What Is National Power?
Xi Jinping Victory Day Parade 2025, from State Council People’s Republic of China
It is very much understood in the international relations academic community that the size of a country’s economy has a very large effect upon its ability to project its power abroad and to successfully execute and win military conflicts. In WW2 it was the overwhelming productive forces of the US that helped support the Allied victory. It was also the incredible ability of the Soviet Union to successfully transfer so much of its industry away from the advancing Axis armies and safely behind the Ural mountains that was a prerequisite for its defeat of 85% of the European Axis forces. Germany and its allies simply did not have the productive capacity to overcome both the Soviet Union and the US. Even before Pearl Harbour, the Japanese knew that they could not fight a prolonged war with the huge productive forces of the US.
The question then becomes, how do we measure the relative scale of the productive forces within each nation? One way is to use GDP at current exchange rate prices, but that is both volatile as exchange rates move around, and may also misrepresent relative sizes due to the under and over valuation of exchange rates. A much better way is to take into account relative price levels in each nation to calculate a “Purchasing Power Parity” (PPP) version. Using PPP we get the following for 2024 utilizing the CIA work fact book (in $millions, at exchange rates in brackets).
China US$33,598,000 (US$18,744,000)
US US$25,676,000 (US$29,185,000)
EU US$24,441,000 (US$19,423,000)
India US$14,244,000 (US$3,913,000)
Russia US$6,089,000 (US$2,174,000)
Japan US$5,715,000 (US$4,026,000)
Indonesia US$4,102,000 (US$1,396,000)
Brazil US$4,165,000 (US$2,179,000)
Turkey US$3,018,000 (US$1,323,000)
Mexico US$2,883,000 (US$1,853,000)
South Korea US$2,607,000 (US$1,713,000)
Canada US$2,341,000 (US$2,241,000)
Australia US$1,635,000 (US$1,752,000)
Thailand US$1,558,000 (US$526,000)
Iran US$1,486,000 (US$437,000)
Taiwan US$1,473,000 (US$611,000)
Vietnam US$1,456,000 (US$476,388)
Malaysia US$1,212,000 (US$422,000)
Kazakhtsan US$739,385 (US$288,406)
Belarus US$265,220 (US$75,962)
We can see from the above that the PPP numbers provide a very, very different picture from the nominal at exchange rate numbers. The Chinese economy is 31% bigger than that of the US, and 37% bigger than that of the EU. The Russian economy is bigger than that of Japan, rather than being a “gas station with nukes”. Iran’s economy is also shown to be much larger than many perceive in the West.
In a number of articles I have shown that even the PPP calculations for China, and for the US, are very significantly incorrect; under-estimating the size of the Chinese economy and over-estimating the size of the US economy. Here, I posit that Chinese GDP per capita is about two thirds of that of the US when accounting for all of the US statistical games and rentier profits counted as output. Others have done detailed analyses and come to approximately the same conclusions.
If we only look at the “covered“ basket, though, CF40 found that the same basket should be worth $24,748 under the US price system; meanwhile, the comparable basket in the US would be worth $31,150. This suggests that China’s consumption level should be 80% of the US level under this approach.
Estimating the “uncovered” basket is more challenging. But even if we take the most extreme (and very unlikely) assumption that China’s consumption in cultural services, entertainment, dining out, hotels, tobacco, and alcohol is only 10% of the US level, China’s total per capita consumption should still be as high as more than 50% of the US level. The reality, though, should be anywhere between 50% and 80%
With China having a population four times the size of that of the US, that would put Chinese productive power at about 2.66 times that of the US and most probably equal to the whole of the West (US+EU+Japan+South Korea+Canada+Australia+New Zealand). And in any regional war, China will be utilizing all of its productive forces locally, with the full support of Russia.
Ron Unz takes a different approach, arguing that the service sector of the economy should be excluded as so much of it is not relevant to national power. He simply takes the agriculture plus the industry sector sizes from the CIA world fact book and ignores the services number. For the US, services were 79.7% of the economy in 2024, while only 56.7% for China and 57.5% for Russia; and 66.1% for the EU. The US can be seen as a massive outlier, most probably due to its ridiculous calculation and inclusion of the mythical “homeowners equivalent rent” (8% of GDP) and the colossal inefficiency of its healthcare sector (18% of GDP, vs. 10.4% for the EU, 5.6% for China, and about 5% for Russia). What does Mr. Unz’s approach produce, in $millions?
