China’s Last Year?

China’s Last Year? By Peter Zaihan.

I see China with not just a demographic failure, but a failure of leadership, a failure of policy, an agricultural failure, and an energy failure, all at the same time. It is entirely possible that this is the last year of the People’s Republic. …

China was already the fastest aging society in human history with the biggest sex imbalance. We already knew that their economic model would not match up with this demography this decade, we always knew that the economic collapse of China was coming. …

Chinese labor is no longer cost-competitive with other Asian countries like Thailand or The Philippines, or Mexico. This is the fastest labor [wage] appreciation in human history, including during the black death, including during all wars. So we’re looking at a 15-fold increase since 1999, [while] their labor effectiveness productivity is probably only increased by a factor of two, maybe three.

There is not an industrial process that is done in China that can’t be done in North America [which includes Mexico] at a lower cost, because our labor is so much more productive, our energy is so much cheaper, our supply lines are so much shorter and you can produce stuff where people actually live. …

The only reason we think of China as a major industrial player is because of the sunk cost of the preexisting industrial plant. … You don’t rebuild that somewhere else overnight. But it is happening. The United States is already in the process as its fastest industrialization, even faster than what we did during World War II. …

On Taiwan and Ukraine:

The Chinese plan has always been to let the Russians go first, just as a proof of concept. So their thinking was a fast war that conquers Taiwan in a matter of days, that imposes a done deal upon the world, and everyone just sucks it up and takes it, because China is too economically powerful to be challenged. And once you hold the territory, there’s no point in going to a broad scale war against the Chinese when it’s already happened. That’s always been their plan. …

With the Russians, they have had every aspect of all of their planning for the last 40 years set on fire and burned to ash in less than a month.

  • It will not be a quick war, because Ukraine was one of the world’s less militarily competent countries in the first place and they’re still holding out against the Russians.
  • Taiwan has been preparing for this war since 1955.
  • Taiwan has a moat.
  • Taiwan has a nuclear program that started in 1974, so if we have a two-month accumulation of Chinese forces getting ready to push, the Taiwanese will see it because this is the only national security question that they pay any attention to, and they will make a nuclear device.

And so the only way that the Chinese can even make an attempt on Taiwan is to text all of their soldiers at the same time and just say everyone get to the coast take a fishing boat with your buddies and start moving on Taiwan. They know it is going to cost them a million troops just to get there. …

Russia has many flaws, but they’re a massive producer of food and energy products. If you put the sanctions that we have put against Russia onto China, oh my. China imports 85% of their energy, 85% of that from the Persian Gulf, and they import 85% of inputs that are necessary to grow their food. So you would have an industrial collapse, a civilizational breakdown, and mass famine within six months, and then you would probably lose a half a billion Chinese over the course of the next year to famine. …

The one that has scared the Chinese the most are the boycotts. BP and Halliburton didn’t have to leave, they weren’t doing anything that was sanctioned, but the super majors and the oil services firms and countless other firms left on a moral imperative prompted by individual shareholders and consumers. And in China, the idea that the average Joe or Jane can influence policy is so antithetical to their mindset that they had no idea this was even possible, much less it was going to happen. So everything that the Chinese have based their system and their strategic policy on for the last 30 years has been proven in the last two months to be utterly wrong.

Probably overstated, but China has major problems and Taiwan is breathing easier these days.

via Lawrence Person