Why steel, ships and electricity matter more than the GDP figures on the evening news
Purchasing power parity (PPP), manufacturing capacity, and electricity generation reveal a different hierarchy from the one that financial markets and broadcast media present.
Editorial Analysis | October 2026
China is winning. It must be argued that an economy consists of energy and work rather than of transactions and fees. Coal, oil, gas, uranium, solar, wind, and water supply the energy, while engineers, technicians, and labourers convert it into steel, cement, food, semiconductors, and transport equipment. Everything else, in this framing, is secondary. That definition repays examination because it captures something that national accounting obscures, since a ton of steel and a banker’s fee enter GDP as equivalent monetary magnitudes despite differing radically in their contribution to material capability. The distinction matters for strategic analysis because states fight wars and sustain populations with physical goods rather than with financial claims, and a country that cannot produce steel or ammunition is dependent regardless of its nominal output.
The historical record supports the contention that energy consumption precedes and accompanies economic ascent. Britain industrialised on coal, the United States on oil, and China has built the largest electricity system in the world with approximately 10,000 terawatt-hours of generation in 2024, a figure that represents roughly thirty per cent of global output (International Energy Agency, 2025). No country has achieved high income status while relying on candlelight or manual labour, and the correlation between energy availability and productive capacity is one of the more robust regularities in economic history. China’s per capita electricity consumption remains below that of the United States, which indicates that the aggregate figure reflects population scale as much as industrial intensity, but the absolute magnitude confers advantages in aluminium smelting, data centre operation, electric vehicle manufacturing, and other energy-intensive activities that cannot be relocated easily.
The critique of GDP as a measure of economic weight proceeds through two distinct arguments that deserve separation. The first concerns what GDP counts, because a lawyer charging one thousand dollars per hour contributes to output just as a steel mill does, even though the lawyer produces no physical object and the mill produces the material basis for infrastructure and defence. The second concerns how GDP is converted across currencies, because market exchange rates reflect capital flows, interest rate differentials, and reserve currency status rather than the relative purchasing power of incomes in different countries. A haircut in New York costs sixty dollars while an equivalent haircut in Chengdu costs approximately thirty yuan, which means that converting Chinese output at market rates understates what Chinese incomes can actually buy within China. Purchasing power parity adjustments correct for this discrepancy, and the International Monetary Fund has recorded China as the world’s largest economy on that basis since 2017 (International Monetary Fund, 2025). India ranks third in PPP terms, which further illustrates how market exchange rates systematically understate the output of lower-income countries with large domestic markets.
It can be observed that American broadcast media rarely mention PPP rankings contains an institutional insight that merits analytical attention. Media organisations operate within parameters established by ownership structures, advertising markets, and the geopolitical assumptions of their audiences, and the presentation of American economic primacy serves those parameters more effectively than a ranking that places China first. The production of consent operates through selection rather than fabrication, and the omission of PPP data is consistent with a broader pattern in which American audiences receive a picture of the world that reinforces rather than challenges existing hierarchies (Herman and Chomsky, 1988). Analysts who rely on broadcast media for their understanding of relative economic power will therefore systematically overestimate American capacity and underestimate Chinese capacity.
A second test concerns whether a country can make things, and the evidence on this question is unambiguous in its direction even if the precise figures require qualification. China accounts for approximately 27.7 per cent of global manufacturing value added, a share that exceeds that of the United States, Germany, Japan, and the United Kingdom combined (International Institute for Sustainable Development, 2025). Chinese shipyards launch the majority of the world’s commercial vessels, Chinese steel mills produce more than half of global output, and Chinese firms manufacture the majority of lithium-ion batteries, solar panels, and electric vehicles sold worldwide. China makes about a third of everything manufactured, which is a reasonable approximation, though the exact share depends on the metric and the year. These figures describe a productive apparatus of a scale that no other single country possesses, and they translate into strategic capacity because shipbuilding, steel, and battery production are inputs into naval construction, infrastructure development, and energy storage.
