There is a particular kind of institutional courage involved in admitting you were wrong, especially when your wrongness shaped the economic destinies of dozens of countries. The World Bank has just published a major new report on industrial policy, and in the foreword, its Chief Economist concedes that the institution’s earlier warning against using industrial policy “has not aged well — it has the practical value of a floppy disk today.” This is an unusually candid admission from one of the world’s most powerful international organisations. And it deserves a closer look, both for what it says and for what it doesn’t.

1993 and the triumph of free-market orthodoxy at the World Bank

In 1993, the World Bank published The East Asian Miracle, a report that would go on to shape development thinking and policy for a generation. Its central argument was that South Korea, Taiwan, Singapore, Hong Kong and other high-performing Asian economies had succeeded primarily because of market-friendly policies: low price distortions, macroeconomic stability, openness to trade, and letting comparative advantage guide which industries developed. The state's role, where acknowledged at all, was cast as facilitative rather than directive — getting the basics right and then stepping back.

This was a selective reading of the evidence, to put it generously. The same report actually acknowledged, in some detail, how governments in these economies had intervened: through targeted and subsidised credit to selected industries, protection of domestic producers, and the deliberate steering of investment into sectors the state had chosen to develop. But having noted this, the report essentially waved it away — concluding that industrial policy was secondary rather than fundamental, and that other developing countries should avoid replicating industrial policy from East Asia, to the degree it had been pursued there.

In other words: yes, industrial policy was present in East Asia — but that wasn’t really why these economies were so successful, and you probably couldn’t replicate it anyway. Active state intervention was to be treated with suspicion. Developing countries were instead counselled toward fiscal discipline, liberalisation, and integration into global value chains on whatever terms were available.

The evidence against the World Bank’s neoliberal position was strong, even around that time. In fact, in the 1980s and 1990s, many political economists documented in great detail how state intervention, rather than free markets, was the driver behind East Asian development. Alice Amsden, Ha-Joon Chang, Peter Evans, Chalmers Johnson, and Robert Wade, to name a few, all published books about the role of industrial policy in East Asia that became hugely influential. Although to some degree acknowledged, The World Bank chose mostly to treat this body of work as caveats to the main conclusion in their 1993 report.

East Asia wasn’t the only counter-evidence available. The historical record of Western industrialised nations tells a similar story. The United States built its industrial base behind high tariff walls throughout the nineteenth century, while also benefiting from enormous state investment in infrastructure, land grants to railroads, and federally-funded research. Britain had practised heavy mercantilism and, especially under Robert Walpole in the eighteenth century, actively pursued industrial policy through protective tariffs, selective import duties, and export bounties. The countries now prescribing free markets to the developing world had, almost without exception, industrialised under conditions of significant state intervention and protection.

The global consequences of the World Bank’s stance in its 1993 report should not be understated. This institution was one of the most powerful shapers of development policy across the Global South, through its lending conditions, technical assistance, and the broader intellectual climate it set. In the 1980s, 1990s and 2000s, industrial policy effectively became treated as a curiosity worldwide: fine, perhaps, in a few exceptional cases, but something you should remain fundamentally sceptical of. The prescription instead for developing countries was liberalisation, privatisation, and faith in market forces.

The development ladder was being kicked away, and the World Bank was partly doing the kicking.

The U-turn: industrial policy re-enters the room

Three decades later, the World Bank has reversed course. The new report, published last week, concludes that industrial policy “should be considered in the national policy toolkit of all countries” — a statement that would have been heretical by the institution’s own standards in the 1990s. The new report even makes explicit reference to its old 1993 report, admitting that they wrongly stigmatised industrial policy. The U-turn has been made so clear that even The Wall Street Journal ran a story about the new report under the headline: “World Bank Embraces Industrial Policy, Abandoning Three Decades of Stigma.”

Why now? This is the most interesting question. And the honest answer has two parts.

The first is straightforward. Industrial policy is experiencing a revival, driven by new realities in the world economy that demand more state intervention, such as great-power rivalries, supply chain fragilities, national security concerns, the geopolitics of the green transition, and the downfall of the rules-based international order.

But there is a second, less flattering explanation worth sitting with.

The World Bank is not a neutral arbiter of economic knowledge. As I have written previously in my newsletter, it is an institution where the interests of wealthy nations — and Western nations above all — are deeply entrenched. And the economic doctrine that the World Bank propagated so forcefully from the 1980s onward — free trade, privatisation, minimal state intervention — was not only ideologically loaded, it was also about maintaining a certain hierarchy in the world economy. As Quinn Slobodian documents in Globalists, the neoliberal project was never simply about “freeing” markets. It was about constructing an architecture of international rules that locked in the dominance of wealthy nations and made it difficult for developing countries to pursue the kinds of industrial policies that the rich world had itself relied upon historically.

That architecture served the West well. Open markets in the developing countries provided Western corporations with cheap labour, cheap goods, and cheap inputs. The stigmatisation of industrial policy was, in this context, a feature rather than a bug — it kept developing countries from doing what rich countries had always done.

What has changed is not the World Bank’s understanding of development economics. The evidence for industrial policy was always there. What has changed is the geopolitical context. Western nations now actively need industrial policy to compete, especially with China. Semiconductor supply chains, electric vehicle manufacturing, critical minerals processing — these are the battlegrounds of great power competition. It is simply no longer coherent for the West to condemn industrial policy as a relic of misguided statism when it is simultaneously practising it on a large scale.

In this light, the World Bank’s U-turn looks less like an intellectual awakening and more like an institutional adjustment to new political realities. The report does, to its credit, make the case for industrial policy in all countries, including developing ones. But we should be clear-eyed: the doctrine shifted because the interests of powerful states shifted, not because development economists suddenly discovered new evidence.

Lessons beneath the reversal

None of this should diminish the genuine commitment to international development among many of the World Bank’s economists. And the new report will provide valuable political cover for developing countries that have long wanted to pursue industrial policy but faced pressure — from the World Bank, from the IMF, from bilateral donors — to hold back.

But it would be naive to take the report at face value as a straightforward act of intellectual honesty. Institutions like the World Bank do not change their minds simply because the evidence changes. They change when the political winds shift. The winds have shifted because powerful countries have decided, for their own reasons, that industrial policy is back on the menu.

The lesson for developing countries is not to wait for the World Bank’s blessing before actively pursuing industrial policy. In fact, many East Asian countries have in the past pursued industrial policy in explicit defiance of World Bank advice. The only thing that has changed is that the world’s most powerful economies are now doing industrial policy so openly that it can no longer be denied to the rest of the world.

I recently had an exchange on Twitter/X with Jonathan Rosenthal, the international editor of The Economist, about China’s economic rise. In response to a post I made on China’s contribution to global poverty reduction, Rosenthal wrote: “China’s rise was almost entirely enabled by liberal economies opening up their markets to Chinese goods.” This is a view shared widely among those with a neoliberal or free-market inclination, which tends to argue, in more general terms, that China’s rise was enabled by trade liberalisation, privatisation, and closer integration with liberal capitalist economies in the West.

I believe this perspective is misleading. While trade liberalisation and access to Western markets surely did assist China’s economic development, China developed by defying, not conforming to, tenets of free trade. China fought tooth and nail with active state intervention to escape a subordinate position in the world economy — a position that Western liberal economies welcomed and wanted China to occupy so they could benefit from cheap and efficient Chinese labour.

Plenty of developing countries have been given access to the markets of Western liberal economies but have remained in subordinate positions. Why did China succeed where other developing countries failed? Because China successfully used trade policy and industrial policy to defy the deeply asymmetric structures of the capitalist world economy, which were largely put in place to benefit the West.

China liberalised, yes — but in a highly interventionist and controlled manner. The difference between China and other developing countries that liberalised under external compulsion is not one of degree. It is one of kind.

Consider capital account controls. While China opened up to trade and private capital, it maintained tight controls over the flow of capital in and out of the country. This gave the state the ability to manage the exchange rate to keep exports competitive, shield the financial system from the kind of speculative capital flows that devastated economies across East Asia, Latin America, and Sub-Saharan Africa in the 1990s, and channel domestic savings through state banks toward priority sectors rather than allowing them to be siphoned offshore. Many developing countries that liberalised their capital accounts did so under pressure from Western institutions. The consequences were often catastrophic.

Or consider more specifically how China handled foreign direct investment. In most developing countries, foreign firms often operate as enclaves, extract profits, and transfer little technology. This is the classic pattern of subordinate integration into global value chains: you get the low-wage jobs, but not the capabilities or skills to upgrade. China’s approach was fundamentally different. China’s joint venture requirements forced foreign firms to partner with Chinese state-owned or domestic firms as a condition of market access. Technology transfer was often legally mandated or structurally incentivised. Companies like GM and Volkswagen had to bring Chinese partners in and co-produce domestically.

State ownership is another important matter. Neoliberal orthodoxy has often demanded privatisation of state-owned enterprises. Countries that complied — across Latin America and Sub-Saharan Africa — typically saw strategic industries sold off, stripping the state of its capacity to retain control over strategic industries and resources. China selectively reformed its state-owned enterprises but did not wholesale privatise them. Banking, steel, energy, telecommunications, aerospace — these commanding heights remained state-controlled. This meant the state could direct credit to strategic sectors at below-market rates. It meant profits could be retained within the national economy rather than remitted abroad. And it meant state-owned enterprises could be deployed as vehicles for international expansion.

None of these strategies — capital controls, forced technology transfer, state ownership of strategic sectors — are consistent with neoliberal doctrine. They are, in fact, direct violations of it. And they are precisely why China’s integration into the world economy produced industrial upgrading rather than permanent subordination.

If we look at other examples of successful catch-up development in the 20th century, the pattern is clear. The countries that escaped a subordinate position — primarily in East Asia — did so by actively employing industrial and trade policies that defied neoliberal principles. They liberalised strategically and gradually, on their own terms, often in direct opposition to neoliberal logic. South Korea, Taiwan and Singapore all heavily protected their infant industries, directed credit through state-controlled banks, and used state-owned enterprises as instruments of industrial strategy.

China escaped subordination not by rejecting globalisation wholesale, but by refusing to liberalise on the terms of the West. And the fact that China became an economic juggernaut through actively defying neoliberal doctrine is precisely why we are seeing an anxious response from Western liberal economies. They are struggling to accept — and even comprehend — a world economy in which they are no longer at the top of the food chain.

In a recent episode of The Weekly Show, Jon Stewart sat down with Richard Thaler, the Nobel Prize-winning behavioural economist whose work on human decision-making has rightly earned him enormous respect. What was supposed to be a discussion about how behavioural economics can shed light on the state of the economy quickly became a clash between a comedian asking basic questions about power and politics, and an economist who struggled to answer them.

Stewart pushed Thaler on the political nature of economics. “The government always picks winners and losers and then pretends like that’s something that they can’t do,” he said. “All markets are designed to some extent.” Thaler’s response was often to retreat into abstraction, “back in the world of inside an economist’s head.” Stewart’s reaction — “Oh boy” — captured the frustration perfectly.

Stewart’s questions — about power, about the nature of capitalism, about how political choices are disguised as technical ones — were entirely legitimate, motivated by what he’s observing in the real world. And the fact that a Nobel laureate couldn’t convincingly address them tells us something important: economics has become a discipline detached from questions of politics, despite the fact that economics is intrinsically and unavoidably political.

The politics that economics pretends isn't there

Open an introductory economics textbook and you will find supply and demand curves presented as if they operate in a political vacuum. You will find models of international trade that fail to examine how trade agreements are shaped by corporate lobbying and geopolitical power. You will find labour market models where wages reflect “marginal productivity” without discussing how labour laws, union suppression, and offshoring determine what workers are actually paid. You will find models of economic growth as a function of capital and technology, but rarely as a function of the colonial plunder and slave labour that made that accumulation possible.

Perhaps most pervasively, mainstream economics treats markets more or less as naturally occurring phenomena — as if they simply emerge when people are left to their own devices. They don’t. Markets are constructed by laws, maintained by institutions, and enforced by states. Karl Polanyi made this point with devastating clarity in The Great Transformation, published in 1944. In the book, he noted that there was nothing natural about laissez-faire. The construction of a supposedly “free market”, Polanyi argued, required enormous state intervention — in law, in policy, in the very restructuring of social relations:

The road to the free market was opened and kept open by an enormous increase in continuous, centrally organised and controlled interventionism (…) Administrators had to be constantly on the watch to ensure the free working of the system. Thus even those who wished most ardently to free the state from all unnecessary duties, and whose whole philosophy demanded the restriction of state activities, could not but entrust the self-same state with the new powers, organs, and instruments required for the establishment of laissez-faire.

Monetary policy is another fitting example that illustrates the political nature of economics. Decisions about interest rates, inflation targets, and financial regulation are routinely framed as “neutral” or “objective.” But they are highly political. Low interest rates tend to favour borrowers, asset owners, and financial markets. High interest rates protect savers but can raise unemployment and slow growth. When the US Federal Reserve or the European Central Bank sets monetary policy, it is making choices that redistribute wealth across society. Even the mandates of these institutions are products of political decisions. The emphasis placed on price stability in Western central banks rather than, say, regulating private finance — which China’s central bank places high priority on — reflects value judgments as well as political lobbying. And delegating any of these decisions to “independent” central banks does not make them apolitical. It simply obscures the politics behind a veneer of technocratic expertise.

Then there are government budgets, which are, at their core, moral and political documents. Progressive versus flat taxes say something about a society’s attitude towards fairness and inequality, rather than just “pareto optimality” or efficiency. Spending on defence versus healthcare versus education signals what, and who, a society values. The choice between austerity and stimulus reflects deeper beliefs about responsibility, risk, and social obligation. When institutions like the International Monetary Fund and the World Bank push specific austerity policies on developing countries — as they have done relentlessly for decades through structural adjustment programmes — they do so with ideological assumptions about the dysfunctional role of the state and the primacy of free markets.

How economics became a "science"

Some economics textbooks and classrooms do touch on these political questions — but typically as asides, overshadowed by mathematical optimisation problems. This was certainly my experience studying for a BA in economics. There were no rigorous discussions about the political nature of economics or the evolution of capitalism. One of our professors told us outright that it was not their job to teach us the economics of the real world, but rather to equip us with the technical skills to understand the economy. What he failed to realise is that, alongside some useful maths and stats, he also taught us how to misunderstand the economy. A framework stripped of politics and philosophy doesn't just leave gaps in students' knowledge, but also fills those gaps with assumptions they may never think to question.

