For much of the post-Cold War period, Western governments operated on a simple belief: trade would change authoritarian systems from the inside.  

Known in German as Wandel durch Handel — change through trade — this idea has been central to shaping engagement with Russia, China, and other autocracies. Economic integration, among other benefits, would produce political moderation, strengthen the middle class, and, over time, coax these repressive regimes toward an adherence to shared rules. Such economic engagement, policymakers contended, would also benefit the economic progress and security interests of countries in the West. Prosperity would draw the fangs of authoritarianism. 

It didn’t. The rapacious Chinese party state and Russia’s klepto-regime have not reformed. They have become more authoritarian. Moreover, the autocrats have managed, in effect, to reverse engineer economic integration to suit and advance their particular interests.  

Some in the West have failed to learn the lesson. Despite the lived policy experience of the past three decades with these now-empowered authoritarian adversaries, policymakers like the French President seem intent on running a version of the change-through-trade experiment again. For its part, the Trump Administration is prioritizing a bare-knuckle version of economic statecraft that includes potential new forays of commercial engagement with a number of authoritarian regimes. This is very different in form, but quite similar in intent. 

This challenge is not novel, but takes on a greater resonance in a new global environment. Writing in the Journal of Democracy  10 years ago, I argued that China and Russia already had turned the logic of change through trade, jiu-jitsu-like, against the democracies.  Over the preceding years, these politically authoritarian, pseudo-market systems used “deep economic and business ties to export corrupt practices and insinuate themselves into the politics of democracies”. Now, a decade later, what suggests that we will get a better outcome?  

The theory behind change through trade assumed that mutual dependence would encourage positive relations. To this end, Western countries supported China’s integration into global markets and pushed for its entry into the World Trade Organization (WTO) 25 years ago. The assumption seems oddly naïve — that by joining a club, a dictatorship would agree to play by the rules. 

But the logic of positive change only works when both sides face similar constraints and have similar intentions. Authoritarian regimes do not. Trade did not have the effect of liberalizing authoritarian regimes but instead in key respects strengthened them.  

Moreover, it made democracies more vulnerable in the process. The problem was not economic integration per se, rather it was treating essentiallyall trade as equal, regardless of who the trading partner was. It wholly ignored China’s already established delinquent behavior in stealing foreign copyright and extensive trade espionage. 

Meanwhile, Europe’s dependence on Russian energy, for instance, was treated as a commercial choice, while the Kremlin saw it as leverage. Western governments welcomed commerce with China as a source of growth, and many are hoping to do so again (Britain’s premier Keir Starmer flew to China on January 27), even as Beijing has continued to treat market access as a tool to extract technology, support its state-directed and subsidized industry, shape corporate behavior, and exert sharp power. 

This, in turn, created systemic dependencies and a “leverage web” for the autocracies to weave around the democracies. Through this process, they became reliant on authoritarian states for such critical goods, including hydrocarbons, rare earths, and pharmaceuticals.  

Among other lessons the United States and other free societies need to relearn is that freewheeling economic engagement with unfree systems carries real risks for security and prosperity. Trade among democracies is different from that with autocracies, which generate a range of adverse non-economic costs through such interaction, flowing from corrosive forms of authoritarian capital. Other costs often manifest in the form of sharp power, which takes advantage of the asymmetry between free and unfree systems, and manipulates and undermines free speech and democratic institutions.  

China’s method of international commerce poses special threats, often bringing with it unsustainable debt burdens, environmental degradation, and its own laborers who supplant the local labor force. And the effects of Beijing’s commercial engagement go much further. Also part of the Chinese package is systematic secrecy, corrupt practices, censorship, and compromising of elites that, to one degree or another, invariably impacts partner countries and institutions. 

Such forms of political intrusiveness are far less severe in trade among democracies. Democratic governments do not systematically use market access to export censorship or punish political disagreement. As a result, democratic trade is less likely to distort domestic debate or weaken institutions.  This explains why the transatlantic community has enjoyed such extraordinary prosperity. Europe and the US are the world’s biggest trading partners — EU consumers buy some $3.6 trillion worth of goods annually from American companies, part of a tapestry of prosperity, the Great Enrichment, that has produced historic levels of wealth for ordinary people. 

The lesson of all this is not to abandon trade, but to advance it in a discerning and strategic way.  

On this count, some of the ideas that free societies will need to keep in the forefront of their thinking include prioritizing trade with other democracies, especially in critical sectors. Friendshoring, which is now accelerating, and supply chain diversification, reduce exposure to coercion and strengthen shared economic resilience. Trade among democracies tends to support innovation and durable growth. Profits are more likely to be reinvested in open societies rather than diverted to repression or military buildup. 

For leaders such as Xi Jinping and Vladimir Putin, for whom regime security is paramount, trade is crucial for the economic strength that funds military expansion, internal surveillance, and foreign influence campaigns. These two regimes already have built up formidable capabilities in this regard. With the zeitgeist seemingly moving in the direction of Wandel durch Handel, free societies’ margin for error doubtless will become tighter.  

For this reason, democracies must be especially vigilant to avoid empowering the very regimes that are seeking to undermine democratic systems and the prosperity and freedoms that accompany them.  

Christopher Walker is Vice President at the Center for European Policy Analysis.  

Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

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