Over the past week, we have been dealt a painful reminder of just how important U.S. policy toward China is in the 21st century. On Monday, due largely to a crash in China’s stock market, U.S. markets suffered their worst day in four years. Insecurity and anxiety about the future—already high for American families—climbed even higher. It was a jarring illustration of how globalization is changing the U.S. economy.

China presents both opportunities and challenges. Trade with its growing middle class has opened American businesses...