confronting the deeper dynamics of "rentiers' revenge" can a meaningful reindustrialization strategy emerge.

To move forward, the US must stop treating China as the problem and start treating its own economic model as the site of intervention. That requires abandoning the illusion of sudden shocks and embracing a more honest reckoning: Industrial decline was a political project, not a natural disaster that hit the US from the outside. Playing the victim and blaming others plays well on the domestic political stage. But it is also the reason why the problems of the American political economy and social settlement can't be solved. To solve its problems, the US must own its problems. Blaming others via "China Shock" tropes is another symptom of a deep pathology of irresponsibility in the American body politic.

The author is an adjunct professor at the Queensland University of Technology, a senior fellow at Taihe Institute and a former advisor to Kevin Rudd, former Australian prime minister. opinion@globaltimes.com.cn