The idea of a rising China has become so entrenched in the Western imagination that it can seem inevitable. But economics rarely operates in straight lines, and in China, the government of Xi Jinping is right now making decisions about China’s economic relations with the world that are bound to alter its trajectory.

Xi, the most dominant political figure in China in half a century, would like his country to overtake the United States as the world’s premier superpower. In that pursuit, he is reorienting his country’s trade and investment away from the West and, in certain respects, looking inward to strengthen China’s economic defenses. China’s leaders argue that such decisions were forced upon them by a hostile Washington intent on maintaining its hegemony. In taking this course, they are also contributing to a larger shift in global affairs, as the post–Cold War moment of globalization has given way to a new era in which geopolitical competition and security concerns drive economic policy.

[Read: How China wants to replace the U.S. order]

The story of China’s rise (so far) has been all about its relationship with the West, and especially the United States. More than 40 years ago, the paramount leader Deng Xiaoping introduced a free-market reform program that connected China’s destitute and largely agrarian populace to global supply chains through bonds of trade and investment with the U.S. and its partners. In flowed foreign capital and technology; out came manufactured goods for wealthy American and European consumers. Growth roared, and with it, incomes. None of that would have been possible without the West’s cooperation.

Beijing and Washington were once willing to set aside their numerous political disagreements in the pursuit of economic benefits that both believed were necessary for the future. But today, the two countries have come to see their ties as a source of risk and vulnerability. Xi fears that Washington can exploit its economic leverage to suppress his country’s rightful rise into a global superpower by withholding crucial technology or imposing punishing sanctions, such as those the U.S. slapped on Russia after its armies invaded Ukraine last year. He has sought to protect China by channeling enormous state support into developing homegrown technologies and by shifting China’s economic energies toward countries, including Russia, that are not perceived as threatening.

Washington, for its part, worries that China can use its dominance of certain supply chains, such as the production of rare earth minerals, to stymie U.S. industry, or that Beijing will capitalize on access to advanced American technology to enhance its own military capabilities or undercut U.S. economic competitiveness. Both the Trump and Biden administrations sought to curtail business with China through tariffs, export controls, and other measures, and encouraged investment in manufacturing at home.

Mike Gallagher, chair of the U.S. House Select Committee on the Chinese Communist Party, sees these shifts as commonsensical in many ways. “There are some people who want to go back to the halcyon days of economic engagement, in the hope that that might improve the U.S.-China relationship. I just think that represents the triumph of delusion over experience,” Gallagher told me. “We need to take off our golden blindfolds when it comes to the risks associated with doing business” with China, and “we need to reinforce our economic sovereignty in concert with our allies.”

And so the economic relationship between the U.S. and China—arguably the most influential of the past half century—is beginning to unravel. U.S. investment into China has been on the decline. In 2017, American companies invested $14.1 billion into China; in 2021, only $8.4 billion, according to the research firm Rhodium Group. In a recent survey of U.S. businesses conducted by the American Chamber of Commerce in China, 51 percent of the respondents said that their current plan was either not to increase their investment in the country or to decrease it, while another 26 percent said that the environment was too uncertain to decide.

Executives in Europe are hardly more enthusiastic. “While a handful of large firms, many of them German, continue to pour money into their China operations, many other firms with a presence in China are withholding new investment,” Rhodium Group explained in a 2022 report. “Virtually no new European firms have chosen to enter the Chinese market in recent years.”

Foreign investment suffered globally during the coronavirus pandemic, but China was hit harder than other countries and regions, according to a study that the International Monetary Fund released in April. The IMF noted that, during the pandemic period (roughly 2020 to 2022), compared with the preceding five years, the United States and the advanced European economies made significantly fewer “greenfield” investments into China—the term for when a company starts a new operation in a foreign country from scratch. Such investments into other regions, including emerging markets in Europe, held up much better. The study also revealed that foreign-investment flows are becoming more concentrated among countries that share similar geopolitical viewpoints. The IMF calls it the “fragmentation” of foreign-investment flows, but what it really means is that the decades-long love affair the West’s CEOs have had with China is coming to an end.

[Read: China’s mistakes can be America’s gain]

Chinese companies are withholding their money as well. The U.S. had been the most popular destination for China’s capital, with $193 billion invested since 2005, according to the American Enterprise Institute. Now Chinese investment in the U.S. has all but evaporated. Though it ticked upward in 2022 from the year before, to $3.2 billion, that’s a mere fraction of the nearly $54 billion invested in the U.S. in 2016.

