Why more export controls won’t stop China’s industrial engine

The first “China shock” was fairly easy to understand.

Beginning in the 1990s, cheap Chinese goods poured into global markets, displacing large parts of lower-end manufacturing across the world.

Now, China shock 2.0 seems to be under way, with China taking the lead in electric vehicles (EVs), batteries, solar panels, semiconductors and other more technologically sophisticated industries.

This is often perceived as a trade problem, with Chinese manufacturers producing too much, selling too...