Aff does not decouple but strikes the perfect balance – only a risk squo Chinese economic espionage is worse than decoupling.

We remain opposed to any effort at outright decoupling of the US-China relationship. The costs of decoupling from losing trade and foreign investment benefits for both countries would be significant and unlikely to generate clear winners. We respect the legitimate needs of both countries to define and protect their national security and law enforcement interests and urge them to do so in ways that leave space for commercially-focused engagement to take place and in close consultation with the business community.132 The geographic scope and institutional diversity of backlash against China and Chinese firms is better explained in terms of security dilemma dynamics than manifestations of vested interests.

Conclusion

Driven by the leadership's amplified perceptions of threats to economic and national security, China's shift from a classic form of state capitalism focused mainly on growth to party-state capitalism was an unwelcome development for Western policymakers. Rather than pursuing further market liberalization, as some had hoped, China has instead intensified state control over the economy and society, with a much more pronounced role for the CCP's political priorities domestically and abroad. Along with Chinese firms' growing presence overseas, this change in China's political economy has stoked external suspicion of China's motives and behaviors. While some commentators believe that the West has finally woken up to the CCP's long-term plans, we view this shift as neither inevitable nor based on a blueprint for global political dominance.133 We have argued that China's political economic model evolved in a process that began before Xi's assumption of power and sharpened under his leadership. The underlying mechanism was the regime's intensified perception of domestic and international threats. The emergence of party-state capitalism in China has also produced significant tension domestically as the primacy of politics affects government-business relations. Reflecting on the business sector's relationship to the state, the CEO of search engine Sogou observes: We're entering an era in which we'll be fused together…. If you think clearly about this, you really can resonate together with the state. You can receive massive support. But if it's your nature to want to go your own way, to think that your interests differ from what the state is advocating, then you'll probably find that things are painful, more painful than in the past.134 Things have indeed been more painful for prominent entrepreneurs who have famously lost control over their firms or their freedoms for running afoul of the CCP. China's unprecedentedly rapid growth for most of the reform era was driven by private firms whose interests did not threaten the regime, and sometimes even spurred the regime to adapt to them.135 It remains to be seen whether those innovative and productive practices will continue apace under a new political economic system in which firms and individuals face greater, even existential, risks. Global backlash has intensified and accelerated. We have shown that much of this backlash has been generated by, and subsequently directed against, the blurring of state interests and commercial endeavors. National governments in OECD countries are highly uncertain about—and threatened by—the inability to parse the boundary between the state and firms, whether state-owned or private. This confusion and risk aversion, reinforced by those who seek to gain from politicizing China's international presence, has led to the securitization of cross-border trade and investment flows with China. Thus, whereas the CCP embraced party-state capitalism to make the regime more secure domestically and internationally, instead it has fomented increasing isolation, suspicion, and exclusion, which pose limits to China's global ambitions. The result has accelerated China's quest for self-reliance in crucial strategic goods and has sought to further fuse China's state and societal interests. Taken together, these dynamics bear the spiraling hallmarks of a classic security dilemma, but one located in the economic realm. We have also documented rapid institutional change within and across advanced industrial democracies as they react to China's transformation under complex interdependence. We have shown how, at the domestic and transnational levels, the formal and informal rules of capitalism have changed as national governments and political actors endeavor to manage perceived threats presented by China's unique blend of state and economy: party-state capitalism. This change is illustrated most strikingly in the United States, a country with historically very low barriers to capital flows, where bipartisan initiatives propose to control not only incoming capital but also the outflow of capital. Collectively, the backlash and institutional changes documented in this article could constitute a lasting shift in the international order in terms of economic openness and interdependence. A good deal of scholarship addresses whether China presents a challenge to the “rules-based international order,” or more precisely, the many international orders in which China is engaged. Several scholars have argued that China is unlikely to challenge open trade and international financial orders. But they have overlooked how other countries' reactions to China's unique global economic presence may affect interdependence.136 Other countries' responses to China's party-state capitalism have already compromised principles of free trade and open borders. China's economic rise and its domestic economic transformation have had an unsettling effect on global capitalism and the strategies of national political economies. A growing literature in macroeconomics examines the “China shock,” referring to how China's entry into global markets has transformed labor markets and political preferences throughout the world.137 The empirical trends documented in this article suggest a research agenda that examines a different, political form of a China shock, and one best studied by political scientists: how global and domestic actors have initiated or reshaped agendas and preferences in light of the unique challenges presented by China's political economic model. Like other critical junctures or disruptions in the global political economy—such as the oil crises of the early 1970s and the rise of knowledge economies in the 1990s—a “China shock” refracted through domestic electoral politics and social movements could upend long-held political commitments and introduce novel responses that shape the political and economic gestalts of a new era.138