Hegemony forged in steel: green hydrogen opens a new front in the China–US rivalry

"The skeleton of the modern world is made of steel, its brain of sand, and its nerves of critical minerals"

I – THE EVOLUTION OF IRON: HUMANITY'S DESTINY

Prehistoric ages are remembered by the principal materials that reflect civilisations' technological development: following the Stone Age came Copper, Bronze, and finally the Iron Age. Considering that the most widely used metal today is iron/steel (approximately 1.9 billion tonnes per year), followed by aluminium (approximately 69 million tonnes per year), it becomes clear that the Iron Age — the structural foundation of our civilisation — is still ongoing. For the steel used today is merely a high-performance alloy of iron.

Our modern infrastructure — bridges, transport networks, skyscrapers, heavy industrial machinery, and energy facilities — still depends on the industrial strength of iron and steel. The hegemony of this era demonstrates how critical the control, supply chain, and production technology of this fundamental material are from a geopolitical standpoint.

To know the story of iron is to know the history of civilisation. This simple yet powerful element has played a decisive role not only in the making of tools and weapons, but also in the economic, political, and cultural transformation of societies. This article examines the journey of iron from past to present, its impact on human history, and its place in the struggle for hegemony.

Rebuilding the bonds of steel

2000–2010: In global steel production, China rose rapidly thanks to low costs, economies of scale, and vast production capacity. While production capacity declined in Eastern Europe following the collapse of the Soviet Union, Western countries shifted toward high-tech and quality-oriented production. During this period, steel emerged not only as a material for construction and industry but also as the foundation of information and communication infrastructure. Data centres, electric vehicles, wind turbines, and 5G infrastructure were all built on steel.

2010–2025: Carbon neutrality and sustainable production targets accelerated the development of new steel alloys. For example, Mn–Al–Si steels provided lightness and durability in electric vehicle bodies. China, controlling more than 50 percent of global steel production, transformed it into a geoeconomic instrument of power.

Today, steel production is measured not only by volume but by its environmental footprint. China's strategy of shifting low-profit/high-emission production to Southeast Asia and Africa partly serves the purpose of spreading the carbon burden. At the same time, China is rapidly developing Green Hydrogen technology alongside carbon avoidance (emission reduction). This is where Green Hydrogen Steel (Green Steel) enters the picture: instead of the carbon-emitting coking coal used in conventional production, hydrogen derived from renewable energy is employed, and the only by-product is water vapour. This process is the only way to decarbonise steel production.

In response, the West (particularly the EU) is attempting to establish a new hegemony focused on high technology and zero emissions through projects like HYBRIT, which aim to reduce iron ore using Green Hydrogen instead of coking coal. This "Green Steel" race once again transforms steel into a geopolitical indicator; carbon border taxes (CBAM) are erecting new protective walls in international trade. The US, meanwhile, is causing global tensions and fuelling uncertainty due to the differing policies of Republicans (based on neorealist thinking) and Democrats (based on neoliberal thinking).

Critical Threshold 6: Steel is no longer merely an indicator of production or military power; it has become a strategic commodity of global supply chains and digital infrastructure. Human slavery was ended; yet industrial steel robots are beginning to take their place in history as the new metal slaves that assume humanity's labour.

Iron, when it first appeared, was a stone fallen from the sky; today it is the invisible skeleton of our civilisation. Every centre of power throughout human history has dominated to the extent that it controlled iron or steel.

II. CHINA'S TRANSFORMATION: FROM THE SMILING CURVE TO THE SMILING GLOBE

The Smiling Curve Theory: Role Distribution in the Global Value Chain

In the late 1980s, Acer founder Stan Shih developed the "Smiling Curve" model to explain value distribution in global production chains. According to this model, the highest value-added in a product's creation process is concentrated at the ends of the chain: the left end represents intellectual capital activities such as R&D, design, and patents, while the right end represents marketing, brand management, and customer relations. The production, assembly, and logistics processes in the middle of the chain carry lower value-added and profitability. In the iron and steel sector — the world's most heavily produced commodity with inherently low profitability and high environmental costs — the shift in the production axis has been dramatic.

China's steel production was around 128 million tonnes in 2000 and surged by more than 700 percent to 1,053 million tonnes by 2020. India rose from 27 million to 110 million tonnes, South Korea from 51 million to 71 million tonnes, Türkiye from 14 million to 34 million tonnes, and Vietnam from zero to 20 million tonnes, while US production declined from 159 million to 72 million tonnes. Similar declines were seen in the UK and EU countries. The Smiling Curve showed its effects quickly.

