On December 6, a buyer walks past a shop displaying horse-shaped plush toys at Yiwu Market.

Stepping into Yiwu International Trade City—the world’s largest small commodity distribution center—you could easily get lost if not careful.

Spanning Zones 1 to 5, it houses 75,000 booths offering over 2.1 million types of small commodities across 26 categories, including daily necessities, jewelry, toys, stationery, hardware, and home textiles. Coupled with the newly opened Zone 6 (International Exhibition Area) in October, it covers almost everything from traditional trade to digital commerce.

During a business trip south, I decided to stop by this "world supermarket." Even though I only had time to visit two floors of Zone 1, it was an eye-opening experience. The plush toy area on the fourth floor caters to both retail and wholesale customers, while the toy area on the first floor focuses exclusively on cross-border trade. Young people are busy doing overseas purchasing live streams, equipped with just a smartphone and a tripod.

Summarizing the views of several shop owners and clerks, China’s economy is indeed sluggish at present. Domestic sales rely on regular customers, while exports to the United States have been somewhat hit by the tariff war launched by Washington. Low-end toys have shifted to "Belt and Road" countries, including the Middle East, Africa, Southeast Asia, and Russia. However, mid-to-high-end toys—due to their higher prices—face difficulties in expanding into markets outside Europe and the United States or switching to domestic sales.

One shop owner said, "Our toys are of good quality and relatively high-priced. You can see the packaging is printed in English; we specialize in the U.S. and European markets."

Yiwu, a city dependent on commerce, is no less international than major metropolises. You can see more foreigners in the International Trade City than on the streets of Beijing, with Middle Easterners making up a large portion. The signs of Turkish and Middle Eastern restaurants are particularly striking, displaying Chinese, English, and Arabic side by side.

Yiwu is regarded as one of China’s export barometers, and its trade performance is largely consistent with China’s overall trade data. In the first 10 months of this year, Yiwu’s imports and exports to emerging markets such as Africa and Latin America increased by 21.8% and 14% respectively, while growth in trade with ASEAN soared by as much as 51%.

China’s overall exports in November rose 5.9% year-on-year in U.S. dollar terms. Although exports to the United States plummeted by nearly 29%, exports to Africa, Latin America, the EU, and ASEAN surged by 28.2%, 14.1%, 14.3%, and 8.4% year-on-year respectively—completely offsetting the impact of the decline in U.S.-bound shipments.

In summary, China has successfully broken through the blockage of U.S. tariff barriers and created new growth engines for exports.

Among the massive amount of data, Western media have paid particular attention to one figure: China’s trade surplus in the first 11 months of this year reached $1.076 trillion, exceeding the $1 trillion mark for the first time.

While this is undoubtedly good news for the Chinese government, Western media have detected a different implication: China’s low-cost products are flooding overseas markets like a tide, and global trade imbalance may be worsening.

China’s leading position in global exports and its important leverage in the global industrial chain have fueled intense discussions about the second wave of "China Shock," which may trigger more trade barriers against China from other countries.

After his warm interactions with Chinese President Xi Jinping during his visit to China, French President Emmanuel Macron made a tough statement upon his return: "China is killing its customers." He warned that if Beijing fails to take action to reduce the growing trade deficit with the EU, the bloc will be forced to adopt tough measures in the coming months, such as imposing tariffs on Chinese products like the United States.

The first "China Shock" refers to the outsourcing of manufacturing from U.S. and European companies to China around the 2000s. This led to the relocation of production bases in Western countries, and a flood of cheap imports from China devastated domestic industries in Europe and the United States, resulting in widespread factory closures and mass unemployment.

In contrast to the low-value-added goods of "China Shock 1.0," "China Shock 2.0" refers to a export tsunami of relatively low-priced Chinese high-tech products. Driven by China’s national industrial policies, enterprises have ramped up production of electric vehicles, batteries, artificial intelligence, and new energy products. However, due to weak domestic demand, excess capacity is being absorbed through exports.

