Want a stable world? Disengage from the Chinese economy

Judging by their actions, America’s enemies are bracing for protracted warfare

New Russia-North Korea military agreements, as well as increased aggression by China’s maritime forces against the Philippines, a U.S. treaty ally, remind us that an emboldened axis of adversaries is working worldwide to demolish the American-led order. 

However, the United States and our allies have a waning opportunity to preserve peace through strength and stem the violent tide of this new axis. But we must be willing to do something that was just some years ago unthinkable: combat the true engine of our enemies’ power, the Chinese economy

Judging by their actions, America’s enemies are bracing for protracted warfare. In Russia, Vladimir Putin’s recent appointment of economist Andrei Bolusov as defense minister and reappointment of technocrat Mikhail Mishustin as prime minister suggest that he is preparing the Russian military and economy for long-term conflict in Ukraine, and perhaps elsewhere in Europe. 

China's Xi Jinping, Russian President Vladimir Putin, Iran's Ayatollah Ali Khamenei and Kim Jong Un of North Korea (Getty Images)

North Korea’s new ballistic missile tests have reinforced its own threats to neighbors in Northeast Asia. In the Middle East, Iranian proxies have continued to consume the region in violence, from the horrific 2023 Hamas attack on Israel to subsequent terrorist attacks from Hezbollah, the Houthis, and Iraqi Shia militias. 

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Most troublingly, Chinese Communist Party Secretary General Xi Jinping has undertaken "the largest military buildup since World War II," in the words of former Indo-Pacific Command head Adm. John Aquilino. Xi has also fortified the Chinese economy against international sanctions and told his generals to prepare for war. 

Simultaneous with a robust policy of military deterrence, America and our allies must strike the root cause of 21st-century geopolitical upheaval – the rise of China’s economic power. Decades of wishful thinking that economic integration between China and the West would create international stability have failed.

Instead, Beijing has successfully converted economic engagement with the West into burgeoning military power and support for America’s enemies. Russia’s war machine in Ukraine overwhelmingly runs on imports of Chinese microelectronics and machinery, and indeed, the total revitalization of Russia’s military industrial base is due to China’s economic support. 

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China is the top destination for both legal and blacklisted North Korean exports, the sales of which fund Pyongyang’s nuclear program. Additionally, China is the world’s top purchaser of Iranian oil, buying more than 1 million barrels per day, while also providing a long-term lifeline to Tehran through investment in key strategic industries. 

The result of decades worth of Western economic engagement with China is a higher risk of wars across the world, including Beijing-instigated wars in Asia.

A vigorous, unified campaign of economic containment – reducing or eliminating China’s access to American and allied markets, technology and capital – would serve as the key to undermining this group of nations that is bent on bringing down the American-led world order. This campaign would not only undermine China’s military buildup but also the Beijing-financed regional aggression of its "strategic partners" in Moscow, Tehran and beyond. 

An American-led campaign of economic pressure should include tariffs on industries nurtured by Chinese Communist Party industrial policy, export controls on a greater range of strategic technologies, and comprehensive investment restrictions. 

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These tools should be employed on sectors, technologies and companies linked to China’s military industrial base, human rights atrocities, and flagship strategic programs like the Belt and Road Initiative, Civil Military Fusion and "Dual Circulation." Aggressive sanctions – especially those targeting Chinese banks and the state-run organizations critical to Beijing’s economic strategies – must also be on the table. 

Businesses, investors, universities, tech innovators and others must understand that weaning themselves from decades of economic engagement with our primary adversary in Beijing will not be cost-free. 

But economic dislocation can be mitigated, and opportunities will exist for sectors and companies that participate in reshaping the global economy in favor of the Free World. Securing our own supply chains, rebuilding our industrial base, remaining the world’s reserve currency and leading financial center, and creating an alliance-based trading system are a few of them. 

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Additionally, a new American energy strategy emphasizing hydrocarbon exports can also bring the European and Asian alliance system greater energy security while mitigating price spikes that come from pressure on the Russian and Iranian oil and gas sectors.

Perhaps most critically, the U.S. needs public and private sector leaders willing to articulate to Americans – 81% of whom already hold unfavorable views of China – why they should volitionally decline to participate in the Chinese economy. 

Stan Druckenmiller, one of the most successful investors of the past 30 years, told CNBC on May 7, "I will never invest in China as long as the current leader is there… And frankly as an American, outside of my investment day job, I feel very good about that decision." 

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Druckenmiller’s words evoke patriotic sensibility, financial wisdom and a winning strategy. To stem the growing tide of conflict and to ensure that the Free World’s historically superior economic system prevails over that of Beijing and its partners, disengagement with China is essential. 

Targeting the economic center of this axis – and securing the economies of the Free World – ensures there is still the hope of saving American and allied lives from future peril. 

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Jonathan Ward is a senior fellow at Hudson Institute and the author of "The Decisive Decade: American Grand Strategy for Triumph Over China."

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