Western economies positioned themselves at both ends of this structure as producers of ideas and brands, while China long remained in the middle as "the world's workshop." This reflected the fundamental paradox of neoliberal globalisation: the West thinks, China produces. China, however, refused to accept this hierarchy and initiated a strategic transformation — supporting its production-centred position with investments in technology, R&D, and brand development, aiming to increase its own value-added in the global value chain.

China's response: the "Smiling Globe" strategy

From the mid-2000s onward, China developed a systematic strategy to transform its low-value-added position in the global value chain. This strategy progresses along three dimensions:

1. Vertical ascent – the technological ladder

China is not only increasing production volume but also raising production quality and technology intensity. The "Made in China 2025" programme targeted ten strategic sectors from steel to robotic manufacturing, promoting high-tech steels, stainless and alloy products, and nano-steel production. Thus China began climbing upward from the bottom of the Smiling Curve.

2. Horizontal expansion – restructuring global networks

China began building production and supply networks not only within its own borders but also in foreign markets through the Belt and Road Initiative (BRI). These networks are creating a China-centred alternative ecosystem to Western-centred logistics chains. By establishing steel mills, energy infrastructure, and mining operations in Africa, the Middle East, and Southeast Asia, it is creating geographical dependency chains.

3. The leap to intellectual capital

By the late 2000s, China began producing not just products but patents. Companies like Huawei, CATL, and BYD integrated into the left end of the chain where R&D activities are concentrated; by 2024, China became the leader in global patent applications. It created its own brands and developed marketing systems.

Through these three dimensions, China pulled the production and assembly processes at the centre of the Smiling Curve toward a value-added centre, restructuring the management and control of the chain in its own favour. By also making breakthroughs at the design (left) and marketing (right) ends, it began to reshape the curve.

From economics to geopolitics: the new global power balance

China is using its production surplus not only as economic capital but also as geopolitical capital. Steel and rare earth elements (REE) form the two fundamental pillars of this strategy: steel strengthens control over industrial infrastructure, while REE secures high-tech ecosystems. The Smiling Curve applied to the value chain of each product. China's role was to handle production in the value chain. But China took the competition beyond the production chain (product). In 2025, competition is over infrastructure, not products: steel → port → railway → 5G → data centre → electric vehicle charging network, and the financing that supports them. This is a circular, multi-layered, geographically distributed sphere. China is creating its own curves spanning the entire world. I propose calling the three-dimensional version of the Smiling Curve, which reflects the global production network and strategic infrastructure integration, the "Smiling Globe."

Thus China, by reversing neoliberal globalisation's "Smiling Curve," is determinedly advancing — with soft power elements — toward realising the "Smiling Globe" model and reshaping the global order long managed by the West in its own favour.

This transformation is not merely economic competition but the geographical and strategic repositioning of global value chains.

III. THE STEEL BATTERING RAM: THE STRATEGY OF EXPORTING HEGEMONY

Throughout history, China was a civilisation that "tamed iron with fire." But in the 21st century, iron in China's hands became not merely a production material but a geopolitical lever. Today, China produces approximately 1 billion tonnes of steel annually, accounting for more than half of the global total (1.8 billion tonnes). This production scale signifies not only industrial supremacy but also the capacity to create global dependency. The fundamental question in this context is: why does China assign such strategic significance to steel?

Rational strategy: building an empire from steel

In China's economic rise, steel has served a dual function: Steel forms the backbone of national development; it supports domestic economic growth as the fundamental material for infrastructure, construction, energy, transport, and defence sectors. On the other hand, it is an instrument that generates international dependency. Infrastructure projects carried out under the Belt and Road Initiative (BRI) are built with Chinese steel, and through this, many countries become permanently linked to China in terms of industrial infrastructure. Furthermore, China spreads its influence by relocating steel factories abroad. This dual function not only erodes the West's industrial supremacy but also creates a new form of hegemony: "Not just production, but dominance over production networks."

China's recent restrictions and redirection policies in steel production are, in this context, not merely environmental but also economic engineering tools. Five fundamental motivations underpin this strategy.