Both European and American countries and Global South nations are experiencing the impact of "China Shock 2.0," which is believed to be more powerful than the previous wave. The root cause of China’s strong export performance is pointed to the depreciation of the RMB, which has made Chinese exports more price-competitive.

Jens Eskelund, President of the European Union Chamber of Commerce in China, stated at a press conference on Wednesday (December 10) that according to the Big Mac Index, the RMB is severely undervalued by 48.7% against the euro. He described the current China-EU trade relationship as "like a fly about to hit a windshield," noting that the growing trade imbalance, coupled with the EU’s high dependence on China in many key areas, "will force Europe to make a decision."

Eskelund predicted that discussions about the RMB exchange rate will escalate in 2026 because "this situation is unsustainable." He also mentioned that the number of WTO investigations targeting China has reached a record high, and these complaints are not coming from Europe but from developing countries, whose manufacturing sectors are facing threats from relatively low-cost Chinese products.

However, Chinese media and official rhetoric argue that the so-called "China Shock 2.0" is a variant of the "China Threat Theory." They emphasize that China has reduced technological costs through large-scale production and shared technological products with the world. The competitiveness of Chinese products’ prices helps stabilize global supply chains and ease inflationary pressures faced by many countries.

The Political Bureau of the Communist Party of China Central Committee held a meeting on Monday (December 8) to set the tone for the Central Economic Work Conference. Rarely, the meeting proposed to "better coordinate domestic economic work and international economic and trade struggles," indicating that while Beijing is trying to expand domestic demand, it has no intention of making major adjustments to its export-oriented development strategy. Perhaps recognizing that it will face strong countermeasures from other countries, the top leadership has elevated foreign trade to the level of "struggle." From Beijing’s perspective, the harsh external environment can be attributed to the other side’s adoption of unilateralism and protectionism.

From small commodities in the past to high-tech products in the present and future, China’s huge economic volume has always brought a significant impact to the world, with equally strong positive and negative effects that have never ceased.

It is foreseeable that as long as international economic and trade order is involved, no matter how China’s growth model changes in the next five years, the old script of geopolitical tensions and great power games will remain unchanged and repeat itself.

On December 6, a buyer walks past a shop displaying horse-shaped plush toys at Yiwu Market.

Stepping into Yiwu International Trade City—the world’s largest small commodity distribution center—you could easily get lost if not careful.

Spanning Zones 1 to 5, it houses 75,000 booths offering over 2.1 million types of small commodities across 26 categories, including daily necessities, jewelry, toys, stationery, hardware, and home textiles. Coupled with the newly opened Zone 6 (International Exhibition Area) in October, it covers almost everything from traditional trade to digital commerce.

During a business trip south, I decided to stop by this "world supermarket." Even though I only had time to visit two floors of Zone 1, it was an eye-opening experience. The plush toy area on the fourth floor caters to both retail and wholesale customers, while the toy area on the first floor focuses exclusively on cross-border trade. Young people are busy doing overseas purchasing live streams, equipped with just a smartphone and a tripod.

Summarizing the views of several shop owners and clerks, China’s economy is indeed sluggish at present. Domestic sales rely on regular customers, while exports to the United States have been somewhat hit by the tariff war launched by Washington. Low-end toys have shifted to "Belt and Road" countries, including the Middle East, Africa, Southeast Asia, and Russia. However, mid-to-high-end toys—due to their higher prices—face difficulties in expanding into markets outside Europe and the United States or switching to domestic sales.

One shop owner said, "Our toys are of good quality and relatively high-priced. You can see the packaging is printed in English; we specialize in the U.S. and European markets."

Yiwu, a city dependent on commerce, is no less international than major metropolises. You can see more foreigners in the International Trade City than on the streets of Beijing, with Middle Easterners making up a large portion. The signs of Turkish and Middle Eastern restaurants are particularly striking, displaying Chinese, English, and Arabic side by side.

Yiwu is regarded as one of China’s export barometers, and its trade performance is largely consistent with China’s overall trade data. In the first 10 months of this year, Yiwu’s imports and exports to emerging markets such as Africa and Latin America increased by 21.8% and 14% respectively, while growth in trade with ASEAN soared by as much as 51%.

