In his book The Rise and Fall of the Neoliberal Order, published in 2022, Gary Gerstle described the neoliberal order and how its core tenets of free trade, deregulation, globalization, and interdependence will result in an era of unforeseen economic prosperity, global peace, and democracy.¹ While it is still debatable whether the system, as described by Gerstle, is a success, one undeniable issue is that public opinion for the order is waning rapidly in its core territories in the Western Hemisphere. U.S. President Donald Trump’s victory in the 2016 election was partially based on distrust and anger towards China and its perceived role in the decrease of manufacturing jobs in the United States as well as the decline of many businesses through the use of international trade tactics. It may be a hyperbole to say that China is “raping” the US through its manufacturing and global economic policies and that it is “the greatest theft in the history of the world,”² as Trump has suggested. However, the sentiments and circumstances on which it is based are certainly not hyperbole, nor are they uncommon. Currently, they are a major reason why many states seek to strategically ‘decouple’ from the global trading system or use trade to gain national benefits.

Germany, one of the premier economies of Europe that surged in the early 21st Century after its reunification in 1990³ – and a major Chinese economic partner – similarly faced questions⁴ regarding its economic reliance on both goods produced in China and the Chinese market itself for imports ranging from automotive to engineering sectors.⁵ This became an increasing concern when China announced its Zero-COVID Policy, which devastated international economies as the CCP implemented quarantine and testing policies to reduce the transmission of COVID-19, resulting in the shutdown of factories within the country.⁶ In 2022, when a full-scale Russian invasion reignited the Russo-Ukrainian War,⁷ Germany faced a major question regarding its reliance on imported natural gas and other energy from Russia. This led to a massive effort to diversify inputs and increase domestic energy generation through coal plants and nuclear power plants.⁸

When the intensity of the COVID pandemic largely subsided in 2023⁹ and domestic economies recovered from the shock, Western corporations faced another barrier in China as Xi Jinping placed pressures on foreign corporations in the name of national security – police raids, espionage charges, fines, arrests, expanding state oversight over foreign corporations, and tightening foreign corporations’ access to information – to the fear of corporations seeking to remain in or return to China. This made long-term commitments in the country precarious.¹⁰ At the same time, there was a shift by the Chinese Communist Party (CCP) to a domestic-focused economic strategy.¹¹ While China still participates in the international economy, it is no longer purely focused on growing national power on the global stage through economic strength but instead the active use of its economy and central position as a manufacturing hub for both daily goods and vital components. It can use this strategy for leverage in international affairs, particularly in the weapons-building department due to its dominance in the rare earths market.¹²

This new position has not gone unnoticed, even as democracies in the West change leaders and shift directions. When Joe Biden was elected he did not let up on the pressure to keep China subdued through trade, hampering its development in critical areas such as computer chips through halts on sales and maintaining Trump-era tariffs.¹³ The Biden Administration further acted to preserve businesses it deemed too vital for sale to foreign control, such as when the Biden Administration blocked the sale of U.S. Steel to Nippon Steel,¹⁴ focused on domestic capabilities through the CHIPS and Science Act,¹⁵ and encouraged economic protectionist arguments regarding the state of the American economy against an increasingly aggressive China.¹⁶

Now, as Trump returns to office, he has again taken the mantle of the American protectionist, threatening to upend the status quo of global commerce with tariffs¹⁷ and other acts of economic protectionism.¹⁸ His policies mirror those of Chinese President Xi Jinping, who began this process around a decade ago, to which Trump responded in his first term and has continued to this day.

This comparison between China and U.S. policies, with a special emphasis on China’s economic history, is conducted due to the convergent nature of both nations’ economic histories after World War II when both states liberalized socially and economically to relatively equal extents from their initial points. I will argue that the convergence in policies is not merely coincidental. It is instead a natural result of the economic interdependence brought forth by the liberal international global order, within which it encodes seeds of its own destruction as leaders use their economic prowess to enact aggression through channels of free trade and neoliberalism.

