The escalating Sino-American rivalry and the broader concerns about China’s economy have caused Western firms to reevaluate their operations there – and rightly so. Given the uncertainty surrounding President Xi Jinping’s economic policies and geopolitical intentions, it may be time for investors and corporate leaders to consider scaling back their exposure to Chinese assets and markets.

The events of the past year - particularly Xi’s dogged refusal to ease his strict zero-Covid policy and his confirmation as China’s first three-term president - have spooked global investors. Likewise, X...