China’s overall exports in November rose 5.9% year-on-year in U.S. dollar terms. Although exports to the United States plummeted by nearly 29%, exports to Africa, Latin America, the EU, and ASEAN surged by 28.2%, 14.1%, 14.3%, and 8.4% year-on-year respectively—completely offsetting the impact of the decline in U.S.-bound shipments.

In summary, China has successfully broken through the blockage of U.S. tariff barriers and created new growth engines for exports.

Among the massive amount of data, Western media have paid particular attention to one figure: China’s trade surplus in the first 11 months of this year reached $1.076 trillion, exceeding the $1 trillion mark for the first time.

While this is undoubtedly good news for the Chinese government, Western media have detected a different implication: China’s low-cost products are flooding overseas markets like a tide, and global trade imbalance may be worsening.

China’s leading position in global exports and its important leverage in the global industrial chain have fueled intense discussions about the second wave of "China Shock," which may trigger more trade barriers against China from other countries.

After his warm interactions with Chinese President Xi Jinping during his visit to China, French President Emmanuel Macron made a tough statement upon his return: "China is killing its customers." He warned that if Beijing fails to take action to reduce the growing trade deficit with the EU, the bloc will be forced to adopt tough measures in the coming months, such as imposing tariffs on Chinese products like the United States.

The first "China Shock" refers to the outsourcing of manufacturing from U.S. and European companies to China around the 2000s. This led to the relocation of production bases in Western countries, and a flood of cheap imports from China devastated domestic industries in Europe and the United States, resulting in widespread factory closures and mass unemployment.

In contrast to the low-value-added goods of "China Shock 1.0," "China Shock 2.0" refers to a export tsunami of relatively low-priced Chinese high-tech products. Driven by China’s national industrial policies, enterprises have ramped up production of electric vehicles, batteries, artificial intelligence, and new energy products. However, due to weak domestic demand, excess capacity is being absorbed through exports.

Both European and American countries and Global South nations are experiencing the impact of "China Shock 2.0," which is believed to be more powerful than the previous wave. The root cause of China’s strong export performance is pointed to the depreciation of the RMB, which has made Chinese exports more price-competitive.

Jens Eskelund, President of the European Union Chamber of Commerce in China, stated at a press conference on Wednesday (December 10) that according to the Big Mac Index, the RMB is severely undervalued by 48.7% against the euro. He described the current China-EU trade relationship as "like a fly about to hit a windshield," noting that the growing trade imbalance, coupled with the EU’s high dependence on China in many key areas, "will force Europe to make a decision."

Eskelund predicted that discussions about the RMB exchange rate will escalate in 2026 because "this situation is unsustainable." He also mentioned that the number of WTO investigations targeting China has reached a record high, and these complaints are not coming from Europe but from developing countries, whose manufacturing sectors are facing threats from relatively low-cost Chinese products.

However, Chinese media and official rhetoric argue that the so-called "China Shock 2.0" is a variant of the "China Threat Theory." They emphasize that China has reduced technological costs through large-scale production and shared technological products with the world. The competitiveness of Chinese products’ prices helps stabilize global supply chains and ease inflationary pressures faced by many countries.

The Political Bureau of the Communist Party of China Central Committee held a meeting on Monday (December 8) to set the tone for the Central Economic Work Conference. Rarely, the meeting proposed to "better coordinate domestic economic work and international economic and trade struggles," indicating that while Beijing is trying to expand domestic demand, it has no intention of making major adjustments to its export-oriented development strategy. Perhaps recognizing that it will face strong countermeasures from other countries, the top leadership has elevated foreign trade to the level of "struggle." From Beijing’s perspective, the harsh external environment can be attributed to the other side’s adoption of unilateralism and protectionism.

From small commodities in the past to high-tech products in the present and future, China’s huge economic volume has always brought a significant impact to the world, with equally strong positive and negative effects that have never ceased.

It is foreseeable that as long as international economic and trade order is involved, no matter how China’s growth model changes in the next five years, the old script of geopolitical tensions and great power games will remain unchanged and repeat itself.