Following the recent meeting between President Donald Trump and Chinese President Xi Jinping, the media have generally focused on immediate transactional outcomes such as the extension of the trade truce, high-tech competition in artificial intelligence, and the geopolitical flashpoint of Taiwan.
For many years, Washington’s foreign policy status quo has mischaracterized the Chinese Communist Party as an ideological monolith hell-bent on spreading global Marxism. This misdiagnosis causes the United States to miscalculate its strategic response. Navigating this 21st-century undertaking requires confronting what China actually is: a centralized, nationalist dictatorship running a deeply integrated, state-directed market economy. China seeks to dominate the world economically.
Washington clings to the “communist” label because an ideological enemy provides domestic leverage over strategic clarity. The political Right focuses on invasion threats to expand conventional defense budgets. Meanwhile, the political Left frames the struggle as a moral crusade to highlight human rights violations and surveillance. Both factions employ this framing because outside threats allow a divided Congress to bypass gridlock and pass bloated spending bills. This distortion begins in the classroom. Standard U.S. textbooks still default to the “communist” moniker, leaving young people with the false impression that they face a stagnant, Soviet-style command economy rather than a state-directed capitalistic rival.
The reality is that China poses an economic and technological challenge, not an ideological one. True communism requires the absolute abolition of private property and total state ownership of production. Modern China does not operate this way. Following late 20th-century market reforms, Beijing embraced an authoritarian capitalist model. Today, China boasts an active stock exchange and hosts over 1,110 billionaires on the Hurun Global Rich List. Data analyzed by the Harvard Kennedy School reveals that China’s domestic private sector generates approximately 60% of its gross domestic product and drives over 80% of urban employment. Marxist purists would view contemporary Beijing not as a triumph of their ideology, but as its ultimate distortion.
This state-directed capitalist landscape is further illustrated by the market-driven activities operating within and across China’s borders. The global surge in fentanyl precursor manufacturing, underground banking syndicates, and transnational human trafficking rings are consequences of unregulated market forces, not communist doctrine. In a textbook command economy, these decentralized, profit-seeking operations would be structurally impossible. Independent Chinese chemical factories supply precursor elements to Mexican cartels with an entrepreneurial agility that mimics Western corporate supply chains, driven purely by financial gain.
Simultaneously, state-subsidized corporations flood global markets with cheap consumer devices, heavy industrial equipment, and green technology. Even when the environmental impacts are recognized, they are ignored in pursuit of global market share. Western consumers, drawn by unmatched price points, buy these goods, effectively subsidizing China’s externalized environmental costs. This behavior demonstrates the cold calculus of market extraction and value-shifting to capture market dominance, rather than a planned economy focused on collective welfare. Yet, Washington defaults to its old playbook, treating a competitive corporate extraction model as a mid-century ideological campaign.
None of this excuses totalitarian abuses within China’s borders. As documented in country reports by the Department of State, Beijing enforces a digital surveillance state, systematically oppresses minorities in Xinjiang, and stifles free political speech. Yet, Washington’s outrage remains highly selective, routinely overlooking identical behavior from strategic allies, ranging from Middle Eastern oil regimes to Western-aligned security partners. This double standard betrays the truth: the “communist” label is a convenient rhetorical weapon to justify economic protectionism and defense spending rather than a true reflection of moral consistency.
Beijing has no interest in converting the people to Marxism or exporting a cultural revolution. Its objectives are winning the trade war, controlling global production, dominating supply chains, and displacing American economic hegemony. By treating China merely as an economic rival, Washington would have to engage in rigorous domestic industrial policy and economic discipline. Instead, politicians default to rhetorical grandstanding while moving away from market liberalization toward protective bilateral trade marked by export bans and tech regulations.
This foreign policy hides a darker reality: Washington is actively instigating the world order it claims to protect against. Isolating near-peer economic opponents through sweeping financial blockades has forced a volatile geopolitical alignment, driving China and Russia into strategic partnerships with hostile regimes such as Iran and North Korea. Left to their own devices, these major market superpowers would prefer stable, predictable, and cooperative trading relationships with the West rather than a consolidated axis of convenience.
Treating China just like the old Soviet Union causes Washington to fundamentally miscalculate its leverage. China is deeply woven into global supply chains. A Peterson Institute for International Economics analysis highlights that despite heightened tariffs, value-added trade data reveals a deep underlying economic interdependence that simple import metrics mask. Chinese components are merely rerouted through third-party countries such as Vietnam or Mexico before reaching American consumers. We cannot decouple from a global market giant using a playbook designed for an isolated, virtually closed nation.
Furthermore, viewing the relationship through an ideological lens causes Washington to hyperfixate on regional flashpoints like Taiwan while missing the wider structural competition. The root challenge is that an autocratic superpower seeks to displace American economic, financial, and technological leadership. Rather than addressing the core economic structures that make China competitive, lawmakers target American tech companies in defense authorization bills while keeping traditional defense spending high.
WASHINGTON’S AI MORATORIUM IS THE BEST GIFT XI JINPING COULD ASK FOR
When politicians focus entirely on communism, they search for the wrong warning signs. They should be looking at port infrastructure, rare-earth monopolies, and artificial intelligence laboratories. As documented by the Council on Foreign Relations, China is expanding its footprint via state-backed capitalism and its multitrillion-dollar Belt and Road Initiative. You cannot defeat a state-sponsored corporate juggernaut with anti-communist lectures.
The current trajectory is unsustainable. Shifting focus from bloated defense contracts toward competitive domestic investments in cutting-edge technology, raw manufacturing capacity, and vital infrastructure is the only viable path. True normalization will not come from demanding ideological surrender from Beijing, nor from manufacturing a permanent adversarial standoff to satisfy Washington’s military-industrial complex. It will come when America secures its own economic resilience, projects strength through financial independence, and negotiates from a position of undisputed domestic success. Only when we accurately outline China’s state-directed model can we construct a strategy pragmatic enough to outperform it.
Cheryl-Ann Lee-Llacer Wargotz is an economic researcher and a former network manager with a background in economics and private asset administration. Her interests focus on the intersection of global trade networks and the growth of the high-tech workforce. Eric Wargotz, M.D., is a geopolitical analyst and policy commentator who has held leadership roles across government and medicine. A clinical professor emeritus at George Washington University and judge, he is a former U.S. Senate nominee and elected county commission president. Views expressed are their own.