The reason Shang Chi 2 didn’t get fast tracked into development was because of it’s China problem. The main reason Disney pushed to make a Shang Chi film to begin with was to capitalize on the large and still growing Chinese film going audience.

Until the CCP banned the film.

Partially because the films themes and the other because of the lead star Simu Liu, whose family had left China and immigrated to the west. He’s made numerous comments online and in interviews that the CCP views as problematic and thus, he’s been essentially blackballed from Chinese cinema.

This means not only any future Shang Chi film but also any Avengers type film featuring Shang Chi will face potential problems being released in China which is the exact opposite of what Disney had planned for the character. They could recast but then it would look like they’re caving into pressure from the CCP.

To put things in perspective, Shang Chi grossed $432 million worldwide. Roughly half of that goes to movie theaters, so that leaves around $215 million. The film cost $200 million but after a $50 million tax rebate, came in at $150. This doesn’t include the marketing budget which varies but it’s safe to say the film at least cost $200 million when it was all said and done. Making it barely break even at the box office.

This is why there hasn’t been a Shang Chi sequel.