China’s Economic Journey to the West

The policies of the engineer of modern China, who transformed the nation into a manufacturing economic powerhouse, Deng Xiaoping,¹⁹ were entrenched in the Cultural Revolution he once led, albeit his fate was more tame than those of some of his more unfortunate compatriots.²⁰ As Deng swept into key positions after the end of Mao’s reign and became a leading voice in the policymaking process in the CCP, he began speaking. He was inspired by his own musings and the socioeconomic progress he saw from other parts of China while in exile, as well as his own connections to the south, about the existence of a socialist market economy.²¹ Far from the socialist isolationism – mainly with foreign capitalist powers – his predecessors and remaining Maoists wanted to promote, Deng embarked on a remarkable journey across the world, visiting Southeast Asia, Japan, and even the US, who had aligned itself with China even under Mao due to the Sino-Soviet Split and a mutual interest against the Soviet Union. On this journey, he saw the economic possibilities created by market forces.²² He returned to China with the aim of economic reform in favor of domestics interests and posterity, investing in foreign education and machinery, reintroducing private enterprises on a small-scale and limiting the state ownership of many tracts of society, opening Special Economic Zones (SEZ) – areas specially set aside for foreign investment and technical cooperation with foreign countries that allowed such regions to become heavily export-oriented industrial zones that boosted China’s global economic standing²³ – and beginning a generational push within China from central planning to a limited market economy.²⁴

The US, coincidentally, began its own period of economic liberalization during this time. Jimmy Carter was one of the first leaders of the post-World War II U.S. to initiate the trend of deregulation rather than the welfare state of Franklin D. Roosevelt.²⁵ Lyndon B. Johnson’s Great Society programs, aimed at expanding the welfare state, were the final repercussions of FDR’s legacy. This program involved establishing Medicare, Medicaid, housing reform, the War on Poverty, and federal policy aimed at extending civil rights for minorities.²⁶ Timeline-wise, Carter was elected in 1977, and the Chinese Reform and Opening Up program was initiated in 1978 by Deng Xiaoping and fellow reformists in the CCP.²⁷ Despite political movements threatening party rule, most notably the student protests that resulted in a violent crackdown in Tiananmen Square in 1989,²⁸ Deng Xiaoping continued with his economic reforms, maintaining the status quo of the CCP economy. Reforms and development continued under Jiang Zemin, Deng Xiaoping’s successor, and Hu Jintao, both in terms of continuing economic reform and further consolidation of the CCP’s authority in China.²⁹ Deng and future Chinese Premiers, including Xi, saw the party as the only stable and sure path to China’s rejuvenation and global rise.³⁰ Contrary to the Cold War-era Western paradigm that reforming China into a global market economy would eventually result in a shift to liberal democracy, or at least some form of democratic state,³¹ the CCP was able to simultaneously achieve a thriving market economy and party domination.

The Rise of Xi Jinping and Donald Trump

Xi Jinping’s rise in 2012 as the General Secretary of the CCP came at a time when the Chinese economic outlook was at its best. 2010 was one of the most dominant years for the Chinese economy in the global perspective: China’s GDP grew by 10.3%, officially surpassing Japan to wear the crown as the world’s second largest economy; total trade volume went up 34.7%; foreign direct investments both into China and from China rose 17.4% and 23.4%, respectively; and total investments grew by 23.8%.³² To foreign observers, and indeed to many people within China, Deng Xiaoping’s reforms and their continuation by his successors were the catalyst for a Chinese resurgence onto the world stage, reflecting the days of the Silk Road. It wielded influence over major international trade, economic, and humanitarian organizations, and formed its own security and economic cooperations.³³