1. Internal transformation – reducing the carbon footprint, increasing value-added

The Steel Industry Stability Plan announced in 2021 is ostensibly a green transformation project, but at its core it aims to improve production quality and redirect the economic structure. By limiting high-emission, low-profit production, China is steering its industry toward high-value-added alloys, stainless steel, and advanced metallurgy. This means that even if production volume decreases, per-unit earnings rise; the "carbon neutral" policy becomes a tool of economic selection. China uses the "green transition" rhetoric to outsource low-profit segments while retaining high-tech segments domestically. While reducing emissions, it aims to break the carbon-neutral chain by developing Green Hydrogen technologies.

2. Geopolitical bypass – circumventing the West's tariff walls

Chinese steel has long been targeted by anti-dumping duties from the US and EU. In response, China has geographically relocated its production to circumvent these barriers through geopolitical bypass. Giants like China Baowu Steel and HBIS have established facilities in Africa, the Middle East, and Southeast Asia, gaining "local producer" status. Thus, Chinese steel can enter the world market under a "local production" label in countries like Egypt, Indonesia, and Malaysia. China is bypassing trade restrictions through geography; it is not changing the production location but redefining the boundaries of the global trading system. These are the battering ram blows that demolish tariff walls.

3. Secure networks – from maritime dominance to land sovereignty

China's steel industry is heavily dependent on imported iron ore. More than 60 percent of this ore is imported from Australia and Brazil; transportation routes pass through sea lanes monitored by the US Navy. This creates a strategic risk for China.

4. Breaking resource dependency – escaping the global capital trap

The fifth motivation in China's steel strategy is breaking the dependency on global capital for raw material supply. The enormous quantities of iron ore required for annual steel production were long controlled by Western mining giants such as BHP, Rio Tinto, and Vale. This situation shifted pricing power outside China and left the supply chain vulnerable to Western geopolitical influence.

To reduce this dependency, China has: partnered in giant sites like Simandou (Guinea) and Belinga (Gabon) in Africa, and purchased direct mining shares in Latin America, Central Asia, and Australia. It has thus created a resource-production chain that integrates iron ore extraction and steel production in the same geography. China is gaining economic independence by sourcing iron ore from its own capital extensions rather than from global mining giants, breaking the West's mining hegemony with steel battering ram blows.

5. Hegemonic expansion – building a new dependency circle

Every steel investment China relocates abroad is not merely a factory but also a dependency mechanism: financing comes from Chinese banks, technology from Chinese engineering, and management from Chinese companies. This structure ties countries along the Belt and Road to China through industrial infrastructure. Even as production is externalised, the chain's centre remains in China. Unlike classical Western colonialism, China is establishing not territorial but production dependency; it is turning steel into the "silent colonial instrument" of the new era.

The steel battering ram strike

The West's economic order was long shaped around the finance–technology–design axis. China is attacking this structure with a "steel battering ram": eroding the West's production infrastructure, making supply chains China-centred, redirecting logistics routes, and ultimately taking control of the global value chain's lock.

The sustainability of China's aggressive strategy stems from the ability of its state-owned enterprise (SOE) steel giants to continue production even when unprofitable, protected from systemic bankruptcy risk by state guarantees. The financial fuel for this power is China's continuous and large current account surplus from exports; this surplus provides the capacity to finance R&D investments, technological leaps, and critical infrastructure projects without depending on Western financial conditions, thereby balancing vulnerabilities such as raw material and sea route dependency.

The competition between Western capital's profit-oriented, dispersed, and short-term oscillation and China's planning-centred, holistic, and long-term steel determination is increasingly tilting in China's favour. The European Union's green steel strategy is important but feeble; it cannot form an effective counterweight against high costs, infrastructure deficiencies, and the US's inconsistent carbon policies. While US pressure in high tech slows China, it is insufficient to stop China's material supremacy in the production-supply-logistics triangle.

Steel has once again become a metal of power — but this time not in swords, but in global supply networks.

The "China domestic market price," which has become the global price reference, is now more influential than even the London Metal Exchange. As a result, many countries' industrial costs have become dependent on Beijing's supply decisions.

Steel factories established outside China (Saudi Arabia, Zimbabwe, Nigeria) have been financed with Chinese loans. These loans tie production decisions directly to Beijing's approval.

Thus, instead of classical military bases, influence is being established through "industrial bases." Türkiye, Indonesia, and Thailand are among the countries where Chinese steelmakers are planning investments.

Chinese steel functions like a monetary policy instrument in the global supply chain — providing economic direction through control of supply and finance.

