The Bloc Structure: Why the US Controls 66% of Global GDP in the Fractured World

Capital Economics developed a methodology to sort countries into blocs using trade relationships, capital flows, and geopolitical links. The result reveals a stark asymmetry: the US bloc controls roughly 66% of global GDP while the China bloc holds only 25%. Population is split evenly, but economic power is not.

The Five-Tier Classification

Countries now sort into five categories:

1. Strong US ally
2. Lean towards US
3. Unaligned (very few will successfully remain here)
4. Lean towards China
5. Strong China ally

Bloc Composition

US Bloc: All of Europe, Japan, Korea, Taiwan, low-cost producers (Mexico, Vietnam), resource countries (Canada, Australia)

China Bloc: Mainly commodity producers – Russia, Iran, Venezuela, large parts of sub-Saharan Africa

The edges around these blocs are fuzzy. Countries can shift. Argentina leaned toward China under Fernandez, now leans toward US under Milei. The boundaries are contested terrain.

The Neutrality Illusion

“Everyone wants to be the Switzerland of the fractured world. Everyone wants to be neutral. I’ve been through the Middle East, through Asia, through parts of Europe, Latin America – everyone’s trying to position themselves as being neutral.”

“But very few countries get to choose to be neutral. The contours of this fractured world will be set by the US and China. They’re the superpowers here.”

Key Takeaway

The economic center of gravity remains firmly within the US bloc. This asymmetry is the US’s strategic advantage – and the source of China bloc’s vulnerability. As rare earth analysis shows, commodity dependence doesn’t equal strategic power.

Source: The Great Fracturing with Neil Shearing on The Business Engineer