Instead, Chinese firms are redirecting their investment to the global South. Last year, the two largest recipients of Chinese foreign investment were Saudi Arabia and Indonesia. Countries associated with Xi’s pet infrastructure-building program, the Belt and Road Initiative, accounted for less than a quarter of total outward Chinese investment in 2017, Derek Scissors, an AEI senior fellow, estimates. Last year, their share reached 60 percent (albeit of a smaller total amount). Though this shift reflects Xi’s foreign-policy preferences, it also shows how Chinese money is being scared off by a suspicious reception in the U.S. “Until that changes,” Scissors wrote in a January report, “investment will continue to shift to poorer countries.”

Although China’s trade with the United States and Europe remains immense, its exchange with the developing world is also growing. China’s largest trading partner is now not the U.S. or European Union, but the 10-country Association of Southeast Asian Nations—which includes Indonesia, Vietnam, and Thailand—with $975 billion worth of goods passing among them in 2022. China’s share of sub-Saharan Africa’s merchandise trade rose from a mere 4 percent in 2001 to more than 25 percent in 2020, surpassing that of both the U.S. and EU, according to a 2023 study from the Atlantic Council.

The shift in China’s global focus is likely to continue because it serves Beijing’s political interests. The new avenues of trade and finance Xi has opened through his Belt and Road program are designed to become routes of political influence. And a big reason Xi has been deepening relations with Russia is to secure sources of energy and other raw materials safely out of Washington’s reach. Trade between those two countries increased by more than a third last year, to a record $190 billion. Now Russians feeling the sting of U.S. sanctions are turning to the Chinese currency, the yuan, in preference to the dollar—furthering Xi’s goal of weakening the global influence of the greenback.

Washington’s position is hardening as well. Former President Donald Trump broke with decades of Washington policy by treating China as a potential adversary rather than partner. President Joe Biden has not only continued that approach, but sharpened it. His administration imposed tough controls on the export of advanced semiconductors and the equipment to manufacture them to China and is mulling new regulations that would curb U.S. investment in China in certain technologies.  

Gallagher said that “restrictions on capital outflows to China make a lot of sense,” and that he thinks Washington may have to take a “sector-by-sector approach” to prevent American money from flowing into Chinese firms affiliated with the military or involved in developing sensitive technology, such as artificial intelligence.

The other advanced democracies appear headed in a similar direction. The hot term in Western capitals with regard to China policy is de-risking: not the extreme “decoupling” of the Trump era, which implied a harsh severing of ties, but a somewhat more moderate effort to counter Chinese threats to security and industry. De-risking could mean diversifying supply chains to make sure that Beijing’s position in them isn’t so strong as to afford it leverage over the West, for example. The language of de-risking was central to the communiqué that emerged from the May summit of the G7, as well as to a speech that Ursula von der Leyen, president of the European Commission, gave in March.

Detachment from the West would be a major shift in itself, but it is not the only one that China has undertaken. The country’s companies and banks are also, in many respects, scaling back their engagement with the world. A few years ago, Chinese firms were “going global” at a torrid pace. Now that outreach has become much more measured. AEI data show that total Chinese investment abroad has shrunk dramatically, from a high of $174 billion in 2017 to only $42 billion in 2022. The story of Chinese lending to developing countries is similar: From 2008 to 2021, the two Chinese state banks that support government-policy priorities issued $498 billion in development finance for 100 countries, according to Boston University’s Global Development Policy Center. That’s not far off the amount lent by the World Bank. But the loans began to taper off in 2018 and sunk to a mere $10.5 billion for 2020 and 2021 combined.  

“We’re very much at a crossroads,” Rebecca Ray, a senior researcher at Boston University who tracks Chinese lending, told me. China’s retrenchment could reflect a decision to prioritize its domestic economy, which sagged amid the coronavirus pandemic and a property-market slump, she pointed out. But it is also possible that pragmatic concerns have led Beijing to pause its lending program before rebooting it to focus more on quality than quantity of development projects.

Whether these trends fully reflect a deliberate economic program remains unclear. The country’s strict COVID-prevention controls, which made cross-border business extremely difficult, may be skewing the numbers, and perhaps, with those restrictions lifted, China’s economic outreach to the world will rebound. Or Beijing may be at a transition point, with leaders looking to expand the country’s economic influence abroad, but with greater precision and effectiveness. But China is almost certainly amid a crucial strategic shift in its economic relations with the world.

