On Dec. 4, after months of delay, the White House released the new U.S. National Security Strategy. The document is a landmark. Competition with China has been systematically weaponized through economic and financial means and elevated to the same plane as traditional military and alliance tools.
Economics is no longer framed as a win-win engine of interdependence. Rather, it has been deliberately re-engineered into a controllable, severable and deployable instrument of geopolitical leverage. The shift is placing intense stress on global economic governance and U.S.-China commercial relations, yet it also—objectively—preserves narrow but genuine and actionable space for cooperation.
Seen through an economic and financial lens, the 2025 NSS rests on a single organizing principle— the near-complete securitization of outward-facing economic policy. Supply chains, technical standards, critical minerals, data flows, dollar-clearing networks and allied investment decisions are all subordinated to one overriding objective, and that is countering a strategic rival.
America is attempting to replace four decades of efficiency-driven globalization with a new order that puts security and control first. In practice, this means draconian export controls and investment screening, massive industrial subsidies, overt pressure on allies to choose sides and an explicit embrace of financial sanctions as core statecraft, all while safeguarding the institutional advantages of the U.S.-led financial system.
This pivot, however, carries steep costs and inherent blowback:
First, by erasing the boundary between economic and national security, virtually any trade, investment or financial-opening measure can now be labeled a “national security” concern. The result is policy sprawl, soaring regulatory uncertainty, exploding compliance costs, higher risk premiums and a predictable chill on efficient capital allocation and long-term investment.
Second, forced derisking and friend-shoring in highly concentrated, scale-intensive sectors—semiconductors, rare earths, battery materials—will drive near-term cost spikes, capacity shortages and inflationary pressure, while eroding the depth of the global division of labor and overall efficiency over the medium- to long-term. Middle-tier and developing economies will bear a disproportionately heavy load.
Third, the aggressive weaponization of finance is accelerating the fragmentation of the global monetary system. The more the dollar clearing system, SWIFT, and secondary sanctions are used as geopolitical bludgeons, the stronger the incentive for others to build local-currency settlement, digital-currency clearing and regional payment networks. Transaction costs rise, liquidity thins and, paradoxically, America's own financial hegemony is gradually diluted.
Fourth, strong-arming allies into economic and technological “team-picking” is already encountering fierce resistance from Europe, Japan, South Korea and Southeast Asia, rooted in their own economic interests and domestic politics. Public scolding of European defense spending and trade coordination has provoked visible pushback. Allied cohesion is fraying, not tightening, and U.S. leadership will suffer as a result.
Crucially, while the 2025 NSS treats China as America's competitor and repeatedly describes the relationship as an “economic battlefield,” it doesn't employ the abstract label “revisionist power.” More important, it explicitly calls for “a mutually advantageous economic relationship with Beijing” and “balanced trade focused on non-sensitive factors.” This pragmatic, Trump-era language makes clear that total decoupling is not the intended end game and leaves real operating room for cooperation.
Four domains stand out:
First is global financial stability and systemic-risk management. Highly technical, depoliticized collaboration is not only possible, it is imperative: Standing crisis hotlines through the IMF or BIS, upgraded temporary liquidity swaps, regular cross-border stress-test data sharing and jointly agreed “no-break” protocols for core clearing and payment systems come to mind. Existing central-bank swap lines and the Financial Stability Board provide ready foundations. This serves both the NSS goal of preserving dollar-system resilience and China's need for stable financial opening-up.
Second are global public goods and rule-making. Through neutral venues (G20, FSB, Basel Committee) the two sides can co-lead on anti-money-laundering intelligence sharing and safety governance for AI in financial applications—issues the NSS itself classifies as transnational challenges rather than competitive domains. These areas deliver the strongest positive externalities and the most effective firewall for the bilateral relationship.
Third are tiered technology-and-trade management and digital-economy rules. This is where the NSS's new emphasis on reciprocity and fairness can be made operational. Governments and industry associations could jointly draw up clear sensitive and non-sensitive lists—with strict controls on leading-edge semiconductors, quantum technologies and critical minerals, along with continued liberalization and mutual standards recognition in consumer electronics, ordinary intermediates and low-risk digital services with third-party verification. Simultaneously co-shaping cross-border data flows and digital-trade rules inside the WTO and APEC would prevent the global digital economy from splitting into rival blocs and remains the most practical way to avert full decoupling while lowering corporate compliance burdens.
Fourth is inclusive cooperation in third markets and the Global South. When bilateral channels freeze, multilateral and regional platforms become vital pressure-release valves. In African critical minerals, Latin American infrastructure and Southeast Asian manufacturing, the U.S. and China could pursue joint or parallel sustainable-financing models, co-create supply-chain resilience funds via the IMF, World Bank and G20, and run limited pilots linking RCEP and CPTPP rules or opening agricultural and consumer-goods markets. This would simultaneously address U.S. concerns about expansion of the Belt and Road Initiative while creating new outlets for Chinese production capacity and American companies alike.
The 2025 NSS formally inaugurates an era in which economic security is the highest form of national security. The trend is not easily reversed in the short term, yet it is far from unconstrained. Sky-high deglobalization costs, financial fragmentation blowback and damaged global growth potential all remind every stakeholder that total decoupling is the single most expensive path on the menu.
Real strategic wisdom lies in tenaciously defending core interests while designing layered mechanisms that preserve breathing room for cooperation. That is the only rational way for the United States and China to avoid mutual destruction and the only realistic way to keep the world economy from sliding into long-term stagnation. In an age of structural competition, holding steady and seizing cooperation where it remains possible is the ultimate source of leverage.