It wasn’t always like this. Adam Smith and Karl Marx, two of the most important historical figures in the discipline of economics, both treated economics as an inherently political subject — despite their ideological differences. They didn’t even call it “economics.” They called it political economy. For Smith, the study of wealth creation was inseparable from questions about the state, social class, and moral philosophy. For Marx, the economy was a system of power relations, not merely a set of exchange mechanisms.

So, what happened? In the 1870s, a group of prominent economists — William Stanley Jevons, Carl Menger, and Léon Walras — launched what became known as the marginalist revolution. They shifted the focus of economics away from production, class, and power towards subjective individual preferences and mathematical optimisation. Value was no longer determined by labour or social relations; it was determined by marginal utility — by how much satisfaction the last unit of a good provides to an individual consumer. The marginalist revolution laid the foundation for neoclassical economics, which today dominates mainstream economic thinking.

This was both a theoretical and methodological shift. Jevons declared that economics, as a science concerned with quantities, is necessarily mathematical. Walras constructed elaborate systems of equations to describe general equilibrium, scarcely backed up by empirical evidence. Economics increasingly modelled itself on physics because it wanted to be seen as a “real” science — what the historian Philip Mirowski has called “physics envy”. Economists started borrowing the mathematical tools of physics but fatally ignored the fact that it was impossible for a social science to replicate the empirical rigour of a natural science. Mirowski doesn't pull any punches in his critique of the marginalist revolution:

The marginalists appropriated the mathematical formalisms of mid-nineteenth-century energy physics, made them their own by changing the labels on the variables, and then trumpeted the triumph of a truly ‘scientific economics.’ Utility became the analogue of potential energy (…)This little blunder rendered neoclassical economics essentially incoherent.

Over the following decades, economics gradually detached itself from the other social sciences. Where it had once been in conversation with history, philosophy, sociology, and political science, it now aspired to stand alone as a “hard science.” Alfred Marshall, in his enormously influential Principles of Economics, pointedly dropped “political” from the title. The message was clear: economics was no longer a branch of political inquiry. It was a technical discipline with its own laws, its own methods, and its extremely questionable claim to objectivity.

The result has been unfortunate. Far too many economics graduates today can build models but cannot explain what is happening in the actual economy. They can derive an “optimal” tax rate under a set of assumptions but cannot discuss the political forces that determine whether that tax rate is ever implemented or, even more importantly, should be implemented. They understand calculus but have probably never read Marx, Smith or Polanyi.

As Angus Deaton — himself a Nobel laureate in economics — has observed, the discipline has serious blind spots. In a remarkably candid essay entitled “Rethinking my Economics”, he identifies major shortcomings of mainstream economics, including the neglect of power in economic analysis, the excessive valorisation of efficiency over social justice, and lack of humility vis-a-vis other social sciences. In particular, he laments how economics has become unconcerned with ethics.

In contrast to economists from Adam Smith and Karl Marx through John Maynard Keynes, Friedrich Hayek, and even Milton Friedman, we have largely stopped thinking about ethics and about what constitutes human well-being. We are technocrats who focus on efficiency. We get little training about the ends of economics, on the meaning of well-being.

Reclaiming the political

There are certainly economists who understand the political nature of their subject. And there is a reason why economics graduates are highly employable compared to their social science counterparts — they tend to develop strong technical skills, which are valued in the labour market. I am not suggesting that economics degrees or economists are useless.

But the de-politicisation of economics has had unfortunate consequences. When economic decisions are presented as purely technical, this runs the danger of camouflaging politics as science. When students are trained to think of markets as natural and governments as a force that should only step in when markets fail, they are unknowingly being equipped with ideology.

Economics is fundamentally political — it has never been, and never will be, a value-free science. At its core, economics is shaped by ideologies, human morality, competing interests, social norms, and political priorities. Pretending otherwise does not make economics more rigorous. It makes it more dangerous. Economics was born as political economy for a reason.

The idea that developing countries can bypass manufacturing and leapfrog straight to services has become more fashionable. Services are becoming a more important source of economic growth and commercial activity, and many question whether traditional industrialization still matters — or is even possible. India’s business process outsourcing boom, UAEs success with financial services, and the Phillippines’s call centre surge are all held up as proof that countries can potentially skip factory-based production.

We should acknowledge new service-based development opportunities. But the notion that countries can skip industrialization is mostly wishful thinking. The evidence shows that very few countries have developed without a strong, competitive manufacturing base. The reason is that services cannot replace what manufacturing uniquely provides: sustained productivity growth, innovation, trade, and the foundation for a strong economy.

The historical record is clear

Virtually every country that has successfully transformed from poor to rich has done so through industrialization. Between 1750 and 1950, the West’s establishment as the world’s economic hegemon was fundamentally a process of becoming the world’s manufacturing hegemon. Since 1950, this pattern has persisted with remarkable consistency. A World Bank study published in 2008 identified 13 countries that sustained annual growth rates of 7% or higher for a period of 25 years or longer. Among these growth miracles, only two — Botswana and Oman, both small countries with highly idiosyncratic economic structures — achieved this without manufacturing-led development. Every other country on that list built its prosperity by expanding manufacturing capabilities.

More recent data by the UN Industrial Development Organisation (UNIDO) arrive at similar conclusions. In their Industrial Development Report 2026, they highlight that 64% of growth episodes over the last 50 years can be directly attributed to manufacturing. Specific case-study evidence strengthens this hypothesis. The two most successful economic development stories of recent times as measured by sustained economic growth, China and Vietnam, achieved rapid growth through export-led industrialization. Both countries are currently two of the world’s strongest manufacturing economies (China, unquestionably, being the strongest).

In fact, the full historical record shows that no country except a few natural-resource rich states (mostly oil-dependent) or tiny financial havens has achieved high living standards without developing a competitive manufacturing sector. This is why “industrialized country” and “developed country” are used interchangeably.

The flip side tells the same story. Regions that have experienced premature de-industrialization have suffered growth slowdowns. Latin America, which went through severe de-industrialization in the 1980s and 1990s, saw manufacturing’s declining share of GDP coincide with decelerated growth. In Africa, premature de-industrialization caused negative economic growth in the same time period. Even OECD countries have experienced growth slowdowns alongside deindustrialization in the past few decades.

Manufacturing remains the engine of productivity growth and innovation

The new appeal of services is understandable, and we shouldn’t discount them. Many digital services do indeed provide some innovation and development. Megacities in India, such as Bangalore and Hyderabad, are prime examples. But when we examine what fundamentally drives productivity growth and innovation, manufacturing retains fundamental advantages that services struggle to match.

Manufacturing activities lend themselves more easily to mechanization and chemical processing. This, combined with the ease of spatially concentrating manufacturing production, enhances the potential of productivity growth through economies of scale — both static based on output level and dynamic through learning-by-doing effects. These advantages are difficult for services to replicate.

Additionally, studies using global input-output data find that manufacturing generates significantly higher productivity spillovers to other sectors than services do. Manufacturing also demonstrates stronger backward and forward linkages — purchasing inputs from and selling outputs to a wider range of sectors — which amplifies its impact on the broader economy.

The innovation dimension is perhaps the most crucial one. Manufacturing firms spend heavily on research and development (R&D), generating strong innovation spillovers throughout the economy. In fact, manufacturing is attributed to 53% of global R&D activity. Manufacturing provides the material foundation for innovation, creates demand for new technologies, and enables the accumulation of productive capabilities that underpin further innovation. While some knowledge-intensive services like software development also drive innovation, the connection between manufacturing and technological progress runs deeper.

The evidence and arguments I’ve presented so far are captured quite well in the figure below — sourced from UNIDO’s Industrial Development Report 2026 — which shows how manufacturing is strongly connected to innovation, job creation, and economic development.

Manufacturing drives international trade

One reason the “services revolution” narrative has gained traction is that trade in services has expanded. Thanks to digitalization and the internet, many services can now be delivered remotely. India’s IT services, the UK’s financial services, and the growth of business process outsourcing all seem to validate services as a new engine of trade-led development.

But when we examine the evidence carefully, manufacturing remains dominant in international trade — and this matters enormously for economic development. Export of goods (dominated by manufactured goods) accounts for roughly 80% of all global exports. Exports allows countries to specialize, achieve scale, and become competitive, all of which accelerate productivity growth and technological development. Manufacturing has historically been far more tradable than services, and this advantage persists.

Manufacturing goods are inherently more storable, standardizable, and transportable than most services. Manufacturing also benefits more strongly from “learning by exporting”— firms competing in manufacturing are forced to innovate and improve productivity. A factory can produce for millions of global consumers; most services remain constrained by local demand. For developing countries trying to achieve rapid transformation, accessing global markets through manufacturing exports has proven indispensable.

Of course, some services that are tradable also enjoy these benefits. However, because a majority of services cannot be traded, the symbiosis between exports and industrialization are stronger. No one has yet found a way to remotely cut someone’s hair, clean someone’s house, serve someone’s food, build someone’s house, or mow someone’s lawn.

Automation is not the threat it’s made out to be

Perhaps the most common objection to manufacturing-led development today is that automation will eliminate the jobs that made industrialization so powerful for development in the past. If robots can perform the routine tasks that once employed millions in textile factories and assembly lines, won’t automation close off the manufacturing pathway for today’s developing countries?

This fear is understandable but overstated. Since the first Industrial Revolution, societies have witnessed continuous workforce disruptions from technological change. The Luddites in 1811 feared automation would destroy textile jobs — and for some artisans it did. But the broader industry saw employment growth because automation increased productivity, lowered prices, and created new jobs.

More recently, automation in manufacturing has generally not led to net job losses. A study of Spanish manufacturing firms from 1990 to 2016 found firms using robots generated employment because output gains outweighed labor intensity reductions. The UN Industrial Development Organization calculated that the growth in industrial robot stock had a positive effect on global employment from 2000 to 2014.

For developing countries, multiple barriers limit automation’s impact. Most automation technologies are developed for high-wage contexts and only become economically viable when labor costs are high. In labor-intensive industries like textiles and food processing, automation often cannot compete with low-cost labor. A report by the UN Conference for Trade and Development notes that “what is technically feasible is not always economically profitable.”

The most sophisticated forecast studies predict workforce reorganization rather than mass unemployment. McKinsey estimates that 3-14% of the global workforce will need to switch occupational categories by 2030 — consistent with historical workforce reorganizations, not an unprecedented crisis. Automation may transform manufacturing, but it won’t eliminate manufacturing’s role in economic development.

China’s labour-intensive industrialization in particular challenges the idea that automation inevitably displaces workers. Labour absorption in China’s manufacturing ecosystem has remained strong alongside the rapid adoption of industrial robots. China’s manufacturing ecosystem currently employs roughly 200 million workers — more than a quarter of the national workforce — demonstrating an exceptional capacity for labour absorption (estimates vary depending on how one defines the manufacturing ecosystem).

This strong labour retainment in manufacturing (China’s peak was reached in the early 2010s) has occurred in parallel with one of the highest growth rates of industrial robot adoption in the world. China’s installed stock of industrial robots grew ten-fold from 2014 to 2024 — from approximately 200,000 to 2,000,0000. China’s stock of industrial robots is currently the highest in the world, dwarfing all other countries.

While automation has undoubtedly displaced some workers within China’s manufacturing sector — and employment in China’s manufacturing ecosystem has slightly declined from its peak in the early 2010s — the overall evidence shows that large-scale labour absorption in manufacturing can coexist with, and even accompany, the diffusion of advanced industrial automation technologies.

Is China crowding out industrialization elsewhere?

China’s manufacturing dominance raises an obvious concern. If China’s share of global manufacturing, which now stands at 35%, keeps growing, doesn’t this necessarily crowd out industrialization opportunities for other developing countries?

The claim that China’s manufacturing dominance is preventing industrialization elsewhere overlooks a crucial fact: very few countries managed to industrialize successfully even before China’s manufacturing boom. Most countries that struggled to develop manufacturing capabilities in the 1960s, 1970s, and 1980s — long before China became the world’s factory — continue to struggle today. China didn’t create the barriers to industrialization that most developing countries face.

More tellingly, Vietnam, the country with the most impressive growth of manufactured exports per capita, is heavily integrated into China’s manufacturing ecosystem. Vietnam’s industrialization success contradicts the crowding-out hypothesis. Rather than being blocked by Chinese competition, Vietnam has leveraged its connections to Chinese supply chains, technology, and investment to rapidly build competitive manufacturing capabilities. This suggests that proximity to China’s industrial base can enable rather than prevent industrialization when countries pursue the right strategies.

China’s rise does present real challenges — simple math dictates that as one country captures more of the global manufacturing pie, less manufacturing occurs elsewhere. But when we see China partnering with developing countries to enable infrastructure development, energy sovereignty, and manufacturing opportunities, there’s clear evidence that China’s industrial ascent creates also create possibilities for structural transformation.

A recent book investigating China’s rise in Africa highlights that China provides real industrialization opportunities for the continent. It highlights two channels through which China contributes to industrialization in Africa: (a) infrastructure finance and construction, and (b) direct investment in manufacturing. The book, however, does emphasise that outcomes are uneven and highly dependent on national policy and agency. African governments, firms, and workers negotiate, contest, and shape these outcomes. In particular, the state’s ability to discipline capital and proactively steer industrial policy is crucial.

Making things still matters

Most successful development stories — from Britain’s Industrial Revolution to South Korea’s transformation to China’s ascent — have run through the factory floor. Manufacturing drives productivity through economies of scale that services struggle to replicate. It generates innovation spillovers that ripple through entire economies. It enables countries to access global markets at a scale services cannot match. And contrary to fears about automation eliminating manufacturing jobs, countries like China demonstrate that manufacturing can absorb hundreds of millions of workers even as robots proliferate.

Services are of course not unimportant. Digital platforms, financial services, and business process outsourcing create real opportunities for development. But they cannot replace manufacturing’s role as the engine of sustained productivity growth and structural transformation. Countries that have neglected industrialization — or lost it prematurely — have paid the price in terms of slower growth, persistent trade deficits, and diminished innovation capacity.

The factory of the future will look different from the factories of the past. But manufacturing — transforming raw materials into finished products — will remain central to development. The path to prosperity still runs through making things.

In recent weeks, a parade of Western leaders has made the pilgrimage to Beijing: Irish Prime Minister Micheál Martin, Canadian Prime Minister Mark Carney, UK Prime Minister Keir Starmer, Finnish Prime Minister Petteri Orpo. French President Macron visited late last year.

This is unprecedented. For much of the last decade, China was the country Western politicians loved to bash. Now, Western middle powers are queuing up to strengthen ties with China.

Take Canada. Mark Carney struck a deal allowing up to 49,000 Chinese electric vehicles into Canada annually at reduced tariffs in exchange for lower duties on Canadian canola and other agricultural products. Carney framed the agreement as “preliminary but landmark,” pledging to boost Canadian exports to China by 50% by 2030.