Infrastructure diplomacy: the steel beneath the concrete

The Belt and Road Initiative (BRI), while appearing on the surface as a transport and investment project, is fundamentally a steel diplomacy. Every railway line, port, or dam project is built with thousands of tonnes of Chinese steel. For the recipient country, this means not just construction but long-term technical dependency.

Pakistan's Gwadar Port was built with Chinese steel and is operated by Chinese companies. African railways — the rails, wagon frames, and connectors — are of Chinese origin. Because these countries must maintain the same standards, they become permanently tied to China in terms of maintenance and spare parts.

For this reason, China's strategy is not merely a "debt trap" but also a "materials trap" strategy.

Geopolitical impact: the silent hegemony built with steel

The emerging structure is an economic network based not on ideology but on infrastructure dependency. While Western alliances rest on security agreements, China's alliance is built on constructed dependencies.

China's steel export map clearly shows this network: Southeast Asia, Africa, the Middle East, and Latin America are all highly dependent on China-sourced industry and infrastructure projects. This situation has created a form of expansion without war: China is establishing geopolitical influence through materials.

While the West controls the seas, China controls the steel beneath the concrete.

Steel tension: the new axis of global power conflict

Today's invisible reality: the skeleton of the modern world is made of steel, its brain of sand, and its nerves of rare earth elements. Even data cables are protected by steel armour, meaning every digital infrastructure's foundation rests on physical metals. Against the post-industrial "beyond-matter economy" thesis that the West has embraced since the 1990s, China early grasped that material production — particularly metallurgical infrastructure — is still the core of hegemonic power, and that controlling "matter" as much as "information" is essential. Global hegemony is determined not by ideologies but by the control of furnaces, temperatures, and production flows.

The China–US tension is reshaping global supply chains in their entirety and directly affecting Türkiye as well.

Türkiye's steel heritage: the industrial backbone

Türkiye, by virtue of its location and production capacity, is both a regional producer and a transit hub in the global steel chain. According to 2023 data, Türkiye is the world's 8th largest producer with approximately 35 million tonnes of crude steel output. The sector generates approximately $16 billion in annual exports and more than 2 million indirect jobs. Production is primarily concentrated in construction steel, long products, and hot-rolled flat products. Stainless steel is entirely imported from abroad (EU, China, Indonesia, South Korea, among others). There is a strong industry based on imported stainless steel. The missing link in the value chain is stainless steel production.

The republic's first industrial policy (1930s) began with the Karabük Iron and Steel Works, strengthened during the Cold War with facilities like Ereğli Iron and Steel (Erdemir). Thus steel is not merely an industry for Türkiye but an ideological symbol of modernisation. Türkiye's development story is a story "woven from steel." Yet the type of this steel is still carbon-based and low-alloy. Türkiye could not obtain steel production technology from its Cold War ally the West; it procured it from the "enemy" Soviet Union. It paid the price for this with coups.

Türkiye transitioned from iron to steel but could not make the leap to stainless steel production.

America's dilemma, Türkiye's opportunity

The fate of the Smiling Curve, which neoliberal global capital built and China is dismantling step by step, will be determined by US domestic political competition. While Democrats, under pressure from global capital, try to keep China as a production contractor in the middle and preserve the status quo created by the curve, Republicans — in Trump's second term — want to shatter the curve and rebuild the entire value chain within the US and trusted allies. This internal conflict is buying China's "Smiling Globe" strategy invaluable time. For while Washington debates internally "should we preserve the curve or destroy it," Beijing is weaving the global chain in its favour with steel bases stretching from Africa to Asia.

For Türkiye, this carries certain opportunities: when Democrats are in power, partnerships with the EU on green steel and becoming a stainless steel supplier become possible; when Republicans win, partnerships with US steel industry against China and easier access to European markets could materialise. On the other hand, China wants to leverage Türkiye's position to access the EU market, which would strengthen Türkiye's bargaining hand against China. China could invest in Türkiye for stainless steel production, but this must occur in a way that does not create dependency.

Türkiye will determine its own position through the smart moves it makes. It has high iron and steel production capacity, possesses the necessary ferrochrome resources, and has nickel production; what remains is to combine these and produce stainless steel. This is a TOGG-distance away. However, one must not lose the existing OYAK while pursuing TOGG.

The question is no longer "who produces more" but "who determines the direction of production, whose steel carries the world." "Consequently, today's hegemony struggle is nothing less than a battle to simultaneously control the innovation of ideas, the flow of finance, and the steel of factories."

The "Century of Türkiye" will be built with the right answers to problems forged from steel.