I've come across the common opinion that Laozi promotes an indiscriminating cooperation - one that advocates "turning the other cheek" even when wronged. Although I think this is an easy conclusion to make, it is my assertion that this is not the view presented in the Dao De Jing. Therefore, I will be discussing my reasoning in this post.
The sages have no constant mind
They take the mind of the people as their mind
Those who are good, I am good to them
Those who are not good, I am also good to them
Tao De Ching, ch 49, translated by Derek Lin
The Tao is the wonder of all things
The treasure of the kind person
The protection of the unkind person
Admirable words can win the public's respect
Admirable actions can improve people
Those who are unkind
How can they be abandoned?
Tao Te Ching, ch 62, translated by Derek Lin
The Dao doesn't condemn, it is impartial to the myriad things. Accordingly, the sage keeps an empty and open mind and maintains impartialness. They recognize society's view of good and bad and even make their own judgements. Saying this, the sage's judgement is more of a dispassionate observation to be used pragmatically - it is not an opinion that morally disgusts. The sage realizes that "admirable action can improve people", so they do not deny anyone kindness for the simple reason that one is "bad". It is recognized that everyone has the ability to improve.
Here is where I think the misconception arises. It is commonly understood that being good to those who are not good equates to "turning the other cheek" when someone wrongs you. To me, this is an easy but dangerous misconception for those who wish to apply these teachings to real life.
A good commander achieves results, then stops
And does not dare to reach for domination
Achieves result but does not brag
Achieves result but does not flaunt
Achieves result but is not arrogant
Achieves result but only out of necessity
Achieves result but does not dominate
Tao Te Ching, ch 30, translated by Derek Lin
The military is a tool of misfortune
Not the tool of honorable gentlemen
When using it out of necessity
Calm detachment should be above all
Victorious but without glory
Those who glorify
Are delighting in the killing
Those who delight in killing
Cannot achieve their ambitions upon the world
Tao Te Ching, ch 31, translated by Derek Lin
The application of military force is not liked but is an option that must be considered. Laozi dictates that force should only be applied when necessary and to the degree and duration required to achieve victory. Because it is an inauspicious means, there should be no glory in this kind of victory. The necessity of military force can only be decided by one who is impartial and doesn't take joy in such means.
Impartialness starts with knowing and knowing starts with yourself. By bringing to conscious not just your strengths but your weakness and other undesirable aspects of yourself, you can begin to accept yourself in full. This must happen before you can know and accept the world in full.
There is nothing practical or moral about letting someone walk on you. Laozi highly promotes the teachings of actions. Letting someone exploit you only teaches a person that their actions are beneficial, thus encourages them to repeat this behaviour in the future towards you and possibly others. It also encourages other people to copy this behaviour who see it as successful. This is not in line with the teachings of the Dao De Jing as harmony is valued. The "Turn the other cheek" sentiment has value but as a fixed rule it quickly will be the breakdown of harmony. This is something I believe Laozi understood well because he addresses the use of authority and force.
Though the sage's foundation for leadership is non-interference, direct and indirect means have their advised application. As a leader, you should understand the specific skills and appropriate application of these means so you are able and prepared to use them when situations may require. With good leadership, indirect means that represents competition or military/physical force should become an uncommon necessity. The emerging of directness and returning to non-interference is usually enough to promote and maintain harmony within your reach. In this way physical opposition will usually only come from outside your influence where the party doesn't know you and doesn't view future interactions with you as any consequence to the present use of competitive measures such as physical force.