This is an edited transcript of “The Ezra Klein Show.” You can listen to the episode wherever you get your podcasts.
The biggest economic story in the world right now is China’s growing dominance across advanced manufacturing sector after advanced manufacturing sector — from electric vehicles to batteries to solar panels to software like A.I. and open models, where they’ve become a world leader.
What is happening here is very different than what we call the first China Shock, when China became a big exporter of things that were not that important to advanced economies — things that mattered maybe for particular communities, for many jobs, but weren’t the frontier of economic growth.
But now it’s different. China is very much at the frontier, and they’re dominating it, and that is going to transform geopolitics. It is going to transform the politics, many say of European countries, where China is pushing them out of manufacturing that has been the absolute cornerstone of their economies.
So I think understanding this second shock is about as essential to understanding economics and geopolitics in the coming era as literally anything is.
Brad Setser follows this about as closely as anyone on Earth. He is a senior fellow at the Council on Foreign Relations. He has served in top trade and economic roles in the Biden and Obama administrations. So I wanted to hear his perspective on this.