Or consider the UK. Keir Starmer’s visit was the first by a British Prime Minister to China in eight years. He brought more than 50 business leaders with him, including executives from HSBC, AstraZeneca, and Jaguar Land Rover. Shortly before the trip, the UK approved controversial plans for a Chinese mega-embassy in London. The message is clear: Starmer wants deeper economic ties with China, and he’s willing to face down critics to get them.

These visits represent a sharp departure. Western politicians have spent years incorporating anti-China messaging into their campaigns, warning of economic coercion, technological theft, and how China’s rise represents a threat to the model of Western liberal democracy. That rhetoric hasn’t entirely disappeared. But the West is clearly choosing more constructive engagement with China.

What’s driving the shift?

The first reason behind this turn toward a more cooperative stance with China is economic. China now dominates global trade and manufacturing, and has a huge domestic market whose purchasing power is steadily growing. Being on good terms with China when it comes to trade is strategic common sense.

Western middle powers have also watched the risks of reckless opposition to China play out during the first year of Trump’s second term. Throughout 2025, Trump escalated trade tensions with China, imposing new tariffs and export controls. China responded by tightening export restrictions, exposing American dependence on Chinese supply chains. China showed the world that it could respond forcefully when challenged. Middle powers took note.

The second reason is that China has established itself as a trusted, cooperative partner in international affairs, especially when compared to the United States. This may surprise those who consume Western mainstream media, but it’s widely understood elsewhere. A global survey by the Alliance of Democracies Foundation found that 79% of countries around the world have a more positive view of China than of the United States. Another global survey by GlobeScan found that favourable views of the United States have fallen sharply, while perceptions of China have improved significantly.

These poll results reflect the fact that China carries itself with more modesty and dignity on the global stage compared to the United States. China has not invaded another country in 46 years, it does not routinely defy UN resolutions, and it does not carry out regime-change operations in foreign countries. For middle powers navigating an uncertain geopolitical landscape, this predictability matters.

The third reason is Trump. His threats to acquire Greenland, his suggestion that Canada should become a US state, and his erratic trade policies have unsettled allies. Many Western governments now view Washington as unreliable. At Davos, Carney warned that “middle powers must act together because if you are not at the table, you are on the menu.” When middle powers weigh their options, China increasingly looks like the more stable choice.

What about the United States?

The Western middle powers are clearly turning over a new leaf on China. But what about the United States? Right now, America is in a strange, ambivalent place with respect to its relationship with China. American exceptionalism has always rested on the belief that the United States is the natural and rightful hegemon of the world. China’s rise challenges that belief at a fundamental level.

Kaiser Kuo describes this psychological challenge exceptionally well in his recent essay, The Great Reckoning. The below passage from the essay — which I have shared in one of my previous pieces but feel compelled to share again — captures perfectly the cognitive battle that Americans are currently fighting in their own minds:

To understand why China sticks in the craw, one needs to appreciate the deeper psychological challenge it poses to US identity. For generations, Americans inhabited a national story that assured them they would always be first in the domains that matter most—innovation, technology, military might, economic dynamism, cultural magnetism. China’s achievements have systematically undermined pillar after pillar of American exceptionalism.

So, are these reflexes being confronted and are Americans finally becoming more ‘pro-China?’ The answer is mixed.

On the one hand, no. China hawks continue to heavily influence policy discourse in the United States. Framing China’s rise as an existential threat is parroted over and over again in US mainstream media. The Washington establishment remains deeply invested in the narrative of China as an adversary.

On the other hand, yes. Trump has softened US tariffs and export controls on China — although they remain extensive — and he often praises his relationship with Xi. But also Trump suffers from ambivalence, routinely slamming Beijing publicly.

The more solid proof of a vibe shift in the United States comes from public surveys. A recent report by the Carnegie Endowment for International Peace found that 62% of Americans believe their lives would not get worse if China gained more power than the United States. These are not the views of a population gripped by fear of China.

The generational divide is particularly striking. Among Americans aged 18 to 29, only 27% said their lives would worsen if China surpassed the United States. Among those 65 and older, 52% held that view. Younger Americans are far less anxious about China’s rise than their elders.

Where are we now?

The West is clearly embracing China. Even in the United States, where China-bashing is still rife, public sentiment is slowly changing. But we need to be clear-eyed about what this entails.

Much of the engagement is pragmatic rather than principled. Western middle powers are pursuing economic opportunities and hedging against an unpredictable United States. The shift is driven by self-interest, not by any newfound commitment to multipolarity.

We also need to recognise that negative views about China are still shared loud and wide across the West — narratives often full of double standards. When China pursues state-led development, it’s characterised as unfair competition. When it seeks technological self-sufficiency, it’s framed as aggression. When it expands its global economic presence, it’s depicted as domination. Yet these are precisely the strategies that most Western countries employ. Reflexive demonisation of China is far from eradicated.

The West’s embrace of China is real, but incomplete. It’s happening at the level of governments and businesses, driven by economic necessity. Public attitudes are shifting, particularly among younger generations. But old habits die hard, and the narrative war continues.

Still, the direction of travel is clear. Western middle powers are pragmatically pursuing engagement. The United States lags behind, caught between its imperial reflexes and reality. But even in America, the ground is shifting.

At this year’s World Economic Forum in Davos, Mark Carney delivered a speech that will likely be remembered as a watershed moment. The Canadian prime minister — a former Goldman Sachs banker, Bank of England governor, and someone most would consider a perfect torch bearer for liberal, rules-based globalisation — made an extraordinary admission:

We knew the story of the rules-based international order was partially false, that the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically, and we knew that international law applied with varied rigour, depending on the identity of the accused or the victim (…) Stop invoking rules-based international order as though it still functions as advertised. Call it what it is: a system of intensifying great power rivalry where the most powerful pursue their interests using economic integration as coercion.

For decades, nations like Canada prospered by participating in what Carney called “rituals” — placing signs in windows to signal compliance with a system they privately knew to be rigged in favour of wealthy nations. The fiction was useful, he conceded, because American-led hegemony provided comfort and prosperity for middle powers in the Global North. But that bargain, Carney declared, no longer works.

Carney’s speech crystallises that the rules-based international order was in many ways a facade — and now, it’s firmly dead. But how exactly did it die? My view is that its death unfolded in three distinct phases (or by three distinct ‘blows’). First, by design. Then, by Trump’s wrecking ball. And finally, by Carney’s confession.

Blow number one: the order was rigged from the start

The rules-based international order emerged from the ashes of World War II, supposedly to ensure global cooperation and prosperity through institutions like the United Nations, the International Monetary Fund, the World Bank, and later, the World Trade Organization. The rhetoric was lofty: multilateralism, sovereign equality, global development and collective security would replace the law of the jungle. But in reality, these institutions were designed to entrench the dominance of the world’s wealthiest nations — and those nations knew it.

Take the IMF and World Bank. Both institutions operate based on a weighted voting system where economic power translates directly into political control. The United States holds effective veto power over all major decisions, and together with the rest of the G7 and European Union, controls well over half the vote in both agencies. If we look at voting power in per capita terms, the undemocratic nature of these institutions becomes immediately visible. In the IMF, for every vote that a person in the United States has, a person in Kenya has 1/20th of a vote, and a person in India has 1/25th of a vote. In the World Bank, for every vote a person in the United States has, a person in China has 1/20th of a vote. In any democratic polity, we would reject the notion that rich people should have more voting power than poor people. Yet such plutocracy is normalised in institutions that claim to govern the global economy.

These power imbalances help explain how the IMF and World Bank could get away with imposing structural adjustment programmes and austerity across the Global South for four decades. These programmes — focused on privatisation and forced market liberalisation — created lucrative profit opportunities for multinational corporations based in the Global North while devastating developing countries. During the 1980s and 1990s, structural adjustment caused incomes to decline and poverty to rise across much of Africa and Latin America, in some cases triggering decades of recession.

The WTO also operates through a facade of consensus that masks profound asymmetries. The dominant economic powers often establish agendas before trade rounds even begin, inviting select developing countries to “Green Room” meetings where key decisions are made behind closed doors. Throughout these negotiations, poorer nations remain at the behest of wealthy countries, often unwilling to contest predetermined proposals for fear of economic consequences. In fact, researchers studying the WTO have found that small groups of powerful, high-income countries were deliberately using their power and market influence during the round of trade negotiations that led to the formation of the WTO (the Uruguay Round) to rewrite the rules of international trade to the advantage of corporations based in its countries.

The liberal establishment knew the system was rigged. They knew trade rules were enforced asymmetrically, that international law applied with varied rigour depending on who violated it, and that institutions like the IMF and the World Bank could destroy economies while claiming to save them. But the fiction served their interests, so they kept the sign in the window.

Blow number two: Trump demolished the facade

Since 2017, the Trump administration adopted policies that violated the rules-based international order more explicitly than ever before. Trump’s first term marked a sharp break with decades of Republican orthodoxy on free trade. He imposed tariffs on various imports, launched a trade war with China, and unilaterally paralysed the WTO by blocking appointments to its Appellate Body — effectively destroying the institution’s ability to mediate disputes. The Biden administration continued this approach, maintaining many of Trump’s controversial tariffs and refusing to restore the Appellate Body.

Trump’s second term escalated this trajectory dramatically. In March 2025, Vice President JD Vance delivered a speech at the American Dynamism Summit that inadvertently exposed the rigged logic underpinning globalisation. Vance articulated what liberal globalists had long understood but rarely admitted: “The idea of globalisation was that rich countries would move further up the value chain, while the poor countries made the simpler things.” He then acknowledged the system had failed — not because it exploited developing countries, but because China had managed to climb the value chain.

The speech was revealing in what it exposed: both the MAGA movement and the progressive left share a critique of the liberal establishment’s faith in globalisation and the rules-based international order. The difference lies in their diagnosis. The MAGA movement argues the system failed because it didn’t benefit rich countries enough. The progressive left argues it failed because it systematically exploited developing countries. Both agree the liberal order is broken; they just disagree about who it should have served.

Trump 2.0 went further still, explicitly violating the UN Charter which was established to promote international peace and ensure the sovereign equality of nation states. In January 2026, US forces attacked Venezuela, kidnapping President Nicolás Maduro in a flagrant breach of the UN Charter. When questioned about international law, Trump made clear he does not consider himself bound by it — he only considers himself bound by his own moral judgment.

Trump has now made it clear that the United States will violate trade agreements, embrace protectionism, and pursue American hegemony without apology. The pretence of a liberal rules-based order championed by his predecessors has been abandoned. Trump pursues US imperialism violently and explicitly.

Blow number three: Carney delivered the confession

This brings us back to Davos. Mark Carney is in many ways the embodiment of the liberal establishment — Goldman Sachs alumnus, central banker, now leader of Canada’s Liberal Party. He is precisely the type of figure who one would expect to find in the inner circle of ‘globalists’. Which makes his admission all the more devastating.

Carney didn’t just acknowledge that the rules-based international order is failing. He admitted that it was always partially false, that the establishment knew it, and that many wealthy nations participated in the fiction because it was useful. He explicitly rejected nostalgia for the old system.

The world Carney described in blunt terms is a world of great power rivalry where the rules no longer protect anyone, where economic integration has become a weapon, and where middle powers must choose between building fortresses or forging new coalitions. He called for middle powers to stop invoking the rules-based international order as though it still functions as advertised, and instead to name reality: “a system of intensifying great power rivalry where the most powerful pursue their interests using economic integration as coercion.”

The significance of Carney’s speech cannot be overstated. For a global, liberal icon to explicitly acknowledge the liberal establishment’s complicity in perpetuating a rigged system — and to argue that wealthy nations went along with the facade because it benefited them — amounts to an indictment from the inside. It’s one thing for critics on the left or the nationalist right to decry the rules-based order. It’s another entirely when the high priest of the liberal establishment declares the temple a fraud.

The rules-based international order is dead. It died slowly, by three blows: first by design, as the architects embedded asymmetries that favoured the powerful; then by wrecking ball as Trump dispensed with the pretence; and finally by confession, as Carney laid bare what the liberal establishment had secretly known all along.

The Trump administration recently published the US National Security Strategy. It’s an extremely important document. It’s an official outline of US priorities in the world, normally published only once every Presidental term. But this time, it’s published at a time of high geopolitical tensions, making it perhaps the most important National Security Strategy this century.

What struck me as most notable with the report is its profound irony. It denounces three decades of American attempts at global domination while articulating a vision of American supremacy more explicit, unapologetic, and comprehensive than perhaps any strategy document since the early Cold War. The strategy condemns the hubris of post-1991 efforts at “permanent American domination of the entire world,” yet it unabashedly demands exclusive preeminence in Latin America, military supremacy throughout the Indo-Pacific, control over critical supply chains, and the right to dictate terms to allies on defence spending and trade policy.

This is not a strategy of restraint or humility. It is suffused with American exceptionalism, asserting that the United States must remain “the world’s strongest, richest, most powerful, and most successful country for decades to come.”

The core critique: what went wrong (according to Trump)

The strategy opens with a sweeping indictment of American foreign policy after 1991 — specifically targeting the national security strategies of the George H.W. Bush, Clinton, George W. Bush, and Obama administrations. While not naming these documents explicitly, the critique clearly targets their central assumptions: Bush Sr.’s “new world order,” Clinton’s “engagement and enlargement,” Bush Jr.’s “freedom agenda” and democracy promotion, and Obama’s “liberal international order.”

These strategies shared common features the Trump document condemns: faith in globalization and free trade as wealth generators, commitment to NATO expansion and alliance management, support for international institutions and multilateral agreements, and emphasis on democracy promotion and human rights. The Obama administration’s 2015 National Security Strategy, for instance, proclaimed American leadership of “a rules-based international order” and emphasized working “through international institutions.” The George W. Bush 2006 strategy declared a goal of “ending tyranny in our world.”

The Trump strategy’s critique is multi-layered but centers on a fundamental claim: these approaches depleted American power in pursuit of ideological fantasies. Economically, free trade policies hollowed out the industrial base and middle class —the very foundation of military capability. Militarily, “forever wars” in Iraq, Afghanistan, and elsewhere exhausted blood and treasure on peripheral nation-building while China rose unchecked. Institutionally, international organizations became vehicles for “anti-Americanism” and “transnationalism” that eroded sovereignty rather than advancing US interests. Strategically, allies free-rode on American security guarantees while running trade surpluses against the United States.

This diagnosis interestingly echoes long-standing heterodox critiques of neoliberal globalization — the offshoring of manufacturing, the prioritization of finance over production, the subordination of worker interests to market efficiency. Yet the document’s solution is not multilateral cooperation or progressive internationalism but rather doubling down on unilateral American power.