The Western trajectory since the 1980s provides the contrast against which the Chinese path becomes visible. American and European firms shifted manufacturing to Asia while retaining design, branding, finance, and marketing functions, which appeared rational from the perspective of individual profitability because labour costs were lower and regulatory burdens lighter abroad. The collective consequence of these individual decisions was the erosion of domestic industrial capacity, the decay of supply chains, and the loss of tacit knowledge that resides in production workers and process engineers. The COVID-19 pandemic exposed the resulting vulnerability when Western governments discovered that they could not manufacture masks or ventilators at scale, and the war in Ukraine revealed that European ammunition production could not sustain a high-intensity conflict (European Commission, 2023). Washington now pursues reshoring through the CHIPS and Science Act, the Inflation Reduction Act, and various executive initiatives, but the reconstruction of industrial ecosystems requires a decade or more and depends on the availability of skilled labour, energy infrastructure, and supplier networks that have atrophied.
The treatment of financialisation as “money that makes nothing” identifies a material mechanism rather than committing an exaggeration, because share buybacks, leveraged buyouts, and private equity restructuring redirect corporate cash flow away from capital investment and into claims on existing assets. The diversion of earnings into financial engineering contributed measurably to the slowdown in productivity growth across the Anglo-American economies after the 1980s, and the 2008 crisis demonstrated that a system oriented toward paper valuations can collapse under the weight of its own fictitious accumulation (Lazonick, 2014). Credit allocation and risk management perform necessary functions in any complex economy, yet the balance between productive and financial activity shifted decisively toward the latter, and the Marxist distinction between productive capital and fictitious capital captures that shift with precision (Marx, 1894). A steel mill produces capacity to make things while a derivative produces a claim on somebody else’s capacity, and an economy that rewards the second more generously than the first will accumulate financial paper faster than it accumulates productive power. Therefore, the Marxist distinction between productive capital and fictitious capital captures this shift with precision, because the accumulation of claims on future value is not the same as the accumulation of capacity to produce value (Marx, 1894).
A realist analysis of the situation begins from the premise that states operate in an anarchic system and must rely on their own resources for security. Industrial capacity is a component of national power in this framework, alongside military capability, energy independence, and technological sophistication. The offshoring of manufacturing was not merely an economic decision but a strategic one, because it transferred productive capacity to a potential rival and created dependencies that constrain foreign policy options. American and European policymakers now confront a security dilemma in which the pursuit of short-term profitability has eroded the material foundations of long-term strategic autonomy. The Chinese leadership, whatever its other failures, has consistently treated industrial capacity and energy security as strategic priorities rather than as residual categories to be managed by market forces.
Game theory illuminates why individual firms offshore production even when the collective outcome is disadvantageous for the state that hosts them. Each firm faces a coordination problem in which unilateral retention of domestic production raises costs relative to competitors who offshore, which means that the dominant strategy for any single firm is to relocate regardless of what other firms do. The Nash equilibrium of this game is universal offshoring and collective deindustrialisation, even though every participant would prefer a coordinated outcome in which all firms retained domestic capacity. States can escape this equilibrium through industrial policy, tariffs, or procurement rules that change the payoffs, but such interventions face opposition from firms that benefit from the existing arrangement and from consumers who benefit from lower prices. The game is further complicated by the fact that the state itself is not a unitary actor but a coalition of interests in which financial and commercial factions may prioritise different objectives from those of strategic planners.
A materialist class analysis situates these dynamics within the broader evolution of capitalist social relations. The offshoring of manufacturing represented a shift in the balance of class forces, because it weakened the bargaining position of organised labour in the advanced economies while enriching the managerial and financial strata that oversaw the relocation. The profits from globalised production accrued disproportionately to shareholders and executives, while the costs in terms of employment, community decline, and skills erosion were borne by workers and their localities. The Chinese state’s control over its banking system and its willingness to direct credit toward industrial priorities stand in contrast to the financialised model in which credit allocation is determined by expected returns on financial assets rather than by productive investment.
