How do you rein in a belligerent colossus with 1.4 billion people‚ nuclear weapons‚ and a desire to command and control the world’s economic order that has prevailed since the end of World War II?  Well‚ there is a way; it is the specter of Adam Smith‚ the 18th-century Scottish economist and philosopher‚ who could give China some reckoning.  READ MORE: Are the US and China Truly ‘Polar Opposites’? “Holding China accountable” was the mantra in the early days of the COVID-19 global pandemic‚ undisclosed by China‚ which shut down domestic flights in and out of Wuhan yet allowed international ones to proceed‚ seeding the world with a deadly pathogen. As I have written in The American Spectator‚ holding a country to account‚ particularly the second-largest economy in the world‚ is a theoretical and impractical concept — one that would require investigation and good faith collaboration by China itself.  As I also suggested‚ it would ultimately be Adam Smith’s invisible hand‚ a metaphor introduced in his treatise The Wealth of Nations‚ which refers to the unseen force of self-interest as governing economic activity — supported by the profit motive.  Foreign direct investment in China‚ estimated at over $4.3 trillion since 1979 according to Macrotrends LLC (data summed by the writer)‚ has for decades driven China’s economic model: It has raised standards of living‚ pulled hundreds of millions out of poverty‚ and given China massive foreign currency reserves‚ which are now over $3.1 trillion. With this stunning success has come belligerence toward Japan‚ South Korea‚ Taiwan‚ India‚ Southeast Asia‚ and the United States; gloating over its Belt and Road Initiative‚ which‚ established in 2013‚ now embraces over 150 countries in an effort to supplant the current rules-based order for trade and investment; and suppression of dissent in western China and Hong Kong. Once a vibrant center for investment banking‚ insurance‚ international trade‚ manufacturing and services‚ Hong Kong has lost its autonomy and attractiveness under the authoritarian rule of Beijing. (READ MORE: Why Has the CCP Banned Demonizing America?) Having assessed operating and political risk‚ some of corporate America is now rethinking its China commitments and exposure there.  Of late‚ Adam Smith’s invisible hand is at work in Apple’s strategic decision‚ as reported last week by the Wall Street Journal‚ to produce over 50 million iPhones per year in India‚ representing one-fourth of the company’s iPhone production after several years. While Apple is not withdrawing from China‚ the company is nonetheless reducing concentration in its supply chain and is a high visibility vanguard. Another signal‚ as reported in November by the Peterson Institute for International Economics‚ is an outflow of foreign capital from China — more than $100 billion through September of this year. This is said to evidence a lack of reinvestment of earnings as well as divestitures of direct investments to Chinese parties. Increasing business regulation‚ intensified national security concerns‚ the desire to control cross-border data‚ the shutdown of foreign consultancy firms‚ and increasing tensions between the United States and China are cited as governing factors.  Further‚ institutional investors reduced their holdings of Chinese debt and equity by $31 billion through October of this year‚ as reported by the Wall Street Journal. Major investment firms such as Carlyle and Vanguard have moderated or cancelled their China initiatives.  The Chinese economy is also floundering. Although the International Monetary Fund predicts 4.5 percent to 5 percent GDP growth for 2023‚ this is well below historical rates and is believed insufficient to address youth unemployment‚ which earlier this year exceeded 21 percent. In August‚ China’s leading property developer‚ Evergrande‚ filed for Chapter 15 protection under the U.S. bankruptcy code‚ and subsequently other Chinese developers have defaulted on foreign debt.  China’s vaunted Belt and Road Initiative has resulted in loans for development of infrastructure of over $1 trillion‚ with emphasis on the Global South — however‚ an estimated 80 percent of such debt is now in distress‚ according to AidData‚ a research organization affiliated with the College of William and Mary. Longer term‚ the joint family system of China‚ a social safety net to support the elderly‚ is stressed by the one-child policy implemented in 1979 by Deng Xiaoping‚ and China will need to allocate resources for this domestic priority. (RELATED: Kim Jong Un‚ Demographic Destiny‚ and DINKs) For over four decades‚ foreign direct investment has been vital to China’s remarkable economic success. Leading multinationals and investment firms are now concluding that operating and political risks do not justify the size of their existing commitments to China. Management and boards of directors are mandating supply-chain diversification and reduction of exposure. This is the most important lever of the West to minimally hold China accountable.  No one should rule China out or believe that its economic distress will moderate its desire to upend the world order set forth by the United States and Europe. Nor should one conclude that China would abandon its objective of taking over Taiwan. But Adam Smith can discipline China and slow it down — and‚ at least‚ the gloating may stop. Frank Schell is a business strategy consultant and former senior vice president of the First National Bank of Chicago. He was a lecturer at the Harris School of Public Policy‚ University of Chicago‚ and is a contributor of opinion pieces to various journals. READ MORE from Frank Schell: The Naivete of American Foreign Policy China Is Preparing for War — Are We? The post A Specter Is Haunting China appeared first on The American Spectator | USA News and Politics.