It seems, then, that the problem with previous strategies was not their pursuit of dominance but their incompetent execution: they sought global military presence without maintaining the industrial capacity to sustain it, they promoted “free trade” that weakened rather than strengthened American economic power, and they constrained American action through international institutions rather than wielding power directly.

Latin America: unvarnished language of domination

The strategy’s treatment of Latin America is perhaps the most revealing section for understanding its approach to American power. Here, the document abandons diplomatic euphemism entirely. The strategy explicitly declares that the United States will “assert and enforce” hemispheric preeminence, “deny non-Hemispheric competitors the ability to position forces or other threatening capabilities, or to own or control strategically vital assets” in the region, and ensure “continued access to key strategic locations.” This is imperialism stated in plain language.

The sheer scope of privileges demanded by the US is breathtaking. The strategy demands that Latin American countries control migration according to US preferences, combat drug cartels as US proxies, provide manufacturing capacity through “near-shoring,” exclude Chinese investment and infrastructure projects, grant the US military expanded base access and freedom of operation, award “sole-source contracts” to American companies for major projects, and generally align their foreign and economic policies with Washington’s strategic goals. In exchange, these countries receive more favorable treatment on commercial matters — meaning conditional access to US markets calibrated to their compliance.

The policy framework centers on “Enlist and Expand”: enlisting existing partners to advance US interests while expanding American influence to squeeze out competitors, primarily China. The document envisions redirecting US military assets to the hemisphere, potentially deploying lethal force against cartels (an implicit authorization for military operations on sovereign territory), and “establishing or expanding access in strategically important locations”— military bases, in other words, though the document avoids the term.

This is not partnership; it is domination. The strategy explicitly states that “the terms of our alliances, and the terms upon which we provide any kind of aid, must be contingent on winding down adversarial outside influence.” Countries that wish to trade with China, accept Chinese loans for infrastructure, or pursue economic relationships not approved by Washington will face American coercion. The document even advocates using “targeted taxation, unfair regulation, and expropriation” threats to disadvantage US competitors.

The language of sovereignty appears throughout — but only American sovereignty. Latin American nations are expected to “cooperate,” to “align,” to “support,” and to exclude influences Washington deems hostile. When the strategy speaks of “sovereign countries working together,” it means countries exercising their sovereignty in ways that serve US strategic interests. The remarkable aspect is not that the United States pursues influence in its geographic neighbourhood — all great powers do — but that this strategy articulates these goals with such extraordinary frankness, absent any pretense of partnership between equals or respect for the independent agency of Latin American nations.

Previous administrations pursued similar goals but wrapped them in the language of partnership, democracy promotion, or mutual economic benefit. The Obama administration’s 2015 NSS spoke of “equal partnerships” and “shared prosperity” in the hemisphere. This strategy dispenses with such niceties entirely. It is explicit that Latin America matters to the United States instrumentally — to control migration, to stop drugs, to secure critical minerals, to deny China strategic access, and to provide markets and resources for American companies. The region’s own development aspirations appear only insofar as they align with US preferences.

The Indo-Pacific: economic competition and containing China

In Asia, the strategy’s dual character becomes even clearer. The document acknowledges China’s economic rise resulted partly from American policy choices—open markets, offshored manufacturing, technology transfer — but frames the solution not as accepting China as an equal partner but rather reasserting economic dominance through different means. The goal is explicit: prevent China from achieving regional economic dominance.

The military component is equally ambitious. The strategy commits to “denying aggression anywhere in the First Island Chain”— a vast arc from Japan through Taiwan to the Philippines and Indonesia. This requires deeper military integration with allies, expanded base access, hardened forward presence, and massive investments in naval capabilities, undersea warfare, space, nuclear forces, and emerging technologies. The document explicitly identifies preventing Chinese control of the South China Sea as vital to US interests.

This expansive vision comes wrapped in burden-sharing language. The strategy demands that Japan, South Korea, and other allies dramatically increase defence spending. This is framed as ending free-riding and unsustainable American subsidies. But the strategic objective remains unchanged: maintaining a “favorable conventional military balance” and preserving American “overmatch” sufficient to deter Chinese action.

The economic strategy is similarly ambitious. The United States will lead allied coordination to counteract Chinese industrial policy, align export controls, secure critical supply chains, dominate emerging technologies, and shape the economic orientation of developing countries through superior financial tools and infrastructure investment. The goal is not reducing American engagement with Asia but restructuring it to ensure sustained US preeminence across both security and economic domains. The strategy envisions using America’s “$30 trillion economy” combined with allied economies (together “more than half the world economy”) as leverage to subordinate competitors and shape global economic rules.

Europe: political interference and expectations of vassalization

The strategy’s treatment of Europe reveals deep ambivalence. Unlike Asia or Latin America, where clear dominance frameworks apply, the European section reads as equal parts disappointment and civilizational alarm. Europe is characterized as economically stagnant, militarily dependent, politically sclerotic, and facing “civilizational erasure” through migration and loss of national identity.

Most striking is the approach to Russia. The document advocates negotiating “strategic stability with Russia”— treating Russia, unlike China, as a normal great power with legitimate security interests. This reflects a fundamental reordering: Russia is a manageable regional power, while China represents the primary challenge. European anxieties about Russian power are dismissed as overblown.

Yet even toward Europe, the strategy maintains expectations of compliance. It demands increased defence spending (5% of GDP), greater burden-sharing, fairer treatment of US commercial interests, and alignment on countering Chinese economic practices. The document expresses hope for nationalist right-wing movements that might restore “civilizational self-confidence” and loosen EU regulatory authority — essentially endorsing European political fragmentation in favor of bilateral relationships more easily managed by Washington.

Unlike previous National Security Strategies, this document clearly aims to weaken national sovereignty in Europe to pave way for more American influence in European politics.

The Middle East and Africa: reduced engagement

In the Middle East and Africa, the strategy articulates reduced engagement. But even here, core interests remain expansive. The United States will ensure Gulf energy supplies don’t fall to adversaries, that key straits remain open, that terror threats are contained, and that Israel remains secure. The shift is from permanent military presence to episodic intervention and partnership with regional powers — outsourcing security to friendly states while retaining the capacity for strikes and special operations when American interests require it.

Yet “reduced engagement” proves relative. The expectation remains that regional powers will align with American preferences, accept American technological standards, and coordinate their policies with Washington’s strategic goals. Similarly in Africa, the strategy calls for transitioning “from an aid-focused relationship to a trade- and investment-focused relationship,” prioritizing countries “committed to opening their markets to U.S. goods and services” and developing critical minerals under American rather than Chinese partnerships. The rhetoric of partnership barely conceals the underlying premise: these regions matter to the United States primarily for what they can provide (resources, markets, strategic access) and engagement will be calibrated to their willingness to advance American economic and security interests.

Conclusion: domination by different means

The central irony of Trump’s 2025 National Security Strategy is profound: it condemns the post-Cold War pursuit of “permanent American domination of the entire world” while demanding American supremacy more explicitly than perhaps any strategy document since the early Cold War. The Bush, Clinton, and Obama strategies at least gestured toward multilateralism and partnership, justifying American power through universalist claims about democracy and rules-based order. This strategy dispenses with such pretenses entirely. It represents a move from liberal internationalist domination to nationalist domination.

The document’s lack of international humility is striking. Other nations should “put their interests first,” but only when aligned with American preferences. The strategy proclaims respect for other nations’ “differing cultures and governing systems” while declaring European civilization faces erasure and Latin American countries must restructure their economies to serve American supply chains. There is no acknowledgment that allies might have valid reasons for diversifying partnerships.

Whether this vision is sustainable depends on assumptions the strategy never questions: that allies will increase defence spending without seeking corresponding influence, that US tariffs will rebuild manufacturing without triggering retaliation, and that other powers will accept permanent American supremacy even while managing their own regions.

The deepest irony is that this strategy, which condemns the hubris of its predecessors, may represent the most hubristic American foreign policy document in a generation: one that demands explicit, comprehensive American dominance while simultaneously claiming to reject the very concept of global domination.

The global economy is undergoing a fundamental shift. After decades of free-market orthodoxy and neoliberal globalization, we’re witnessing the return of industrial policy — but this time with a twist. Major economic powers — especially the United States, China, and the European Union — are now explicitly intertwining their economic strategies with national security concerns. This isn’t just a policy adjustment. It represents a wholesale transformation of how major powers approach economic development and competition.

These three economic giants are implementing distinct approaches to industrial policy while pursuing similar objectives: technological leadership, supply chain security, and national economic sovereignty. What we’re seeing is the emergence of a new economic nationalism, one that is reshaping the global economic order.

Industrial policy as national security strategy: nothing (entirely) new under the sun

Here’s something that often gets lost in contemporary debates: while the fusion of industrial policy and national security has contemporary features that make it distinct, it also has deep historical roots that stretch back centuries.

Alexander Hamilton, writing in the late 18th century, understood that economic prosperity wasn’t just about wealth creation — it was fundamentally connected to national independence and security. His insights laid the groundwork for America’s own industrial catch-up strategy against Great Britain. As he put it, “Not only the wealth; but the independence and security of a Country, appear to be materially connected with the prosperity of manufactures.”

This thinking wasn’t confined to the United States. In Japan, Fukuzawa Yukichi influenced the strategic use of protectionist policies during the Meiji Restoration. In Africa, Kwame Nkrumah argued that industrialization was essential not just for economic development, but as the material basis for national freedom and independence from colonial powers. Latin American dependency theory similarly emphasized how industrial policy could help peripheral economies break free from exploitative international trade structures that favoured the global North.

The crucial point is this: neomercantilism — the idea that countries should actively use industrial and trade policies to generate trade surpluses and enhance competitiveness — has always viewed economic power and national security as inseparable. So, what we’re witnessing today isn’t the invention of something entirely new, but rather the resurrection of ideas that were temporarily suppressed during the neoliberal era of the 1980s onwards.

During that period, international organizations effectively outlawed industrial policy through structural adjustment programmes and free trade agreements. The Washington Consensus reigned supreme. But the 2008 financial crisis, rising inequality, climate change pressures, supply chain vulnerabilities exposed by COVID-19, and intensifying geopolitical tensions have collectively demolished faith in free-market orthodoxy. Industrial policy is back. And it’s back with a vengeance.

The securitization of economic policy

What distinguishes today’s industrial policy renaissance from historical precedents is the explicit securitization of economic competition. National security has been reconceptualized to encompass economic vulnerabilities that were previously viewed as mostly commercial concerns.

The COVID-19 pandemic was a wake-up call. When safety measures shut down production worldwide, the fragility of global supply chains became painfully apparent. Russia’s invasion of Ukraine compounded these concerns, as physical blockades and economic sanctions led to global price spikes in oil, gas, wheat, and fertilizer. Suddenly, dependence on foreign suppliers was a strategic liability.

But the bigger driver has been China’s rise. From 2000 to 2022, China’s share of global manufacturing exploded from 6% to 31%, with projections suggesting it could reach 45% by 2030. China’s rise represents a fundamental challenge to the established global hierarchy, and has played a huge part in resurrecting industrial policy as national security strategy in the West. Additionally, China’s success with state capitalism and long-term industrial planning has upended the assumption that free markets are the only path to prosperity.

The West’s response to China’s rise has been comprehensive. The United States has adopted an explicitly hawkish stance toward China, implementing extensive export controls, tariffs, investment screening, and domestic industrial subsidies. The European Union has chosen a more measured approach, balancing strategic autonomy and regulations on inward investments with trade openness. In China, although industrial policy has been a staple of state planning for decades, national security considerations have become even more deeply integrated into its development strategy in light of growing geopolitical tensions. Beijing is now pushing even harder for technological self-sufficiency and manufacturing dominance across a range of sectors and nodes of supply chain.

Economic competition and industrial policy has now been genuinely ‘securitized’. The distinction between economic and security concerns has effectively collapsed.

Global ramifications: who wins and who loses?

This brings us to the most important question: what does this mean for the rest of the world?

The reality is complicated, with both worrying trends and genuine reasons for hope. To properly understand the implications, we should evaluate these developments from an international development perspective, not just through the lens of great power competition.

Let’s start with the concerning aspects. Industrial policy is, by definition, about economic competition between nation states. One country’s industrial success often comes at another country’s expense. When the United States, China, and the European Union simultaneously ramp up their industrial policies, they’re highly likely to, collectively, dominate an even larger share of global manufacturing. In 2023, these three regions accounted for 69% of global manufacturing output, up from 61% in 2000. This concentration is projected to increase further.

For lower-income countries, this creates serious challenges. They simply don’t have the economic muscle to launch competitive industrial policies on the scale of the strategies such as the CHIPS and Science Act or Made in China 2025. Recent research shows that there is a strong positive correlation between domestic financial capacity and the ability to pursue industrial policy. Countries with limited resources are effectively shut out of this new competition for industrial supremacy. The risk is that their industrial capabilities could stagnate or even erode as the major powers consolidate their dominance.

But here’s where we need to complicate the narrative. The picture is far more nuanced than this suggests, and there are several reasons for genuine optimism.

First, we should celebrate China’s industrial success from a development perspective. Since 1980, China has lifted more people out of poverty than the rest of the world combined. China’s rise has entailed more than a billion people experiencing dramatic improvements in living standards. If we care about reducing global poverty, China’s economic ascent is unambiguously positive. Moreover, China is leading global efforts in renewable energy manufacturing, now accounting for 65-82% of the global market share across solar panels, wind turbines, lithium-ion batteries, and electric vehicles. This isn’t just helping China — it’s offering the entire world access to cheaper renewable energy technology, which is essential for tackling climate change.

Second, not all countries in the global South are losing out. Some are actually benefiting significantly. So-called “connector countries” — nations that have forged strategic ties with multiple superpowers — are leveraging geopolitical rivalry to their advantage. Mexico is a perfect example. Investment from the United States has surged as companies pursue nearshoring strategies. But Chinese firms are also investing in Mexico to access the US market while bypassing American tariffs. Vietnam, Malaysia, and Indonesia are similarly seeing pronounced upticks in manufacturing FDI from both the United States and China, becoming more deeply integrated into global supply chains across electronics, apparel, and clean energy sectors.

Third, China’s partnerships with the global South represent a welcome alternative to traditional North-South relationships. While complicated, China’s approach — focused on infrastructure investment, respect for sovereignty, and cooperation more so than domination — offers a different model than the conditional lending and structural adjustment that characterized Western involvement in developing countries throughout the neoliberal era. The data backs this up: in Sub-Saharan Africa, positive views of China outweigh negative views by roughly 3 to 1. Research finds that Chinese firms in Africa have positive impacts on infrastructure development, capacity building, and manufacturing investment.

