Peter Zeihan on China

Investment Analysis Clubs Macro Economic Trends and Risks
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A bit of a rehash. China is in a world of hurt due to demographics.

China’s birth rate is below US’s since 1991.
More people over age 53 than under.
Labor cost in China are double Mexico. And Mexican workers are more skilled. Skill level of Chinese worker is stagnant.
China is debt ridden.
China agriculture is the least efficient in the world.
He still the collapse of China in 8 to 10 years. The current US president will accelerate the pace of the collapse.
No mention of AI & robots. China is making great strides in those areas. I assume both lessen the strain of the demographic issue keeping China in the manufacturing game.
I don’t disagree that collapse is coming to China. I disagree on the short time span prediction of Zeihan.

The China economic system is based on political stability via bribing the population. All cash is force into certain investment vehicles subsidizing the availability of capital for business to employ the population.
The population demographic & Covid means consumption has declined in the past 6 years.
The current president’s tariffs on China goods creates a problem for US consumers and likely will cause a Recession there. The tariffs are the “Kiss of Death” for the China economy. The rest of the world does not have excess amount of consumption to absorb what was exported to the USA. There is no possible trade deal between the US & China.
China is hoping for a repeat of a phase 1 trade agreement in the first term of the current US president. China sign signs the deal and then ignored the agreement on intellectual theft etc.

Shortage of daily use China consumer goods. China tech goods will still flow as US tech world convinced the current president to put an electronics exception in the China tariffs. Substitutes on the daily use consumers goods will eventually appear from other sources because the US demand is there. Industrial goods such as machinery & transformers will seriously impact US reindustrialization. Yes we do make those items but manufacturing of those items would have to triple in size. The size of US reindustrializtion to replace China will require a 50% increase in the electrical grid. Ain’t gonna happen.
In 2 to 3 years product shortages in the US will intensify and inflation will take off.

Zeihan predicts tough times for the US but a stake is driven through the China economy.
Again I agree with him that economic conditions will be worse in China but not a dire as he predicts.

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I asked Perplexity to summarize every Peter Zeihan China video ever created:

Zeihan says China is on the brink of demographic collapse. He also says Xi has a cult of personality and doesn’t understand how bad things are.

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Perhaps you could explain how it existed without bribes for 1000 years as an agrarian society. Perhaps there’s more to the culture than seen through Western eyes?

The Chinese have seen their country go from mostly farming to mostly industrial in less than a full generation, something that took the US and Europe hundreds of years to accomplish. Maybe the natives will be restless, but I’d give them the chance to work it out, particularly with the kind(s) of repression available to that government versus the kinds we are used to (and are just beginning to glimpse.)

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