China US$14,548,000
EU US$6,526,000
India US$5,826,000
US US$4,673,000
Indonesia US$2,129,000
Russia US$2,034,000
Japan US$1,686,000
Brazil US$1,120,000
Mexico US$1,021,000
Turkey US$950,670
South Korea US$865,524
Iran US$734,084
Vietnam US$720,720
Taiwan US$658,854
Thailand US$635,664
Canada US$629,729
Malaysia US$$549,036
Australia US$461,070
Kazakhstan US$261,003
Belarus US$99,722
This puts the Chinese productive forces at 2.23 times that of the EU, and 3.11 times that of the US, and only slightly smaller than the whole of the collective West; by only US$951 billion. If we add Mexico to the West, and Russia, Iran, Kazakhstan and Belarus to China, then BRINCISTAN (Belarus, Russia, Iran, North Korea, China, Iraq, the Stans) is the significantly larger bloc. That is without counting the productive capacity of North Korea.
Some, quite correctly, will argue that some of the “services” sector is really an embedded part of the productive forces and they would have a point. But given the very significant under-estimation of Chinese GDP utilizing PPP calculations that have been pointed out, I would tend not to see that as materially changing the relative positions above.
Another point, which is extremely important, is the technological level of the productive forces. The same amount of output, but one of gatling guns and the other of spears, can have very different impacts on national power. It is here that India falls down the most, being far behind the West. In contrast, China is at least the equivalent of the West in technological level; with many indicators pointing to China moving to higher levels than the West. In addition, Russia has shown itself to be ahead of the West in some technologies, such as hypersonic missiles. And both China and Russia have the ability to strike both Europe and the United States with such missiles.
The current reality is that China could win a military conflict with whatever forces that the West could concentrate within its region; the lengthier the conflict the more overwhelming would be China’s advantages. And that is without the probability that both South Korea and Japan may prefer self-preservation to taking part in such a conflict.
With respect to the ongoing economic conflict, the Chinese economy keeps rolling along at 5% GDP growth while the USA grows between 2% and 3% (and that’s with the fraudulent inflation calculations and vast rentier profiteering), and the EU at between 1% and 2%. Most recently, we are seeing the implosion of German industry under the combined impacts of the cessation of cheap Russian hydrocarbons and increasing Chinese competition; with German industrial production down 4% y-o-y in August, concentrated within the automobile manufacturing sector. German industrial production is still 15% below the pre-pandemic level. French industrial production is flat y-o-y and 6% below its pre-pandemic level, while UK industrial production is just above pre-pandemic levels and flat y-o-y. In all three countries, industry is falling into recession. US industrial production is still below pre-pandemic levels, and grew 1% y-o-y in August. Japanese industrial production was down 1.6% in August 2025, and is still below 2019 levels. In contrast, Chinese industrial production is 37% higher than the pre-pandemic level and is growing at a rate of 5% per annum. Russia also quickly overcame Western sanctions, and its industrial production is significantly above pre-pandemic level and is growing at about 3% per annum.
With China’s vast highly-educated and trained technological workforce being used to dominate one industry sector after another, actively undermining and destroying the productive forces of the West. To the point where Western corporations are preferring to use China as a production base to serve not just China, but also the rest of the world outside the West.
Another factor international relations scholars point to is “soft power”, most especially the relative power provided by the international community’s view of each nation. Unfortunately for the West, their open involvement in the Gazan genocide has trashed that image whilst China’s image has risen. With China moving to become a climate change action and clean energy powerhouse, and also a supporter of global free trade in contrast to the US, China’s relative reputation can only increase further and that of the West deteriorate further.
The US especially does have other advantages. Firstly, its ability to print its own currency to pay for its vast overseas network of military bases as the provider of the reserve currency; although that perquisite is slowly but surely eroding. Another are the ethnic European comprador elites in Latin America, but even here things are slipping. The Mexican governments of Obrador and now Sheinbaum have been slowly establishing a greater level of popular governance and sovereignty. While Trump’s ridiculous treatment of Brazil very much threatens to turn its economic elite toward the China that is already its largest trading partner.
But even worse, the Trump administration’s tariff war, involvement in the Gaza genocide, and insults toward other nations have turned an ASEAN which includes Thailand, Vietnam, Malaysia and Indonesia toward China. Then even worse again, the same factors are tending to move India off the fence and more toward China and Russia, with the “Quad” of the US, Japan, India and Australia all but dead. The defeat of Ukraine by Russia will also add the manufacturing heartland of the old Soviet Union, as well as extensive natural resources.
As we are seeing with the new assertiveness of China with respect to the US attempts at economic and financial bullying, it is the former that now has the upper hand with respect to the latter. The fact that China has in fact already overtaken the US in national power will become more and more blatantly obvious in the next decade, only somewhat hidden by China’s preference for a multipolar world and respect for other nation’s sovereignty in contrast to the US unilateralism and interventionism. China will have “won” without fighting, the truest sign of a Great Power if we use the insights of Sun Tsu who believed that to subdue the enemy through strategy and intelligence rather than direct conflict is the supreme art of war. With a little help from the somewhat less strategic and intelligent Western planners and policy makers.