Developing countries that can navigate between competing powers and maintain productive relationships with multiple economic blocs may find themselves with more leverage than they’ve had in decades. The new multipolar competition creates space for strategic manoeuvrability that didn’t exist during the unipolar moment of American hegemony. Additionally, the rise of China challenges the established imperial arrangements put in place by countries in the global North, potentially opening pathways for more equitable South-South cooperation.

A changing world order

What we’re witnessing represents a fundamental shift in how the global economy operates. The ideological retreat from globalization, the securitization of economic policy, the decline of faith in multilateral institutions, the language of “strategic decoupling”— these all point to a new economic nationalism that’s here to stay.

This transformation has both troubling and hopeful dimensions. The concentration of industrial and technological capabilities within three major blocs does risk marginalizing countries without the resources to compete. The zero-sum logic of industrial competition could crowd out industrialization opportunities for many developing countries. But the rise of multipolarity also creates new possibilities—countries in the global South now have options to play competing powers against each other, forge strategic partnerships with multiple blocs, and potentially carve out more favourable positions in global value chains than were available during unchallenged US hegemony.

The crucial question is whether this new economic nationalism will evolve toward greater fragmentation and conflict, or whether it can accommodate a more pluralistic global order that allows space for diverse development strategies.

What’s clear is that the age of free-market globalization is over. Industrial policy, long dismissed as outdated or counterproductive, has returned as a central tool of economic statecraft.

Every year when the Nobel Prize in Economics is announced, a familiar pattern emerges. The winners almost invariably have one thing in common: they’ve passed through an elite US university — usually Harvard, Chicago, MIT, Stanford, Princeton, Yale, Berkeley, and Columbia. Defenders of this pattern will tell you these institutions simply attract the world’s best minds. But this explanation doesn’t hold up. The extreme concentration of Nobel laureates at a handful of universities isn’t just about merit. It’s a symptom of deeper structural problems in economics.

I’ve seen these problems firsthand during my time in economics departments. The discipline suffers from elite dominance, intellectual gatekeeping, Western bias, and a striking lack of diversity. These forces have created a closed intellectual ecosystem — one that reinforces existing hierarchies, marginalises alternative perspectives, and limits the field’s ability to tackle the economic challenges facing most of the world.

This isn’t just an academic problem. Economics shapes policy decisions affecting billions of lives. When the discipline is dominated by a small elite trained in similar ways at similar institutions, the policies that result reflect only a narrow range of perspectives. Let me walk you through the evidence.

Economics is uniquely hierarchical and insular

In 2015, Marion Fourcade, Etienne Ollion, and Yann Algan published a landmark paper called “The Superiority of Economists.” The paper highlights that economics operates as an unusually self-reinforcing field where elite training pipelines control publication opportunities, academic positions, and intellectual influence.

They find that, although all disciplines cite their own work to some degree, “economics stands out markedly, with 81 percent of within-field citations —against 52 percent for sociology, 53 percent for anthropology, and 59 percent for political science.”

What does this insularity look like in practice? Here’s how one economist interviewed by the authors described it:

You are only supposed to follow certain rules. If you don’t follow certain rules, you are not an economist. So that means you should derive the way people behave from strict maximization theory. . . . The opposite [to being axiomatic] would be arguing by example. You’re not allowed to do that. . . . There is a word for it. People say ‘that’s anecdotal.’ That’s the end of you if people have said you’re anecdotal . . . [T]he modern thing [people say] is: ‘it’s not identified.’ God, when your causality is not identified, that’s the end of you.

This rigid gatekeeping begins early in economists’ careers. Graduate programs at top institutions determine not just who enters the profession, but what questions are considered legitimate and what methods are acceptable. Students absorb specific frameworks and techniques that become the standard for the entire discipline. Challenge these orthodoxies, and you’ll find yourself at a systematic disadvantage in publication, hiring, and career advancement.

The authors document what they call the “superiority of economists”—where the discipline’s objective supremacy is intimately linked with their subjective sense of authority and entitlement. Survey data backs this up. Economists are the only social scientists where “a (substantial) majority disagree or strongly disagree with the proposition that ‘in general, interdisciplinary knowledge is better than knowledge obtained from a single discipline.’”

This creates what Fourcade and her colleagues identify as a characteristic pattern of inequality: those in a central position within a field fail to notice peripheral actors and are also largely unaware of the principles that underpin their own domination.

The result? From the perspective of other social scientists, economists often resemble colonists settling on their land. They arrive with their tools, deploy their techniques, but rarely learn from the locals or question whether their methods actually fit the terrain.

A small elite controls the editorial machinery

The concentration problem doesn’t stop at training. It extends to how economic knowledge gets produced and validated. In their 2023 study, “Who Are the Gatekeepers of Economics?”, Alberto Baccini and Christina Re document how a remarkably small group of elite institutions and individual scholars controls the editorial machinery of the discipline’s most prestigious journals.

Their study looked at 1,516 active economics journals in 2019, which includes more than 44,000 scholars from over 6,000 institutions and 142 countries. The pattern they found is clear:

Results highlight that the academic publishing environment is primarily governed by men affiliated with elite universities in the United States. The study further explores social similarities among journals using a network analysis perspective based on interlocking editorship. Comparison of networks generated by all scholars, editorial leaders, and non-editorial leaders reveals significant structural similarities and associations among clusters of journals. These results indicate that links between pairs of journals tend to be redundant, and this can be interpreted in terms of social and intellectual homophily within each board, and between boards of journals belonging to the same cluster.

Let me break down why this matters. Academic journals are the gatekeepers of what counts as legitimate research. Editorial boards decide which papers get reviewed, which reviewers evaluate them, and ultimately which work gets published. When these boards are dominated by scholars from a handful of institutions — all sharing similar training and commitments — you get a powerful mechanism for enforcing intellectual conformity.

The interlocking editorship that Baccini and Re identify is particularly concerning. The same people sit on multiple editorial boards, creating redundant networks. This isn’t random. It reflects “social and intellectual homophily”: people with similar backgrounds and views clustering together, validating each other’s perspectives while systematically excluding alternatives.

For young scholars, the message is clear: to advance your career, you need to publish in a narrow set of top journals. To publish in these top journals, you need to frame your research in ways that align with what gatekeepers at elite institutions want to see. Innovative approaches that challenge dominant paradigms? Research centered on non-Western contexts? Work drawing on alternative theoretical traditions? Good luck getting that published.

The vicious cycle is obvious. Scholars at elite institutions publish in top journals. This boosts their institutions’ prestige. Which attracts more talented students and faculty. Who publish more papers. And so on. Meanwhile, researchers from other institutions— especially in the Global South — find themselves locked out, regardless of the quality or relevance of their work.

Elite concentration is actually getting worse

Here’s where it gets really concerning. You might think these problems would ease over time as economics globalises and democratises. But the opposite is happening.

In 2024, Richard Freeman, Danxia Xie, Hanzhe Zhang, and Hanzhang Zhou published a study entitled “High and Rising Institutional Concentration of Award-Winning Economists”. The study compares institutional concentration across academic disciplines. They looked at around 6,000 prizewinners from 18 areas of the natural sciences, engineering and social sciences. Their finding? Economics stands alone in becoming more concentrated over time.

The key passage from their research is worth reading in full:

The world’s most renowned economists work for the most part at a few elite US universities (Harvard, University of Chicago, MIT, Stanford, Princeton, Yale, UC Berkeley and Columbia University). Nobel laureates in economics spend on average half of their academic time at these eight institutions, which account for only three per cent of all institutions with internationally renowned academic awards. Interestingly, the concentration in all other fields is low and tending to decline, suggesting that knowledge production in science is generally becoming more decentralised.

Let that sink in. While other disciplines are becoming more decentralised — spreading excellence across more institutions — economics is moving in the opposite direction. Nobel laureates in economics spend half their time at just eight universities.

This isn’t just about prestige. It’s about whose questions get asked, whose methods get legitimized, and whose perspectives shape the discipline. As economics becomes more concentrated, it becomes less capable of addressing the diverse economic challenges facing most of the world.

Problems that don’t fit the dominant paradigm get less attention. Questions obvious to those outside elite institutions go unasked. Methods that might yield valuable insights but don’t align with mainstream approaches remain unexplored.

There’s also an international dimension here that often gets overlooked. Yes, elite American economics departments attract talented students from around the world. But these students receive training that emphasises problems, contexts, and solutions rooted in developed Western economies. When they return home or take positions elsewhere, they carry assumptions and frameworks that often don’t translate well to different economic contexts.

Economics is rooted in Eurocentric assumptions

One the most fundamental critiques comes from scholars working to decolonize economics. In their 2025 book, “Decolonizing Economics: An Introduction”, Devika Dutt, Carolina Alves, Surbhi Kesar, and Ingrid Harvold Kvangraven make the argument that mainstream economics is built on Eurocentric and colonial assumptions that render it “ill-equipped to tackle critical questions, such as structural racism, uneven development, the climate crisis, labour relations, and how structural power shapes economic outcomes.”

This goes beyond complaints about concentration or gatekeeping. It challenges the very foundations of how economics understands the world.

Here’s their core argument:

Decolonizing economics entails challenging the norms of neutrality and objectivity that economists claim to speak from, while fostering alternative ways of understanding the economy that take seriously structural power relations and contemporary processes of economic development. Readers will come to understand the political stakes of decolonization and the wide range of scholarship that already exists that can help us grasp economics from non-Eurocentric perspectives.

The problem, as Dutt and her colleagues show, is that dominant economic theories emerged from specific historical contexts in Western Europe and North America. Yet they’re presented as universal truths applicable everywhere. This erases the diverse economic systems, practices, and forms of knowledge that exist in other parts of the world.

Think about the concepts economics takes for granted. What counts as “development”? What economic activities get measured and valued? The answers embedded in mainstream economics reflect Western historical experiences and priorities. They often marginalise or pathologize economic practices in formerly colonised regions.

The concentration of economic authority in elite Western institutions reinforces these biases. When most influential economists are trained at a handful of American and European universities, and when these same institutions control the discipline’s publication and reward structures, alternative perspectives struggle to gain recognition.

Indigenous economic knowledge? Non-Western theoretical frameworks? Insights from scholars in the Global South? They remain marginalised, dismissed as insufficiently “rigorous” or “scientific”— according to standards defined by the very institutions whose dominance is being challenged.

What needs to change

These problems — elite dominance, editorial gatekeeping, rising institutional concentration, and Eurocentric foundations — feed off one another. They create a self-reinforcing system that resists change. But recognising these patterns is the first step toward fixing them.

The Nobel Prize pattern should prompt uncomfortable questions. Why do so few institutions produce virtually all recognised excellence in economics? Is this really about merit? Or is it evidence of structural barriers that prevent talented scholars from other backgrounds and institutions from gaining recognition? What perspectives and insights are we losing when economic authority concentrates in such a narrow set of places?

The answers matter because economics isn’t just an academic exercise. It shapes policy decisions affecting billions of lives. When the discipline is dominated by a small elite trained in similar ways at similar institutions, the policies that result reflect only a narrow range of perspectives and priorities.

We need to fundamentally rethink what economics is, who it serves, and how economic knowledge should be produced.

This means:

• Creating genuine pathways for scholars from diverse institutions and backgrounds to contribute to economic discourse

• Recognising forms of economic knowledge and inquiry beyond the narrow methodological orthodoxy that currently dominates

• Taking seriously the insights of scholars working to decolonize economics and center perspectives from the Global South

• Breaking down the disciplinary silos that isolate economics from other social sciences

The Nobel Prize pattern isn’t just a curiosity. It’s a warning sign pointing toward deep structural problems that limit what economics can be and what it can achieve. Until these problems are confronted directly, the field will continue reproducing the same hierarchies, marginalising the same voices, and reinforcing the same narrow vision of economic inquiry.

Antonio Gramsci (1891–1937), the Italian philosopher, journalist, politician, and revolutionary, is particularly well known for developing the concept of hegemony. According to Gramsci, hegemony refers to the way a ruling class maintains power not only through coercion, but through cultural and ideological leadership. Power is not merely about who controls the state — it’s also about who controls meaning, culture, and “common sense.”

In his Prison Notebooks, Gramsci articulated this nature of hegemony (paraphrased):

The supremacy of a social group manifests itself in two ways, as ‘domination’ and as ‘intellectual and moral leadership.’ (…) A ruling class is not content to rule by force alone; it must also shape the convictions and habits of the masses. (…) Only when its worldview is accepted as common sense does its power become stable and enduring.

I’ve been reflecting on Gramsci’s concept of hegemony in the context of China’s rise and the economic and geopolitical rivalry unfolding between the US and China. In strands of US mainstream media, there’s a clear attempt to frame the American perspective as “global common sense.” Narratives portraying China as a calculating cheater, industrial thief, or authoritarian bogeyman are often pitched as neutral, objective, or moderate. This has paved the way for a new kind of American exceptionalism: China’s rise can be depicted as a bid for global domination — economically, politically, and militarily — with little self-examination from the US side.

Kaiser Kuo, host of the Sinica podcast, has offered one of the sharpest critiques of this phenomenon, highlighting the psychological dissonance Americans face when confronting a world no longer dominated by the US:

To understand why China sticks in the craw, one needs to appreciate the deeper psychological challenge it poses to US identity. For generations, Americans inhabited a national story that assured them they would always be first in the domains that matter most—innovation, technology, military might, economic dynamism, cultural magnetism. China’s achievements have systematically undermined pillar after pillar of American exceptionalism. Deep-rooted and often unconscious hierarchies still position the West as normative and other states as derivative. The moment of recognition and readjustment requires confronting those reflexes.

These reflexes indeed need to be confronted because they often play out as double standards in aspects of US public discourse. Palantir’s CTO, Shyam Sankar, recently published an op-ed in the Wall Street Journal which serves as a good example of the type of discourse I am referring to. In the piece, he claims that the Chinese Communist Party harbours a clear desire to see America fall. He accuses China of strangling US supply chains, unfairly subsidising its industries, and flooding foreign markets with Chinese goods. His pièce de résistance is the claim that no country has done more for Chinese prosperity than the United States.

These allegations rest on foundations as fragile as cracked ice, rooted in a familiar agenda: the preservation of US economic, political, and cultural hegemony. Let’s examine them one by one.

Before proceeding, let me be clear about what this critique targets. The arguments that follow challenge US policy and discourse — not the American people as such. This is not “anti-Americanism.” It is a critique of narratives manufactured and amplified by the US ruling class and mainstream media institutions, narratives designed to manufacture consent for policies that serve elite interests while claiming to represent universal values or national security imperatives.

Does China strangle US supply chains?