The contrast does not establish that China has abolished class antagonism, because wage labour, private capital, and pronounced inequality remain central features of its political economy. What the contrast does establish is a difference in the relation between the state and capital that Western political economy has largely lost, because the Chinese party-state owns all urban land, controls the major banks and the direction of credit, and retains a substantial ownership stake in industrial capacity. The reduction of extreme poverty for approximately 800 million people, achieved through collective rural land ownership, state-directed infrastructure investment in interior provinces, and a cadre-led campaign across 832 designated counties, was a deliberate policy outcome rather than a market by-product (World Bank, 2022). A state that can direct credit toward shipyards, battery plants, and interior provinces demonstrates a capacity to subordinate financial returns to developmental objectives, while a state whose investment decisions are disciplined by shareholder returns cannot replicate that outcome. The analytical question is therefore not whether China is socialist in some doctrinal sense, but what kind of class state has produced these results and what that implies for the balance of productive power.
The are alternative measures to consider, including energy per person, industrial share of output, steel and ship production, engineering graduates, and PPP-adjusted GDP, constitutes a reasonable dashboard for assessing national capability. None of these indicators is sufficient on its own, and each is subject to manipulation and measurement error, but together they provide a more accurate picture of material capacity than nominal GDP alone. The question to ponder is whether it is too late for the West to rebuild its industrial base admits no definitive answer, because the outcome depends on political choices that have not yet been made and on the allocation of resources over the coming decade. The United States possesses advantages in capital, technology, and energy that could support a serious reindustrialisation effort, while Europe faces higher energy costs and more fragmented political institutions that complicate coordinated action. China’s advantages in manufacturing scale, supply chain integration, and state coordination are substantial but not permanent, and the country faces demographic headwinds, debt overhang, and the risk of external containment that could constrain its trajectory.
In conclusion, one can print money but cannot print a steel mill, that is the truth that financial markets routinely obscure. Monetary expansion can create claims on resources without creating the resources themselves, and a state that relies on financial engineering while neglecting productive capacity will eventually confront the gap between its obligations and its capabilities. The Western powers are not yet at that point, but the trajectory of the past four decades has moved them in that direction. China’s trajectory has moved in the opposite direction, from a poor agricultural economy to the world’s largest manufacturer and electricity producer within a single generation. Whether these trajectories continue depends on institutional choices, class configurations, and geopolitical contingencies that no analysis can predict with confidence. What the evidence does establish is that the hierarchy of nations measured by productive capacity differs substantially from the hierarchy measured by market exchange rates, and that analysts who rely on the latter will misjudge the balance of power until a crisis exposes the gap.
Authored By: Global GeoPolitics
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Reference
European Commission (2023) European Defence Industry Reinforcement through Common Procurement Act (EDIRPA). Brussels: European Commission.
Herman, E. S. and Chomsky, N. (1988) Manufacturing Consent: The Political Economy of the Mass Media. New York: Pantheon Books.
International Energy Agency (2025) Electricity Information 2025. Paris: IEA.
International Institute for Sustainable Development (2025) *Global Manufacturing Scorecard*. Winnipeg: IISD.
International Monetary Fund (2025) World Economic Outlook Database, October 2025. Washington, DC: IMF.
Lazonick, W. (2014) ‘Profits without prosperity’, *Harvard Business Review*, 92(9), pp. 46–55.
Marx, K. (1894) Capital: A Critique of Political Economy, Volume III. London: Penguin Classics (1991 edition).
National Bureau of Statistics of China (2025) Statistical Communiqué on the 2024 National Economic and Social Development. Beijing: NBS.
World Bank (2025) World Development Indicators: Manufacturing, Value Added (% of GDP). Washington, DC: World Bank.
World Bank (2022) Four Decades of Poverty Reduction in China: Drivers, Insights for the World, and the Way Ahead. Washington, DC: World Bank.
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