The turn could ultimately be an inward one. Xi’s economic philosophy is based not on integrating with the world but on strengthening the homefront and marshaling Chinese resources for national endeavors and competition with the U.S. His mantra is “self-reliance,” by which he means eliminating his country’s vulnerabilities to the outside world, and especially the West. Doing so requires China to substitute imports with homemade alternatives. He may look for China to export its new high-tech products abroad but purchase as little as possible in return. Such a China will be one that doesn’t contribute as much as it could to the economic progress of its trading partners, and one that is less, not more, important to the global economy overall.

[Read: Breaking China’s hold]

But an insular turn is not the only possibility. Xi is also detaching China from the West in favor of links to the global South. He’s taking a risk in doing so. The United States, Japan, and other advanced economies still account for nearly 60 percent of global output, while the developing world (excluding China) produces less than a quarter. That means that consumers in the global South, though they are becoming richer, cannot afford to buy as much from China as those in the West and other advanced economies. Nor can the global South offer the technology that the West can.

Thus, Xi’s fixation on security and power over economic efficiency is leading him to alienate the trading partners that can provide what the Chinese economy needs most for its growth, such as advanced technology, in exchange for ties to countries (like Russia) that cannot replace what is being lost. Whether China can continue its ascent under these conditions remains to be seen. But Xi’s choices are likely hindering, not helping, China in its effort to join the ranks of the world’s richest countries.

China’s current trajectory may make it a less formidable competitor to the U.S. economy. But American companies will likely lose out on profitable opportunities too. The costs of a separation between China and the West are potentially huge for the entire world, with all sides paying a price for determining economic policies based on who is friend and foe.

A core component of liberal democracy is that the opposition must have the right to field the candidate of its choice, giving it a fair chance to oust the government at the ballot box. In Poland, which has become one of Europe’s most important economic and military powers, that axiom is under attack.

At the end of May, the governing Law and Justice party instituted a commission to investigate Russian influence on Polish politics. Given the ways in which the Kremlin has tried to wield power over European political parties, including Germany’s Social Democrats and Italy’s Lega (formerly Northern League), a nonpartisan commission to investigate such links in Poland would certainly make sense. A body with the authority to propose formal charges, to be investigated by independent courts, for people who are suspected of breaking existing laws would be perfectly appropriate.

But this new commission is nothing of the sort. It violates the most basic democratic principles; its composition, exclusively of ruling-party members or loyalists, is wholly partisan; it is empowered to punish alleged culprits as it sees fit, turning the commission into prosecutor, judge, and jury, all in one. Perhaps most shockingly, the commission has the right to disbar anyone from public office for up to 10 years.

[Yascha Mounk: After Poland, no democracy is safe]

This last detail suggests the commission’s true purpose. With parliamentary elections coming up in the fall that are expected to be closely contested, the government appears to be using the commission as a cudgel against the leader of the country’s biggest opposition party, Donald Tusk, who was the prime minister from 2007 to 2014, and the president of the European Council from 2014 to 2019. At a minimum, Law and Justice seems set to use its hold over the commission to tarnish Tusk’s standing in the eyes of voters; many observers fear that it could go so far as to make it illegal for him to run.

Poland, in short, may be poised to turn into a Potemkin democracy, an empty simulacrum of genuine self-government. And that once again reveals the alarming brittleness of democracy, with even the most vaunted democratic success stories deeply vulnerable to authoritarian capture.

Poland has long been seen as one of the great success stories of the past 30-plus years. During the Cold War, when the country was effectively a satellite state of the Soviet Union, it maintained a crushingly authoritarian system and suffered from very low living standards, especially in rural areas. Today, Poland enjoys full sovereignty, a status that had largely eluded the country for three centuries. After Poland gained independence from the Warsaw Pact, it made great strides toward freedom and political stability, joining the European Union and affording its citizens expansive social and political rights.

Even more notable is the country’s economic transformation. One of few countries in the world to have enjoyed continuous economic growth for the past three decades, Poland has seen its GDP increase nearly tenfold since the end of Communist rule. Keir Starmer, the leader of the British Labour Party, recently made headlines by warning that Poland is on track to overtake the U.K. in GDP per capita by the end of the decade.

Although Poland has continued to grow richer and more influential, its political development was upended when Law and Justice swept into power in 2015. Under the guidance of Jarosław Kaczyński, the populist party immediately set out to undermine the rule of law.

Kaczyński placed loyalists on the constitutional court by legally dubious means and gave political appointees power over the judicial process. His party turned the state broadcaster into a tool of government propaganda, used public funds to purchase privately owned regional newspapers, and tried to force the owners of independent radio and television stations to sell their rightful possessions.