The reality is more complex than this charge suggests. Over the past few decades, the economic relationship between the US and China has been characterised by mutual dependence, though the benefits have been distributed asymmetrically. While American corporations have extracted enormous profits from Chinese manufacturing, Chinese workers and firms have often operated under compressed wages and tight profit margins.

Consider Apple, the US-based electronics giant. Apple has generated more profit in China than any other foreign company. Between 2015 and 2024, Apple made $227 billion in operating profit in China — over a quarter of its total operating profit during this period. In my book, The Future of the Factory, I show how Apple raked in 56% of the final retail price of iPhone models it released throughout the 2010s, without actually making any of the components. Meanwhile, the workers and firms who assembled the iPhone, mostly based in China, got a mere 1.5% of the final retail price.

This is hardly evidence of China “strangling” US supply chains; rather, it demonstrates how deeply American corporate interests have benefited from the relationship.

China’s economy and its workers have certainly benefited from foreign investment from the US over time. But they did so only by strategically using industrial and trade policy to ensure that economic integration served developmental goals rather than perpetuating dependency. China’s economic development required building independent, sovereign industrial capacity — a path US corporations have historically resisted when pursued by developing countries. The US has preferred arrangements that keep developing countries in subordinate positions within global supply chains. Where US investment and trade ties have occurred primarily on the terms of US corporations, long-term development has consistently failed to materialise.

Does China unfairly use industrial and trade policy?

China does indeed have an active state that intervenes strategically in markets to make the country more innovative, competitive, and technologically sophisticated. This includes subsidies. But such measures are hardly unique to China, nor are they inherently illegitimate.

The largest industrial subsidy program in modern history is the US CHIPS and Science Act, signed into law in 2022 by President Biden. It authorises roughly $280 billion in funding to boost domestic research and manufacturing of semiconductors and related technologies. This represents a significant embrace of industrial policy by a country that has long criticised others for doing the same.

Historical context is also essential here. China’s subsidies and state intervention must be understood as part of a catch-up strategy employed by virtually every country that has successfully industrialised. State intervention through industrial policy — including subsidies, tariffs, and strategic investment — has been essential for technological advancement throughout modern economic history.

The US itself provides a telling example. During the 19th century, as it worked to catch up with Britain’s industrial prowess, the US maintained the world’s highest average tariff rates on manufactured imports. In the modern era, we see the US returning to these tools, having recognised that the liberal international order it championed no longer serves its interests as it once did.

Meanwhile, China’s trade policy measures, such as its recent export restrictions on rare earth metals, represent strategic responses to aggressive US actions, including the extensive tariffs introduced during the Trump administration.

Does China flood overseas markets with Chinese goods?

Yes, China does flood overseas markets with Chinese goods — and wealthy countries welcomed this with open arms until China became a competitor. They welcomed it because it hugely benefited their consumers and corporations. The price of all sorts of goods and industrial inputs in wealthy nations plummeted after China became more strongly integrated into the world economy.

Research has documented dramatic price declines for manufactured goods imports into the US relative to consumer prices in non-traded sectors between the 1980s and early 2010s, in some cases exceeding 40%. This was not an accident or an imposition; it was the intended outcome of policies that wealthy nations actively supported and encouraged.

The current backlash in the West against China’s rise reveals an uncomfortable truth: wealthy countries support globalisation when it reinforces existing hierarchies, but they resist it when it enables catch-up development. As JD Vance candidly stated at The American Dynamism Summit in March 2025: “The idea of globalisation was that rich countries would move further up the value chain, while the poor countries made the simpler things.” When China moved up that value chain, wealthy nations ironically decried that the rules of trade weren’t fair any longer.

China faces particularly intense criticism for flooding foreign markets with clean energy products, such as EVs, solar panels, and wind turbines. And, indeed, China dominates the global market for clean energy manufacturing: it manufactures about 80% of the world’s solar panels, 60% of the world’s wind turbines, 70% of the world’s EVs, and 75% of the world’s batteries — all at a lower cost than the West. But in the middle of a climate emergency, this is something we should celebrate rather than demonise. The accusation oddly seems to be that China is doing too much of something right.

It’s also worth noting the scale of China’s trade in per capita terms. Despite dominating certain sectors in absolute terms due to its population size, China’s per capita exports rank only 104th globally. This is far below Germany (26th), the UK (42nd), and the United States (63rd). In essence, the primary concern appears to be that China is a very large economy growing at a pace that challenges established hierarchies.

Is China a greater military threat to the world than the US?

Shyam Sankar’s commentary reveals a clear double standard: his framework assumes that the only legitimate global hierarchy is one with the US at its apex. While Sankar does not explicitly advocate military confrontation with China, his rhetoric strongly suggests this as a potential response should China continue its economic and technological development.

It is in the realm of military intervention where the contradictions in US discourse become most apparent. US political leaders and media frequently warn that China’s rise threatens global peace and stability. Yet this framing requires ignoring fundamental disparities in military behaviour between the two countries.

The historical record shows marked differences in patterns of military intervention. Since World War II, the US has been involved in more than 100 regime change operations — many targeting democratically elected governments — and has deployed military force in over 70 countries. The US currently maintains 902 active military bases in foreign countries. By contrast, China operates one foreign military base (in Djibouti) and has not engaged in a major military conflict since 1979.

Recent events further sharpen this contrast. The US stands alone among nations in providing unconditional support for Israel’s military operations in Gaza, which have been characterized as genocide by international legal experts and human rights organizations. The US has voted against UN Security Council resolutions calling for a ceasefire six times — the only country to do so. Additionally, US officials have publicly attacked international institutions including the UN and ICC for condemning the actions of Israel. This pattern of behaviour fits the definition that international relations scholars use for a particular type of actor in the global system: a rogue state.

Hegemony through narrative

Antonio Gramsci’s concept of hegemony offers a powerful lens for understanding how narratives around China’s rise are constructed in the US. It reveals how power is sustained not only through economic and military dominance, but through control over what is presented as “common sense.” By framing China as an existential threat, US elites and mainstream media outlets reproduce a worldview that legitimises American primacy while suppressing critical self-reflection and dismissing critics as “China hacks” or “CCP shills.”

And in those rare instances when a space for critical examination opens up, it is expected to be accompanied by a litany of caveats citing all the things that are wrong with China — its political system, social policies, or human rights record.

The double standards at play expose not a principled defence of “global order” but a defence of hierarchy, with the US at its apex. The patterns examined in this essay suggest that much of the current discourse is less about defending universal principles of “global order” than about preserving a particular hierarchy. When China pursues state-led development, it’s characterised as unfair competition; when it seeks technological self-sufficiency, it’s framed as aggression; when it expands its global economic presence, it’s depicted as domination. Yet these are precisely the strategies that virtually every successful industrialised country has employed.

The reflexive demonisation of China serves to normalise American exceptionalism, making it appear neutral, inevitable, and righteous. Gramsci reminds us that these narratives are neither natural nor inevitable — they are constructed, contested, and can be changed.

I recently developed a new approach to green industrial policy together with Jason Hickel. Our framework has now been published as a research article, entitled “A progressive framework for green industrial policy”, in the journal New Political Economy. It is the very first policy framework to explicitly outline how to scale down harmful industries, organise production around public benefit, and achieve global ecological justice.

Our motivation for developing this framework was that current approaches to green industrial policy are failing to address unsustainable growth in energy and resource use, especially in high-income countries. Consider this shocking fact: in high-income countries, resource use exceeds sustainable guardrails by a factor of four and they are responsible for around 90 per cent of global carbon emissions in excess of the safe planetary boundary. While many high-income countries are making efforts to decarbonise, it’s not happening fast enough. At existing rates of carbon mitigation, high-income countries will take on average more than 200 years to decarbonise fully. Meeting the targets of the Paris Agreement — a legally binding international treaty on climate change which aims to limit global warming to well below 2°C above pre-industrial levels — is a distant pipe dream unless wealthy nations radically change course.

We clearly need a new approach to green industrial policy. In developing our framework, although we took inspiration from existing approaches, we most importantly incorporated new insights from ecological economics, post-growth, and degrowth — much-needed insights that challenge the conventional approach of ever-increasing production and consumption.

Our framework has three pillars: (1) scale down ecologically harmful industries and sectors to directly reduce energy and resource use; (2) organise production more around public benefit, with greater democratic control and guidance over investment and production; and (3) work towards global ecological justice and enable greater ‘ecological policy space’ for the global South to pursue industrial development. The framework shows how productive capacity can be liberated and redirected towards more socially and environmentally beneficial ends, while also democratising control over the economy. Let me briefly outline each pillar.

Pillar 1: Scale down ecologically harmful industries. This pillar emphasises the need to reduce production in sectors that are energy-intensive, resource-heavy, and socially unnecessary — for example, fossil fuels, industrial beef, fast fashion, and luxury goods. The goal is to directly reduce energy and material use while freeing up productive resources for socially and environmentally beneficial purposes. Tools include credit policy to restrict lending to harmful industries, consumer protection laws like ‘right to repair’, and targeted taxation on luxury and polluting products. This pillar repositions industrial policy to actively manage economic contraction in ecologically damaging areas, while remobilising and liberating resources towards a just and green transition.

Pillar 2: Organise production more around public benefit. The second pillar argues that production should be reorganised to prioritise public good over private profit. In the current system, the for-profit private sector largely controls investment and production, leading to overproduction of harmful goods and underproduction of socially necessary ones. Public financial instruments — such as state-led credit guidance and public investment — are key to ensuring that essential services like public transit, housing, and renewable energy are adequately provisioned. This pillar calls for stronger coordination across state policy levers and increased democratic control over economic planning, enabling societies to redirect efforts towards equitable and sustainable production.

Pillar 3: Global ecological justice. The final pillar addresses international inequality and the need for differentiated ecological responsibilities. High-income countries are primarily responsible for ecological breakdown and must reduce their resource and energy use. In contrast, lower-income countries require increased ‘ecological policy space’ to develop their economies and meet human needs. This entails allowing the Global South greater freedom to formulate industrial policy, receiving reparations or climate-related compensation from the North, and participating in a fairer global governance structure. Ultimately, this pillar promotes a just transition that empowers the South while holding the North accountable for historical and ongoing ecological exploitation.

Although our framework calls for systemic transformation, the policy pathways are not simply thought experiments. They build on real-world implementation, both at present and historically, including carbon taxes, credit guidance, competition law, consumer protection laws, and public ownership structures.

But we do indeed question the status quo of the capitalist economic system more fundamentally than existing frameworks for green industrial policy. Our argument is that the scale and urgency of ecological breakdown demand more than incremental or market-led fixes. We need a fundamental transformation. Encouragingly, this perspective is not fringe. As we highlight with reference to several studies in our paper, a growing majority of climate scientists and members of the public support post-growth positions and believe that socially unnecessary production and consumption pose a significant threat to our planet and society. For example, a consumer study found that 70 per cent of people in 20 high-income and middle-income countries support the statement that “overconsumption is putting our planet and society at risk”.

Yet we recognise that strong public support alone will not be enough. The interests of powerful elites who benefit from the status quo will likely resist the kinds of changes we advocate. To overcome this, we argue that what’s needed is not just protest or symbolic politics, but the rise of mass-based political movements and parties capable of taking power and implementing these policies. History shows that transformative change often seems unrealistic — until it is achieved. Like past struggles for universal suffrage, civil rights, and the end of apartheid, systemic change is possible when rooted in collective action.

Rethinking Economics — the international network of scholars and students that promotes pluralism in economics — has published a report on the state of the economics discipline. Specifically, the report looks at the degree to which economics degree programmes in the UK are equipping students for their future. It does so by reviewing economics programmes at 16 prestigious UK universities.

The report concludes that the economics discipline is in a pretty dismal state. It finds that the economics curriculum in the UK places more focus on training students to ‘think like an economist’ rather than providing them with an understanding of how the economy actually works. These are the main findings of the report:

• The climate crisis and socio-ecological issues are broadly absent from economic curricula. 75% of universities do not teach any ecological economics; instead, when issues of ecological sustainability are taught, environmental damage is considered as something that needs to be priced into market mechanisms.

• Economics education does not address historical and contemporary power imbalances. 55% of universities do not provide meaningful teaching on questions of historical slavery, colonialism, or neocolonialism at all. History and ethics are absent from these discussions.

• Mainstream neoclassical economics dominates the economic theories taught. Of the 480 theory modules we graded, 88.3% of them included mainstream neoclassical economic thinking focusing on rational, self-interested individuals. They are almost entirely taught through quantitative technical skills.

• Economics is taught in isolation from other social sciences. The discipline of economics should be embedded within the social sciences, and students should be encouraged to learn across other disciplines such as politics, sociology, geography, and history, but for the most part, it remains siloed.

• There are two programmes that are critical, climate-conscious, and provide an economics education fit for the 21st century. SOAS and the University of Greenwich introduce students to a range of intellectual and methodological perspectives within the economics discipline. They put a learning focus on climate, power, and inequality throughout the course.

Pluralism and non-monolithic thinking in economics departments clearly remain marginal. The debate on the state of the economics discipline got heated recently, when Ha-Joon Chang — a pluralist economist who wrote the foreword to the above-mentioned RE report — wrote a fierce critique of mainstream economics (specifically, neoclassical economics, which dominates the mainstream) in the Financial Times. His critique was rooted in the findings of the RE report. Comparing neoclassical economics to Catholic theology in the Middle Ages, Chang writes the following:

The dominance of neoclassical economics in our university curricula has created a world where we are told there is no alternative — only technical adjustments to a system that is fundamentally fair, rational and efficient. But this is fiction. Economics today resembles Catholic theology in medieval Europe: a rigid doctrine guarded by a modern priesthood who claim to possess the sole truth. Dissenters are shunned. Non-economists are told to “think like an economist” or not think at all. This is not education. It’s indoctrination.

Chang continues to take fierce jabs at neoclassical economics in his piece:

Neoclassical economics has become the Aeroflot of ideas. A friend recalls that after asking for a vegetarian meal on a flight with the Soviet airline in the 1980s, he was told: “No, you cannot. Everybody’s equal on Aeroflot. It’s a socialist airline. There’s no special treatment.” The same logic applies in today’s economics departments: you’re free to choose — as long as it’s neoclassical chicken

Chang’s piece was widely shared and applauded on social media. Even Niall Ferguson, the economic historian whose views differ from Chang politically, endorsed Chang’s piece on Twitter/X. Unsurprisingly, economists who are positioned more firmly within the mainstream came to the defence of the status quo in economics departments. Olivier Blanchard, former IMF Chief Economist, responded to Ferguson, saying, “Niall and others. Please do your homework (…) And discover, to your surprise, the degree to which researchers explore new ideas.”

