The new Atlantic Declaration between the UK and US "sets a new standard for economic cooperation", Rishi Sunak says.

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.

Gen Z is poised to massively expand its influence in the 2024 election. But its impact may be more complex than typically assumed.

As many as 7 million to 9 million more members of the racially and culturally diverse Gen Z could cast ballots in 2024 than did in 2020, while the number of the predominantly white Baby Boomers and older generations voting may decline by a corresponding amount, according to nonpartisan forecasts. As a result, for the first time, Gen Z and Millennials combined could account for as many votes next year as the Baby Boomers and their elders—the groups that have made up a majority of voters for decades.

That generational transition represents a clear opportunity for Democrats, who have consistently amassed solid, sometimes overwhelming, margins among both Millennials and Gen Z voters. But an analysis of previously unpublished election data from Catalist, a Democratic targeting firm, by Michael Podhorzer, the former political director for the AFL-CIO, shows that even the emergence of these new voters may not break the larger political stalemate that has partitioned the country into seemingly immovable blocks of red and blue states.

Podhorzer’s analysis of the Catalist data, shared exclusively with The Atlantic, found that over the past four elections, Gen Z voters have broken heavily for Democrats in blue states, and provided the party solid margins in closely contested swing states. But in red states, with a few prominent exceptions, Podhorzer surprisingly found that even Gen Z voters are mostly supporting Republicans.

The generation’s strong Democratic lean in blue and purple states may create growing challenges for Republicans trying to amass the 270 Electoral College votes needed to win the White House. But the Republican tilt of younger voters in red states could frustrate Democrats trying to loosen the GOP’s hold on those places. That seemingly unbreakable Republican grip has made it difficult for Democrats to win majorities in the U.S. Senate and House of Representatives, and has allowed the GOP to impose a sweepingly conservative social agenda across nearly half of the country.

Republicans remain dubious that young voters will show up in large numbers anywhere next year for President Joe Biden, the oldest U.S. president, who did not run well among them in the 2020 Democratic primaries and whose approval ratings with them remain anemic. As Kristen Soltis Anderson, a GOP pollster who has extensively studied younger voters, told me, “I don’t think there is a lot of focus in Republican world” about the potential risk to the party of a big surge of new Generation Z voters in 2024, “in part because a lot of Republicans believe that there is just no way young voters will turn out for Joe Biden.”

But other analysts point out that despite their equivocal feelings about Biden, young people voted in very large numbers in 2020 and maintained relatively high turnout in 2022. A lack of enthusiasm about Biden personally “didn’t really dissuade the generation from coming out and voting for Democrats” in either of the past two elections, says John Della Volpe, the director of polling at the Harvard Kennedy School Institute of Politics, which conducts a twice-yearly national survey of youth attitudes. “They knew the stakes in the election. They knew what life was like under more Republican control versus more Democratic control.”

Whatever they think about Biden, the influence of Gen Z, generally defined as young people born from 1997 to 2012, is certain to rise next year simply because so many of them will age into the electorate. William Frey, a demographer at Brookings Metro, estimates that about 15.4 million eligible young people will have turned 18 between the 2020 election and Election Day next year.

In 2016, the first presidential election when any members of the generation were old enough to participate, Gen Z accounted for just 2 percent of voters, according to an analysis of census data by Frey for the nonpartisan States of Change project. In 2020, Gen Z rose to 7.5 percent of all voters, Frey calculates. Frey projects that the generation will increase its share of the electorate to 13 percent in 2024. Depending on turnout, that could mean about 8 million more Gen Z voters next year, increasing the total to about 20 million in all.

Millennials, generally described as younger adults born from 1981 to 1996, have also increased their share of the electorate. In Frey’s analysis of census data, they rose from about one in seven voters in 2008 to just under one in four in 2020. Frey predicts that in 2024, the two generations combined will make up about 37 percent of the electorate.

That could mark a historic tipping point. Frey projects that in 2024, the Baby Boomers and their elders—the last members of the Greatest and Silent Generations still voting—will also constitute 37 percent of voters. If that forecast holds up, it will end decades during which those Republican-leaning older cohorts were the biggest generations in the electorate. Meanwhile, Generation X, defined as those born from 1965 to 1980, will remain stable over this period at about one-fourth of the electorate.

Another fundamental shift in American politics over the past half century is magnifying the impact of this generational evolution: Voters now divide between the parties more along lines of cultural identity than class interest. And on every important cultural and demographic dividing line between the two parties, the younger generations exhibit characteristics that predict support for Democrats.

More than 70 percent of Baby Boomers are white. But just 55 percent of Millennials are white and only slightly more than half of Gen Z are. Millennials and Gen Z are far less likely than older generations to identify with any organized religion and far more likely (especially in Gen Z) to identify as LGBTQ. Younger generations are also more likely than older ones to hold a college degree.

“What sets Gen Z apart is … they are growing up in a much more racially and ethnically diverse cohort, which really is driving them to more progressive positions,” Melissa Deckman, the chief executive officer of the nonpartisan Public Religion Research Institute and the author of a forthcoming book on the generation, told me.

Overall, these new voters are behaving almost exactly as those attributes would predict. Before 2004, as I’ve written, exit polls and other sources found little difference between the voting preferences of younger and older voters. But since Millennials and then Gen Z entered the electorate in large numbers, Democrats have established a durable advantage among the young. Catalist’s data, for instance, show that Democrats have carried almost exactly 60 percent of the two-party vote among Millennials and Gen Z in each of the past three presidential elections and in three of the past four congressional elections; the one exception came when the party’s vote among them hit 66 percent in the 2018 congressional races. (One New York Times analyst, citing unpublished polling data, recently claimed that Millennials, though still supporting Democrats, are moving to the right as they age, a view also held by some Republican pollsters. But skeptics quickly noted that other data sources, such as results from the large-sample Cooperative Election Survey, do not show such a shift.)