In other words, this commission is the culmination of democratic backsliding that has been under way for years. If the new body bars Tusk from running in the fall elections, this highly influential EU member state will no longer be a genuine democracy. That would drag the whole bloc into a crisis of legitimacy.

A significant facet of the developments in Poland, one with special resonance for the United States, suggests that the obvious explanations for the rise of authoritarian populism are at best incomplete—with major implications for any hopes of reversing the trend. Standard accounts of the ascendancy of authoritarian populism tend to focus on cultural change and economic stagnation. The debate has usually centered on which of these two factors is more important—but neither fits the Polish case especially well.

Take the economy. In a single generation, Poland has grown much more affluent. Admittedly, this newfound wealth has come with greater inequality; some rural areas have been left behind compared with the gleaming metropoles—and Law and Justice has expertly exploited the resulting resentments. But in some ways, the improvement of living standards has been most striking in the country’s poorer regions, where people now take for granted amenities such as indoor toilets, which many lacked some 35 years ago.

What’s more, support for Law and Justice is hardly limited to the poor or excluded; the party is also popular with social strata that have enjoyed breathtaking upward mobility. As with Donald Trump in the U.S., Law and Justice in Poland appeals to plenty of people who are doing very well.

The notion of a backlash against cultural change does not fit the facts so well either. In 1989, Poland was a deeply conservative and patriarchal country. Today, women enjoy greater equality and autonomy, and, especially in the cities, sexual minorities are a visible part of the country’s social fabric. Law and Justice has played up fear over “LGBT ideology” and used a rejection of secular urban elites as part of its electoral pitch—moves that have made the party popular among those who feel alienated from the country’s new culture, which is much more liberal and cosmopolitan than it once was. Poland’s transformation, however, has been so deep and rapid that such regressive messaging alone would not be enough to keep Law and Justice in power; the party has been able to win a series of elections only because its appeal extends well beyond that reactionary base.

Take the Catholic Church, which has long played a big political role in Poland. In the last years of Communist rule, Poland was one of the most Catholic countries in the world—a majority of the population attended Mass at least once a week. Now that number has fallen to about a quarter of the population. With the hold of the Church declining so rapidly, and its reputation in tatters after a string of sexual-abuse scandals, any explanation for the success of Law and Justice that relies simply on the theory of a backlash against cultural change is inadequate. Deeply devout voters now constitute too small a share of the electorate to keep Law and Justice in business. The same sort of change has affected other realms of Polish society. Attitudes toward gays and lesbians have, for example, dramatically improved, which means that homophobia cannot on its own account for the enduring appeal of Law and Justice.

The upshot should worry those who think that further cultural change will magically make the problem of populism disappear: Neither a greater secularization of Polish society nor a further liberalization of attitudes toward sexual minorities is sure to erode the party’s popularity.

All of these examples should be a warning for other democracies facing authoritarian-populist challenges, including the U.S. Some American pundits argue that populism’s potency derives mainly from the stagnation of living standards. Although that idea has some plausibility, the experience of Poland suggests that rapid economic growth and widespread prosperity do not necessarily reduce support for authoritarian populists.

The other main school of thought insists that the roots of populism lie primarily in cultural grievances. Politicians like Trump, the argument runs, are especially popular among voters who are whiter and older, so as the population diversifies, and members of Gen Z gradually replace Baby Boomers, support for such candidates is sure to dwindle. Here, too, the Polish experience is sobering: Even as Poland’s culture has become more liberal and progressive, the arc of its politics has not bent toward democracy. The young have, in virtually all major democracies, been more progressive than the old for decades—yet, in part because voters’ values change as they grow older, the moment when progressives consistently win commanding electoral majorities has failed to materialize.

Polish democracy is not dead. Hundreds of thousands of people marched in Warsaw over the weekend to defend democratic institutions and fight for their right to vote for the candidate of their choice. The upcoming elections look likely to be close, even if—or perhaps especially if—Tusk is disqualified from running.

[Read: Poland is not ready to accept a new McCarthyism]

To understand the developments in Poland—and similar ones in such countries as Turkey, India, and America—the simple binary of democracy and dictatorship will not do. Poland, like so many other countries, is evolving into an embattled system that political scientists have described by such names as “illiberal democracy” and “competitive authoritarian regime.” The Law and Justice government has skewed the odds, giving it a big advantage over its political rivals. And yet, elections remain meaningful for now, because the opposition still has a real shot at gaining power through the ballot box.

Poland was already a flawed democracy before the new commission was constituted. The opposition will retain some agency, even if Tusk is barred. But the Law and Justice government has taken yet another fateful step toward turning Poland into a Potemkin democracy.