When successive Western leaders promoted the virtues of globalism and free trade, China was one country out of many non-Western states that seized the opportunity to bring itself into the international fold, not only as a participant but as a leading figure of the new neoliberal order – and one of the few to do so while regarded by the West as a pariah. However, when leadership changed, fear naturally took over regarding the future of Chinese policy. Xi Jinping soothed some foreign governments’ and corporations’ concerns when he said that he would pursue the “Chinese dream of great rejuvenation of the Chinese nation,”³⁴ referring to the continuation of the Chinese economic transformation started by Deng Xiaoping.³⁵ Under Xi, the state began to reassert its role in the firms that had been left to decide their own business strategies for the past three decades.³⁶ It placed party secretariats into board positions,³⁷ and integrated firms and their CEOs into the party’s purview by giving them seats in the CCP itself.³⁸

Trump utilized similar tools of trade protectionism in his effort to “Make America Great Again,” echoing Xi’s language of national pride and a restoration of what has once been lost due to foreign influences as justification for greater economic interventions. His efforts to maintain a stake in national industries employed similar tactics, including negotiating with Nippon Steel to gain a “golden share” – the ability to appoint a board member – in order to direct Nippon Steel’s production to align with US interests.³⁹

The Future of the Neoliberal Order

With a similar set of policies, developments, and reactions, both China and the US are responding to the other state’s economic nationalization programs in an attempt to avoid becoming the more dependent state as avenues to trade become restrictive. One of the most significant effects of neoliberal expansion is the formation of a more interconnected cultural and economic world. The same interconnectedness that provided the tools for the growth of the neoliberal outlook, however, has also led to its destruction. Donald Trump and Xi Jinping’s ability to wield the economic prowess of their states as effective weapons to wage “economic wars,” both against each other and as tools of neocolonialism, with projects such as Prosper Africa⁴⁰ and the Belt and Road Initiative,⁴¹ showcases how the neoliberal tools of free trade and international investment can be exploited to project national power or as tools to increase relative power at the expense of other states⁴² and the open acceptance of terms of free trade to be used as power considerations in interstate power dynamics.⁴³ No where is this clearer than when China warned states not strike any deals with the US on tariffs that would sideline China, lest they be hit with other trade punishments.⁴⁴

With the current global status quo centered on the idea of free and open trade, its ubiquity is on par with terms of sovereign territory and military prowess. However, as it is only held together through international norms, it can be very easy for the first domino to fall. The attempts to use free trade for national advantage can easily lead to a cascading effect of mutual and reciprocal attacks. This phenomenon is not new, nor are its repercussions; for example, the Smoot-Hawley Tariff Act of 1930 triggered a global wave of reciprocal tariffs that effectively halted global trade and exacerbated the Great Depression worldwide.⁴⁵ The scope and context of the impact, however, are new. Today’s network of trade is more expansive and entrenched, and states are more reliant upon others for domestic prosperity. All countries have a stake in the continued existence of a system of relatively free trade for their markets and sources of prosperity. This is especially pressing for democracies and export-focused nations due to sensitivity to domestic concerns.Even though Xi Jinping accelerated the crisis of neoliberalism with growing efforts to nationalize China’s economy into a sense of autarky that triggered US fears of a destabilizing China on world trade,⁴⁶ the cascading effects of such trade conflicts showed themselves most intensely with Donald Trump’s insistence on a “trade war” with China over trade deficits and currency manipulation concerns.⁴⁷ If left unchecked, the continuous tipping of dominoes may irrevocably shift the world away from the neoliberal status quo that has dominated the world since the late twentieth century – a system that has generated wealth for many states and their people, despite pervasive shortcomings in global wealth distribution.⁴⁸ The end of such a status quo will not lead to the regaining of lost national power, perceived or otherwise, but rather only lead to greater economic hardship for those who have benefitted from it. This will in turn result in the erosion of mutual peace among interdependent nations, especially as a new Sino-American Cold War looms on the horizon with its first shots fired through tariffs and trade rather than artillery and bombs.

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