The key insight that Podhorzer’s analysis adds is that even this strong overall Democratic advantage remains subject to substantial geographic variation that tends to reinforce, rather than reconfigure, the nation’s electoral divisions.

Using Catalist data, he found that Democrats in the four elections from 2016 through 2022 have consistently amassed imposing margins of 20 to as much as 40 percentage points among Gen Z voters in the 18 states he identifies as already leaning reliably Democratic, such as California, Oregon, Washington, Hawaii, Illinois, Minnesota, and the Eastern Seaboard states from Maryland to Maine.

Gen Z voters over those four elections have also provided Democrats solid margins of roughly 15 to 25 percentage points in the eight purple states: Arizona, Georgia, North Carolina, and Nevada across the Sun Belt, and Michigan, Pennsylvania, Wisconsin, and New Hampshire in the Rust Belt.

But the story in the remaining two dozen Republican-leaning states is more complex. Podhorzer found that Democrats performed better in the red states among Gen Z than they did among older generations—but not well enough to actually win those youngest voters. Republicans still carried a majority of Gen Z voters in most of the red states. Even in red states where Democrats have won most Gen Z voters in recent elections—including Texas, Florida, Iowa, Kansas, and Montana—the party’s margins among them are typically slim. That means Democrats in red states are not generating nearly enough advantage from younger generations to overcome the lopsided GOP edge among older cohorts.

Podhorzer told me this regional variation is “only surprising to the extent you believe that age explains almost everything about voters’ partisanship. But if you understand that the neighborhood you grew up in, the parents you have, the schools you went to, and the general politics that you are introduced into is a big factor, it shouldn’t be surprising at all. Because if you grow up in Brooklyn, no matter how old you are, you are swimming in blue water … and the same goes for those growing up in red America.”

For Democrats, the most important of the trends Podhorzer cataloged may be their persistent strength among Gen Z voters in the battleground swing states that decide who wins the White House. In all, Podhorzer calculates that Gen Z voters in the swing states who cast their first ballot in the 2018 election or after have preferred Democrats by nearly 20 percentage points. (Democrats also hold a strong 15-point edge among Millennials in those states who voted for the first time in 2018 or after.) To Podhorzer, the clear lesson of these trends is that Democrats are more likely to win the battleground states by investing in turning out these new voters than by trying to lure back the mostly blue-collar whites who have abandoned the party to support Donald Trump.

Podhorzer says the Democratic advantage among younger voters in the purple and blue states has been driven largely by an unusual dynamic. Typically, he points out, young voters gravitate toward a party because of a positive association with the president in office as they entered the electorate: John F. Kennedy or Ronald Reagan or Barack Obama. But in this case, Podhorzer argues, the most powerful force moving Gen Z toward Democrats is not so much excitement about the party (or Biden), but negative views of Trump. “They are coming of age at a time when everybody around them, as well as the popular culture, loathe and ridicule” Trump, he told me. “Especially in the blue states, where MAGA candidates have hijacked the nominating process, there is no exemplar of a reasonable Republican anywhere to be seen.”

Some GOP strategists aren’t particularly concerned about the party’s poor performance with young voters, Anderson, the GOP pollster, says, because inside the GOP coalition, Trump is strongest among the youngest generations. “So if you are hanging out in Republican land only, you can easily convince yourself that Donald Trump is actually very popular with young voters, because he is irreverent and edgy or whatever your rationale would be,” she told me. The problem is that too many in the GOP don’t realize “that the young people in the past who might have liked Mitt Romney aren’t in our rooms anymore” and that instead we “have boiled the youth of the party down to this very Trumpist core.”

In many red states, Republicans appear to be taking no chances with the unfolding generational transition: Several GOP-controlled states, such as Texas, Georgia, and Arizona, where the ascending younger generations are much more racially diverse than older voters, have imposed the toughest restrictions on voting.

In every state, influence in the coming years will flow from those mostly white older generations to more diverse younger ones. By 2028, Frey projects, the Boomers and their elders will fall to slightly below a third of voters nationwide, while Millennials and Gen Z will soar well past two-fifths. By 2032, when all of Gen Z is eligible, Americans born after 1980 will cast almost exactly half of all votes.

Deckman said she expects Gen Z to continue to lean left over this period—in part because, more than any previous generation, these young people are consuming media that they themselves create, on TikTok and similar platforms. “Their news is generated by themselves, and because they are more progressive, I think many Gen Zers are consuming information that reinforces those viewpoints,” she told me.

As Podhorzer’s analysis shows, this transition isn’t yet threatening Republicans in most red states. And in the swing states, Republicans can probably offset the growing presence of Gen Z and Millennials in 2024 by running better with older voters, many of whom are unhappy with Biden’s performance.

But the Democratic advantage with Gen Z is like an investment whose value compounds over time—in this case, as their share of the electorate expands. If Republicans can’t regain at least some ground with younger voters, especially in the battleground states, the party will need to squeeze bigger margins out of shrinking groups. In any given election, as Trump demonstrated in 2016, Republicans might meet that test. But making that math add up will only get tougher for the GOP as the generational transition inexorably rolls on.