But even within mainstream walls, powerful criticism has emerged. The most notable is an essay by Angus Deaton — a Nobel Prize-winning economist — outlining five major shortcomings of mainstream economics. They are the following:

• Power: Our emphasis on the virtues of free, competitive markets and exogenous technical change can distract us from the importance of power in setting prices and wages, in choosing the direction of technical change, and in influencing politics to change the rules of the game. Without an analysis of power, it is hard to understand inequality or much else in modern capitalism.

• Philosophy and ethics: In contrast to economists from Adam Smith and Karl Marx through John Maynard Keynes, Friedrich Hayek, and even Milton Friedman, we have largely stopped thinking about ethics and about what constitutes human well-being. We are technocrats who focus on efficiency. We get little training about the ends of economics, on the meaning of well-being—welfare economics has long since vanished from the curriculum—or on what philosophers say about equality. When pressed, we usually fall back on an income-based utilitarianism. We often equate well-being with money or consumption, missing much of what matters to people. In current economic thinking, individuals matter much more than relationships between people in families or in communities.

• Efficiency is important, but we valorize it over other ends. Many subscribe to Lionel Robbins’ definition of economics as the allocation of scarce resources among competing ends or to the stronger version that says that economists should focus on efficiency and leave equity to others, to politicians or administrators. But the others regularly fail to materialize, so that when efficiency comes with upward redistribution—frequently though not inevitably—our recommendations become little more than a license for plunder. Keynes wrote that the problem of economics is to reconcile economic efficiency, social justice, and individual liberty. We are good at the first, and the libertarian streak in economics constantly pushes the last, but social justice can be an afterthought. After economists on the left bought into the Chicago School’s deference to markets—“we are all Friedmanites now”—social justice became subservient to markets, and a concern with distribution was overruled by attention to the average, often nonsensically described as the “national interest.”

• Empirical methods: The credibility revolution in econometrics was an understandable reaction to the identification of causal mechanisms by assertion, often controversial and sometimes incredible. But the currently approved methods, randomized controlled trials, differences in differences, or regression discontinuity designs, have the effect of focusing attention on local effects, and away from potentially important but slow-acting mechanisms that operate with long and variable lags. Historians, who understand about contingency and about multiple and multidirectional causality, often do a better job than economists of identifying important mechanisms that are plausible, interesting, and worth thinking about, even if they do not meet the inferential standards of contemporary applied economics.

• Humility: We are often too sure that we are right. Economics has powerful tools that can provide clear-cut answers, but that require assumptions that are not valid under all circumstances. It would be good to recognize that there are almost always competing accounts and learn how to choose between them.

When a towering figure within the mainstream launches this kind of criticism, it’s a clear sign that mainstream economics needs an overhaul.

I’ve long taken an interest in economic pluralism and how economics can become a more inclusive and interdisciplinary social science, engaging with real-world economic issues more deeply. My view is that economics degrees have, for the most part, become subpar degrees in mathematics, isolating themselves from other social sciences and important real-world applications. During my undergraduate studies in economics, which couldn’t have been more mainstream, one of our professors actually told me and my fellow students that it’s not their job to teach us the economics of the real world. I remember being shocked. The obsessive focus on abstract models and lack of concrete applications in my undergraduate curriculum eventually started to deeply frustrate me. When my non-economics friends asked me the simplest of questions about the economy, I found myself unable to answer them. While the quantitative skills taught in mainstream economics degrees are useful for employability in that they provide a solid understanding of numbers and charts, it has serious consequences when economics graduates don’t understand what’s happening in the actual economy.

The focus on mathematical formalism and consequent abstraction from important issues in the real world do not only have consequences for understanding the economy — it also has consequences with respect to the questions asked within the discipline. Far too many economists are concerned with how a change in measured variable X affects measured variable Y rather than asking normative, important questions such as: Is capitalism preferable to socialism? What are the global consequences of China’s rise in the world economy? What are the limits of looking at climate change purely through the lens of market failures? In fact, I’ve met many economists who say that they think economics is a ‘hard science’ that should be unconcerned with these types of questions. Both Adam Smith and Karl Marx, two of the most important figures in classical economics, would turn in their graves if they heard this. Despite their political differences, these two scholars approached economics in a similar way. They both understood that economics is shaped by human values, social norms, and ideologies. According to Smith and Marx, to be an economist is also to be a philosopher.

The crisis in economics education isn't just an academic problem — it's a societal one. When policymakers, business leaders, and analysts graduate with a mathematically sophisticated but contextually impoverished understanding of economic systems, it has serious consequences. An army of economists out there has been taught to prioritise market efficiency over social outcomes and treat complex socioeconomic challenges as mere technical puzzles. If economics is to become a truly relevant and responsive social science, we must reclaim the diversity that once defined the discipline.

I wrote a post on Twitter/X recently, claiming that China is fundamentally socialist, not capitalist. The post generated intense debate. I eventually elaborated on my claim in a lengthier post. You can read the lengthier post below, fully copied in its original form:

This post created intense debate, so I think I should flesh out in greater detail what I mean when I say that China is fundamentally socialist rather than capitalist.

In socialist economies, the state/public controls or owns a majority of the means of production. In capitalist economies, by contrast, private individuals/corporations control or own the means of production.

This makes China, fundamentally, a socialist economy. And it makes the United States, fundamentally, a capitalist economy.

Of course, there are many elements of China's economy that are capitalist — for example, a clear presence and function of private capital and the lack of labour power. Likewise, there are many elements of the US economy that are socialist — for example, the presence of social security and welfare programmes.

In the modern world economy, socialism and capitalism are not clear binaries. All countries fall somewhere in between, and uniquely display features of each system. China is certainly one of them. Keyu Jin gets this across really well in her book, "The New China Playbook: Beyond Socialism and Capitalism." The literature on state capitalism also describes the Chinese economy quite well.

I personally see capitalism and socialism as two massive trees, each with different branches.

My view is that the tree that forms the basis of China's economy is fundamentally socialist. The point I've made about the state controlling the means of production is a very important one: the interests of private capital don't prevail over the interests of the ruling party.

We see this especially in the financial sector. The Chinese state has complete control over the financial sector and the direction of credit, in a way we don't see in any Western capitalist economy. This has been on full display in recent decades: the Chinese state has directed money and investment forcefully in line with long-term goals. The Chinese private sector is clearly subordinate to the state.

The Chinese political leadership also has explicit socialist roots and ideology — it officially embraces Marxism and Leninism. The CCP (or the CPC, if you will) is clearly organised around Leninist principles: a tightly organised elite party with powerful central authority.

From a socialist perspective, one can criticise China for weak labour rights and weak welfare programmes compared to Western states. However, both of these should be understood in the context of China's role in the world economy and China's development trajectory.

Many Western states and corporations contribute to the lack of labour power in China. Low-paid jobs have effectively been outsourced from the West to China for decades now, benefitting consumers, corporations and workers in the West. In fact, if it wasn't for China taking all the low-paid jobs, labour power wouldn't be as strong in many Western countries. My home country, Norway, is a perfect case in point, where labour and private capital have been on a honeymoon for decades because we can import most manufactured goods from China rather than make them at home.

Regarding welfare, this must be seen in the context of China's development trajectory. China's GDP per capita is 1/6 of the US, and they are actually super efficient with resources when we take this into consideration. Life expectancy in China is in fact higher than in the United States. It is true that many welfare programmes aren't as strong in China as in the West, but at this stage, the Chinese state prioritises delivering on acute material needs and economic development (e.g. housing, infrastructure, job creation, poverty reduction). And they are delivering really well on this: China has lifted more people out of poverty than the rest of the world put together in the last 50 years and infrastructure in China is now among the most advanced in the world.

In summary, while China incorporates capitalist elements, its economy remains fundamentally socialist in structure and control.

To pre-empt questions and comments about democracy in China (they always emerge), you can read my thoughts about that here.

Spoiler alert for Jurassic World Rebirth.

I recently went to the cinema to watch Jurassic World Rebirth, the seventh installment in the Jurassic Park franchise. I really enjoyed it. It’s packed with thrilling action and spectacular dinosaurs, and mostly avoids cringy punchlines by the protagonists. It also features a fascinating story about intellectual property. The core mission of the "team"—there tends to be a team mission in the Jurassic Park films—is to extract blood samples from long-living dinosaurs in order to make a life-enhancing drug for humans. The team members with a corporate bent unsurprisingly want to patent this drug in order to profit from it. But the paleontologist, Dr. Henry Loomis, wants to make the drug open-source so that the entire world can benefit from it.

In the end, Dr. Loomis gets his way. After several nerve-wracking encounters with dinosaurs, the team extracts all the blood samples they need. The drug becomes distributed without a patent, open-source for the entire planet. That's how the film ends. It helps, of course, that the team's greedy pharma executive is eaten by a Distortus Rex (a mutated Tyrannosaurus rex).

What a fantastic ending. Sadly, this kind of ending is only fiction for now. In the real world, technology and intellectual property are strongly protected rather than shared globally. Most international trade agreements actively prevent the free flow of intellectual property and technology across borders. In fact, lower-income countries regularly face accusations of "technology theft" from high-income countries. For example, China has throughout its economic development period regularly faced accusations by the United States of intellectual property infringement.

If we want a world of shared prosperity, this way of thinking needs a radical overhaul. The idea that lower-income countries "steal" technology from high-income countries is actually absurd in many ways.

Let me explain. In a capitalist economy, the rationale behind protecting intellectual property is that it incentivizes innovation (through the profit motive). This view is problematic because there are numerous examples of innovation occurring without a profit motive—such as the polio vaccine, the internet, the printing press, and the list goes on. But even if we accept the view that we need patents and intellectual property protection to incentivize innovation, we face a huge international development problem: high-income countries file a lot more patents and profit more from these than lower-income countries. Stronger protection of intellectual property therefore drives global inequality between countries.

In fact, knowledge monopolies and protection of intellectual property among powerful transnational corporations based in high-income countries are driving intense concentration of corporate wealth and power, thereby holding back economic development in lower-income countries. A recent paper by Cedric Durand and William Milberg gets this point across forcefully. They find a tremendous increase in international income generated by intellectual property rights from the 1980s to the 2010s, going almost entirely to high-income countries (dominated by the United States). In 1980, the income generated from international payments related to the use of intellectual property was fairly equal across the world. In 2016, this income was a hundred times higher in high-income countries than in low- and middle-income countries (US$323 billion versus US$3 billion).

We should also recognize that transnational corporations in high-income countries—the main beneficiaries of patents—are completely reliant on labor and production systems in lower-income countries to generate profits. For example, the innovation and windfall profits of the US technology industry would not be possible without labor from and in countries like China and India. In fact, the above-mentioned paper by Durand and Milberg explicitly highlights that large US-based technology firms rake in massive profits primarily because they take advantage of their power in the world economy, rather than because they innovate. If anything, high-income countries owe lower-income countries massive amounts of technology due to taking advantage of their labor and skills.

We need to consider the international development dimension more strongly. Technological development is part and parcel of economic development. In the process of development, lower-income countries rely on some technology transfer from high-income countries. If we want a world of shared prosperity, we would create rules that enable global distribution of intellectual property and technology. Currently, our rules-based order does the opposite—it prevents technology from being distributed widely. It's a good thing when technology is transferred from a wealthier part of the world to a poorer part of the world. It's absurd that we call it "theft." I'm sure the paleontologist, Dr. Henry Loomis, would agree.

Climate debates on China often center on a seemingly paradoxical question: how can the world's largest carbon emitter simultaneously be its most crucial ally in the fight against climate change? While China's coal-dependent industrialization has made it responsible for a huge share of the world's current emissions, the country has also emerged as the undisputed leader in clean energy manufacturing and deployment. This apparent contradiction has fueled heated discussions about China's true climate legacy.

My analysis reveals that China is hardly responsible for climate breakdown — rather, China is proving to be one of the world's most important forces in decarbonization efforts, both at home and abroad.

The emissions picture is more complex than it appears

The case against China seems straightforward. In 2023, the country accounted for 31.5% of global CO2 emissions (production-based), making it by far the world's largest emitter. China's growing emissions stem largely from rapid economic growth and industrialization since the 1980s, fueled by coal-powered energy.

These figures are undeniably problematic, but they tell only part of the story. The emissions picture changes dramatically when we consider two crucial factors: international trade patterns and per capita emissions.

International trade patterns can be considered by looking at consumption-based rather than production-based emissions — the former account for the carbon footprint of goods consumed rather than just produced. These matter considerably for export-oriented economies like China's. It is also important to consider China’s huge population when looking at emissions: China makes up 17% of the world’s population, and should therefore be expected to account for more of the world’s emissions compared to smaller countries. We can adjust for population size by looking at per capita figures.

When we make these adjustments — by examining consumption-based per capita CO2 emissions — China is not the primary culprit behind global warming. Instead, it's the United States, whose per capita emissions are 16.5 metric tons, roughly twice those of China’s per capita emissions.

Even accounting for these adjustments, China's emissions remain substantial. But we're still missing the most crucial factor in assessing responsibility for climate breakdown: historical context.

Historical responsibility: who created this crisis?

Understanding responsibility for climate change requires examining cumulative emissions — the total carbon released since the 1800s, when emissions began increasing substantially. This historical perspective fundamentally changes how we assign responsibility for our current climate crisis.

Researchers have in fact calculated different regions' responsibility for climate breakdown based on cumulative emissions. They have done this by dividing the global safe carbon budget into national 'fair shares' on a per capita basis, then assessing each country's historical emissions against these allocated shares. The results are striking: China is responsible for a mere 1% of climate breakdown. By contrast, the United States bears responsibility for 38% and the European Union for 29%.

This historical analysis highlights an important point: blaming China for climate breakdown fundamentally misses the mark. The climate crisis was created primarily by the United States and Europe over the past two centuries. China's emissions are a relatively recent phenomenon.

China is leading the clean energy revolution

In addition to understanding the responsibility for climate breakdown, we also need to ask: who is leading the solution? China is making a very strong case for itself. The country has leveraged its industrialization to build impressive capabilities in clean energy production at a blistering pace.

Consider this stunning shift: in every major category of clean energy technology, China now accounts for at least two-thirds of the global market share. This is extraordinary considering that China was one of the smallest global players in clean energy technology just 20 years ago. The success story of BYD, the Chinese EV manufacturer that recently surpassed Tesla in global sales to become the world's largest electric vehicle company, exemplifies this transformation.

China's clean energy surge becomes even more impressive when we examine new installed capacity. In wind and solar power, China's contribution to new global capacity has grown from a mere 0.6% in 2001 to 63.3% in 2024. Meanwhile, the United States and Europe — regions largely responsible for climate breakdown — have been investing comparatively little in these critical sectors.

