Can China turn national power into world leadership?

As turbulence grows in many countries, it is tempting to ask if there is a global hegemon that can sort everything out fairly.

US President Donald Trump has threatened that his country would not defend Nato allies if they failed to spend enough on their defence. Together with new trade barriers, his words suggest that the US is scaling back its ambitions for global leadership and concentrating more on its own region.

Our latest projections of national strength for 2027 take into account resources, territory, economic strength and military power. They still put China in first place, with its lead over other countries widening. But when might China move beyond leading the ranking to exert decisive influence over the world’s trouble spots and become a global arbiter?

To explore that question, we should first look at how states have assessed national power. Ancient rulers counted people, revenues, troops, ships and resources but these were separate assessments, not a single measure of national power.

A more systematic approach emerged in the late 17th century. Economist William Petty’s political arithmetic compared England with France and Holland through territory, population, trade, shipping, public revenue and the ability to support armed forces. It was an early attempt to assess a country’s strength by considering several factors together.

Today, computing power and better tools for analysing data make it possible to assess many dimensions of national strength across countries at once.

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A national strength index is like a state’s dashboard. One gauge shows the fuel level, another the speed, a third the condition of the engine. A driver needs the whole panel: each gauge tells only part of the story. Gross domestic product shows the size of an economy, while defence spending shows how much a country devotes to its armed forces. Overall strength also depends on territory, resources, population and science, and on how these assets work together.

Among the 193 countries in our index, China ranks first, the US second and Russia third.

China’s lead rests mainly on the scale of its economy and industrial production. Its large domestic market, workforce, infrastructure and extensive supply chains provide a strong base. They help China develop its scientific and technological capacity, strengthen its armed forces and increase its influence on the world economy.

Our calculations show a gradual decline in America’s relative strength and share of the global economy. Structural imbalances, slower growth and rising debt pressures are part of the picture. The US pays more than US$1 trillion in interest on federal debt every year.

The components of our index reflect how a state works. Each has its role, but also supports the others. In our assessment for 2027, the economy carries the most weight, followed by the armed forces. The economy is the military’s material base. Defence spending becomes real power through factories, design centres, testing grounds, repair facilities, transport, energy supplies and skilled workers.

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In a long confrontation, the ability to produce weapons and ammunition at scale, repair equipment and raise output quickly becomes crucial. Economic capacity thus shows the depth of a country’s reserves and its ability to sustain a military effort.

Large defence orders can also support the economy. Long-term contracts give factories steady work and a reason to invest in equipment. Mass production creates demand for metals, chemicals, electronics, machine tools, transport and software. Training builds engineering skills, while research can produce technologies with civilian uses. New plants and infrastructure can expand a country’s productive capacity for years to come.

Military spending trends show that major powers see defence capacity as a long-term priority. According to the Stockholm International Peace Research Institute, global military expenditure has risen significantly.

The three biggest spenders, the US, China and Russia, accounted for about US$1.48 trillion, or 51 per cent of the world total. Their concentration at the top broadly matches our national strength ranking, although the order and gaps differ. Military spending matters, but overall strength rests on all the components.

Europe saw particularly rapid growth: military spending reached US$864 billion last year, up by 14 per cent. Germany increased spending by 24 per cent to US$114 billion, while Spain raised it by 50 per cent to US$40.2 billion.

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But military protection is only part of the picture. It is one response to the fragmentation of the global economy into macro-regions, a trend noted by many international organisations. Fragmentation may be only the first stage of this change.

The next could be “fractalisation”, a process in which large regional economies reproduce some of the functions of the former global system within their own networks.

They connect markets and build supply chains, transport routes, payment systems, technology platforms and standards. They continue to trade with the wider world, while making sure essential functions can keep working if particular external links fail. Chinese President Xi Jinping’s proposals last month for a Brics special economic zone, a digital platform and closer industrial cooperation may be early signs of this process.

Our calculations for 2027 put China first in national strength. But a ranking cannot tell us whether other countries will accept its leadership. That depends on whether the links China offers work beyond its closest partners, and whether others find them reliable and beneficial.

If stronger regional systems begin to connect more closely, they could lay the foundations for a new phase of globalisation. Only then will we see whether China can play a leading role in shaping the next world order.