This is a geopolitical clash of power. It's not about respective political regimes, it's about relative power and influence. If China liberalises tomorrow none of the fundamental issues will change and China will still be a threat to the US. The only thing that will change is that the US will have to find something else in order to label China 'evil'.
No thank you. Stop pushing "China is victim of bully" or "China is here to save you from evil West" rhetoric.
China is using its military to forcibly steal territory the size of France from neighboring nations. That territory does not belong to China.
The US can rightfully sanction any nation that uses its technology and its currency. Those things belong to the US. The sea territory that China is stealing does not belong to it.
Other nations do not have to obey US sanctions. They're free to abandon all US technology and abandon the US dollar and its banking structures. Go for it.