This dramatic shift in clean energy investment represents more than just national industrial policy; it's effectively cleaning up the mess that Western industrialization created. While China's absolute emissions have continued growing alongside its clean energy expansion, recent data suggests the country may be reaching a crucial turning point.

Turning the corner: China's emissions begin to decline

For the first time in China's modern history, the country's CO2 emissions have dropped for a full year that was characterized by growth in energy demand. This milestone occurred because rapid growth in clean energy production finally began outpacing growth in total energy consumption.

This development signals that China's massive investments in clean energy infrastructure are beginning to pay dividends in emissions reduction, even as the economy continues growing. It suggests that China may be pioneering a new model of economic development that decouples growth from emissions — something Western nations failed to achieve during their own industrialization.

How China is enabling global decarbonization

China's clean energy transformation extends far beyond its borders, fundamentally reshaping global decarbonization possibilities. The country's clean energy exports totaled $143 billion in 2024 across lithium-ion batteries, solar panels, and electric vehicles — approximately 10 times higher than comparable exports from the United States.

China’s contribution to decarbonization abroad isn’t just happening via exports of clean energy technology. The country has also become a global vehicle for clean energy investment. Chinese companies have announced a staggering $168 billion in foreign investments in clean energy manufacturing, generation and transmission since 2023. Notable projects include an $11 billion solar plant in Indonesia, a $9.4 billion hydroelectric dam in Congo, and an $8.1 billion battery plant in Hungary.

China’s clean energy exports and foreign investments are, of course, not charity. They involve business negotiations and diplomacy, and are undoubtedly part of China’s soft power strategies abroad. However, the clear upside is that a greater number of developing countries can achieve energy independence through these partnerships with China. Whereas fossil fuels constantly need to be imported — at least for those countries not endowed with plenty of it — the resources needed for a solar plant, a hydroelectric dam, or a wind farm are naturally replenished by the sun, flowing rivers, or the wind.

Conclusion: reframing the climate debate

When assessed comprehensively, the evidence points to a clear conclusion that challenges conventional wisdom about China's impact on the climate. While China's absolute emissions remain substantial, the country's net impact on decarbonization is overwhelmingly positive.

China bears minimal responsibility for the climate crisis that confronts us today. More importantly, China has become the world's indispensable clean energy leader, driving decarbonization both domestically and internationally. As China's emissions begin declining even amid economic growth, the country is effectively cleaning up the mess created by the West.

The implications for global climate cooperation are profound. The international community should recognize China as an essential partner whose clean energy capabilities are fundamental to achieving global decarbonization goals. Without Chinese leadership in clean energy innovation, manufacturing, and deployment, tackling the climate crisis seems like a far-fetched goal.

US President, Donald Trump, recently raised tariffs on imported goods from almost all countries in the world. He claims his tariffs will reduce the US trade deficit, revive American manufacturing, and get the US better ‘deals’ with foreign countries.

But so far, Trump’s tariffs have mostly created economic havoc — both at home and abroad. US tariffs are being raised and reduced unpredictably and recklessly. The US stock market has acted like a yo-yo in response to the tariffs; experts are questioning the status of the US dollar as an international safe haven currency; and investors are losing confidence in the US economy. Even the number of tourists travelling to the US has cratered. In short, Trump is taking a wrecking ball to the American economy.

Trump’s tariffs are also creating problems for many other countries. His rash Liberation Day tariffs were calculated based on countries’ trade surplus in goods with the US: Trump essentially applied steep tariffs on countries that haven’t committed any crime against the US other than exporting a lot of goods to them. This is creating problems for developing countries that are highly dependent on the US market, such as Cambodia, Lesotho and Sri Lanka, to name a few.

However, there is a silver lining to Trump’s tariffs. They are having an unintended consequence that global citizens should celebrate: more people are daring to imagine a world economy that isn’t dominated by the US. If we want a world of shared prosperity and shared power, we should welcome this.

Why is a world not ruled by the US desirable?

We should work towards a world with less US dominance for two important reasons. First, the US has created and maintained a system of global governance that disproportionately benefits itself. The US has too much power in large international organisations, such as the International Monetary Fund, the World Bank and the World Trade Organisation. This uneven distribution of power creates global inequality. For example, it has been documented that transnational corporations based in the US have benefited vastly more than anyone else from proposals implemented by the World Trade Organisation since the early 2000s.

Second, the US has clearly emerged as an imperialist superpower with little respect for the sovereignty of countries that are unwilling to succumb to US hegemony. Violent, and seemingly never-ending, US interventions abroad have made this clear. US leaders often claim that their interventions abroad serve to protect ‘freedom’ and ‘democracy’, but this claim is highly dubious. Here is a good case in point: the US intervened in foreign elections at least 128 times between 1946 and 2014, usually to sabotage the democratic process in favour of US interests. As if this wasn’t shocking enough, a recent report found that 73% of the world’s dictatorships receive direct military support from the US.

Towards a more equitable international order

With less US influence, we would likely move towards an international order where power is more equitably shared between nation states. But exactly how is this power rebalancing playing out?

Trump’s tariffs — coupled with his arrogance in international fora — are making many countries de-risk from the US, economically and politically. Traditional European allies, for example, are seeking more autonomy in trade, defence and energy, taking a more cautious approach to US cooperation. The French economist, Thomas Piketty, recently wrote that “the US is no longer a reliable country.” The EU even issued burner phones to its US-bound staff for IMF and World Bank spring meetings in Washington D.C. in fears of US espionage.

In the Global South, many countries have gradually been turning away from the US and towards large emerging economies within their own ranks, primarily China. But this trend is strengthening amidst Trump’s tariffs. For example, China, Japan, South Korea and countries of ASEAN recently issued a joint statement taking a unified stance against Trump's tariffs and seeking to de-risk themselves from the US.

In this global restructuring, the role of China is very important. While Trump may have tried to weaken China with his aggressive trade barriers aimed at the country, China has proven highly resilient to his tariffs. David Daokui Li at Tsinghua University recently said that US tariffs wouldn’t even make the list of the top three challenges for the Chinese economy. Why isn’t China concerned about US tariffs? Well, China has had to deal with US hostility for years now, and has unsurprisingly taken action. Since 2018, when Trump started his trade war against China, the country has gradually reduced its dependence on the US market.

Not only has China reduced its dependence on the US market, China has also worked hard and strategically to build strong economic partnerships with other countries across the entire globe. This, coupled with the self-destructive behaviour we’re witnessing in the White House, could pave the way for a new international economic order with a stronger role for China and a weaker role for the US.

This is not saying that China will replace the US as global economic hegemon. Nor is that desirable. But a restructuring of global economic power is desirable; a restructuring involving less US dominance. As nations increasingly seek alternatives to US-centric trade relationships, we stand at the threshold of potential systemic change. There is now hope for a more equitable international order — one where prosperity is shared rather than concentrated, where sovereignty is respected rather than undermined, and where cooperation replaces domination.

China’s rise in the world economy is arguably the most significant economic and political event of the 21st century. It’s reshaping global trade and geopolitics at astonishing speed. Much of the West, especially the US, has responded with alarm. Donald Trump’s tariffs are the clearest example. But the hostile response to China’s rise is misguided. The rise of China is not a threat to global stability — it’s a development that we should welcome.

China’s rise to economic superstardom has been rapid and without precedent. The country’s dominance in global trade underpins this rise: China recently became the first country in history to record a trade surplus of $1 trillion.

This dominance has been made possible by an export-led industrialisation push. China plays a part in practically all global manufacturing industries. It now accounts for more than 35% of global manufacturing, a number which is expected to increase to 45% by 2030.

China’s dominance in global trade and global manufacturing have raised alarm bells in some countries, particularly the US, which increasingly views China as an economic threat and competitor. The hostile stance towards China has practically reached bipartisan consensus in the US now. Since 2018, both Republican and Democratic administrations have implemented strict trade restrictions aimed at China, such as export restrictions and tariffs.

There are of course legitimate reasons to worry about China’s dominance in global trade and manufacturing. If China’s dominance in these areas keeps growing, there will simply not be enough of the ‘pie’ to share between the rest of the world. Beyond the US, many countries have expressed concerns about their ability to compete with China, including Germany, Japan, South Korea, Chile, Turkey and India, to name a few. However, we should keep in mind that China has not by itself eroded manufacturing capabilities in these countries or prevented manufacturing capabilities in these countries from developing. It’s a complicated picture.

With respect to the ties that China is building abroad, the picture is also complicated. Kyle Chan argues that China has diverse strategies of ‘industrial diplomacy’ abroad. In some countries, such as Brazil, Indonesia, and Mexico, China is ramping up manufacturing investment. But in other countries, most notably India, China is limiting the flow of workers and equipment.

China’s rise in the world economy clearly comes with benefits and drawbacks. But I’d argue that the benefits outweigh the drawbacks.

The West has profited from China’s rise

China started becoming a big player in the global economy in the 1990s and 2000s, marked by membership in the World Trade Organization in 2001. This was welcomed by most countries in the West. For consumers and corporations in the West, China’s integration into the world economy meant access to vastly cheaper manufactured goods and access to a larger variety of manufactured goods, both as inputs and finished goods.

One country in particular took advantage of the efficient and low-cost production systems that China offered: the US. William Milberg and Deborah Winkler have documented that the price of manufactured goods imports into the US have declined massively relative to US consumer prices in non-traded sectors between the 1980s and early 2010s, in some instances by more than 40%.

US corporations are among the greatest beneficiaries of China’s integration into the world economy. There is a common misconception that Chinese firms are outcompeting US firms. While this is true in some sectors — and is increasingly happening —, the capitalist rise of China has actually boosted US structural power in certain ways, especially by generating more profits for US corporations. Research by Sean Starrs finds that most global industries are still dominated by US corporations, aided by China’s rise. Starrs highlights that both investments in China and imports of inputs from China have enabled US corporations to maintain their global dominance.

The electronics giant, Apple, is the perfect case in point. Apple has made a fortune in China: $227 billion in operating profit over the past 10 years, which accounts for over a quarter of its operating profit during this period.

US tech giants’ dependency on Chinese goods was in the spotlight recently. When US president Donald Trump announced steep tariffs on Chinese imports in April 2025, CEOs in the US tech industry were outraged as the share prices of their companies plummeted. But these CEOs rapidly and successfully lobbied Trump to quickly lower tariffs on Chinese-made electronics items, which big tech firms, such as Apple, Nvidia and Microsoft, are completely dependent on. Although many of these corporations have plans to become less dependent on China’s production systems, it’s simply not economically profitable for them at this point. Apple’s supply chain is a good case in point. 157 of the 187 suppliers used by Apple currently have a presence in China.

It’s commonly argued that China has benefitted from the economic relationships forged with US corporations — both through attracting investments and through supplying US corporations with inputs. China has indeed utilised relationships with companies such as Apple in clever ways in order to build up technological capabilities. But we can hardly claim that China has gotten a fair deal. For example, throughout the 2010s, Chinese workers and firms that assembled the iPhone got less than 1.5% of the final retail price. Chinese workers have literally toiled for pennies in factories serving US markets.

China’s rise offers new (and potentially better) partnerships for the Global South

China has made a committed effort to strengthen economic relationships across the world. For countries in the Global South, this is an opportunity to strengthen ties with a superpower that shares a common challenge: trying to emerge from the economic periphery. In this sense, China provides a welcome alternative to existing North-South relationships, which have often been (and often still are) characterised by imperial arrangements designed by the North to extract profits and resources from the South. While China may not be a magic bullet for economic development in the Global South at large — and while we need to recognise China’s diverse strategies in the Global South —, it would not take much for China beat the poor track record of Western involvement in developing countries, especially in Latin America and Africa.

We should pay particular attention to Africa, where China has strengthened both economic and political relationships. By now, China is the most important trading partner for almost all African countries. This stands in stark contrast to the situation in the early 2000s, when African countries traded more with Western partners, such as the US.

China has become highly popular in Africa. In Sub-Saharan Africa, positive views of China outweigh negative views by a factor of about 3 to 1 across nearly 300 surveys in the region. China is also contributing to economic development in Africa. A review of over 100 articles found that Chinese firms in Africa have a positive impact on economic development, capacity building, and innovation.

This does not mean that China’s economic impact in Africa is unambiguously positive. But the pendulum tends to swing too much in the other direction, uncritically reinforcing negative narratives about China's rise in Africa — often with little to no grounding in real evidence. It’s important to debunk such narratives. The narrative about China's "debt-trap diplomacy" in Africa is a good example. This refers to a perceived strategy whereby China provides substantial loans to African nations as a way to trap them into debt. This narrative has turned out to be nonsense. A study that looked at more than 1,000 loans to Africa found that Chinese lenders never seized assets, never used courts to enforce payments, and never applied penalty interest rates.

China is a climate champion

China’s impact on the climate is heavily debated. On the one hand, China’s industrialisation has entailed considerable growth in greenhouse gas emissions. On the other hand, China has become a global leader in efforts to develop technology for renewable energy. I would argue that the benefits of the latter outweigh the costs of the former.

It’s important to look into the details of China’s growing emissions to understand the full context of them. If we look at consumption-based emissions (which is vital because we want to account for where things are consumed, not only produced), China is not nearly as bad as some other major countries, most notably the US, in per capita terms. The below chart, which depicts this, doesn’t even account for countries’ historical emissions. If it did, most countries in the West would score far worse than China. So, while China can surely work on reducing their emissions, the responsibility to do so primarily lies with the West.

China’s growing emissions can largely be attributed to rapid industrialisation. In this respect, it’s important to note that China has used its industrialisation and increased productive capacity to massively scale up production of renewable energy devices. As of 2024, China accounted for 60-85% of the global market share across a range of renewable energy devices, including the production of solar panels, wind turbines, lithium-ion batteries and electric vehicles. This is not only helping China slow down growth in emissions — it’s also offering other countries to do the same by exporting these products to them.

What’s good for China is good for a big part of the world

I’d like to conclude this post by highlighting a point often overlooked in the debate on China’s rise: if China does something that benefits a majority of their own population, this, by definition, benefits a big part of the world. How? Because China accounts for roughly 17% of the world’s population. According to World Bank data, since 1980, the number of people lifted out of poverty in China exceeds the number of people lifted out of poverty in the rest of the world. This is a remarkable achievement by China, and should be celebrated by anyone who cares about international development.

We see that China’s economic ascent, while not without challenges, has delivered undeniable benefits. The alarmist anti-China rhetoric has unfortunately overshadowed the positive aspects of China’s integration into the world economy. In a world quick to view China’s rise with suspicion, it’s time to shift the narrative.