The Peter Zeihan Podcast Series - Can Immigration Solve China's People Problem? || Peter Zeihan

Episode Date: November 18, 2024

China is facing a demographic crisis, but can immigration be used to counter it?Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://mailchi.mp/zeihan/can-immigration-solve-chinas-people-problem

Hey, everybody, Peter Zion here coming to you from a snowy Colorado where we're in the column between the storms, two feet behind us, one foot in front of us, lots of shoveling yet to be done. Today we're taking an entry from the Patreon Forum. The question specifically is, can China use immigration to solve some of its problems? The scale of the challenge, of course, is huge, and what China has done isn't really technically immigration. They send their people out to attend universities and pick up technical skills that they can't get within China, and then they try to bring them back. And that has been at least moderately successful.

I'd say probably a third to half of the students they send abroad come back and considering that's better than zero, you know, take the win where you can get it. But moving the demographic pendulum is really hard and takes decades, even with immigration. So let me give you a quick three examples. Canada decided about 15, 17 years ago that they were facing a European-style demographic, graphic collapse. And so they opened up the doors and over the course of the next 15 to seven years brought in about four million people, mostly under age 40. That did stabilize their tax base. That did stabilize their workforce. But it generated four million people who needed a place

to live. And if you need a place to live, you're not very price sensitive. So it caused a housing shortage across the system in the places where actually there was work. And they're now dealing with the political outcomes of that, which is part of the reason why the Justin Trudeau government is likely to fall in elections next year. Second example would be Germany where the birth rate has been dropping for 130 years ever since industrialization began. But it really fell off the cliff after reunification in 1990. Now, you would think that you have a big optimistic moment like reunification and birth rate would go up. The problem is that the East German territories, former East Germany, were economic basket cases. And the Germans collectively spent over a trillion euro trying to

rehabilitate the industrial plant and infrastructure, and it was just a waste of money. So if you're in the East German system, you saw all this money coming in to try to make your system better, and it all failed, and in the meantime, all your young people left, and so your birth rate almost went to zero. And in the West German system, you're paying and you're paying and you're paying and you're paying and you're paying, and you basically had a 12-year period with negligible economic growth because you were basically shoveling money into the furnace. So the birth rate dropped there, too. And of course, it's a heavily industrialized urbanized country. And when you live in condos, there's no room for the kids, as opposed to when

you live on the farm. There's all kinds of room for them, not to mention their free labor. So the economic case went away, the emotional case went away, and the birth rate in Germany kept falling. And probably within the next seven or eight years, we're looking at about a one-third reduction in the size of the German workforce, and it will only shrink thereafter with all the implications it has for consumption, tax base, and state coherence. So a few years ago, the Germans led in about a million people from Syria refugees. And people are like, oh, this is for demographics. Like, no, they just did that because they were trying to do the morally correct thing. Because of the million people, something like 850,000 of them were men. And that really doesn't help the demographic

situation in the long run. That's before you consider things like language and cultural and skills barriers. If the Germans really wanted to solve their demographic problem with immigration, they would need to bring in about two million people a year under age 25 every year, from now on just to hold the line. You know, after 20 years, it's not Germany anymore. If you're going to use immigration to stay off a demographic problem, you need to do two things. One, you need to start early before you have much of a problem. And two, you have to have some assimilative capacity so you don't generate big culture clashes.

You want it to be a trickle, not a flood, which brings us to China. Chinese data is getting updated bit by bit by bit by bit. they're trying to get a grip on their demographic problem. And with a population of what they thought was $1.3 billion, now looks like it's closer to $1.1 billion, may even be less than $1 billion. The scale of what they would need to do is immense. Now, also, the trajectory of the Chinese is far worse than the Germans.

The Germans industrialized over 130 years. The Chinese did it in about 45. So if you just go back to like 1960, the Chinese birth rate was so high that each woman was having four to six kids. And Mao was concerned that the young generation was going to eat the country alive, perhaps literally. So they instituted a two-child policy, which shortly thereafter became a one-child policy. And then the country went through the fastest industrialization process ever. So everyone moved off of the farm and into condos and stopped having kids. We're now in a situation where officially the birth rate is about one-farlization.

point two children per woman. The reality is probably below one. And we already know by official data that in most of the major cities, places like Shanghai or Beijing, it's already below 0.4 or 0.5. So you're talking about one fourth, one fifth replacement levels. That means that we're looking at a complete demographic collapse of the Chinese system within 10 years. I mean, the Germans are practically a slow fade out compared to what's happening in China. And the challenge numerically, you wanted to use immigration is you're probably talking about needing to get 30 million people under age 25 every year just to sustain the numbers where they are today. I'm not sure there are that many potential migrants in the world at any given time. So we're looking at a workforce collapse. We're

going to financial collapse. We're looking at a state coherence collapse in the not too distant future. The real challenge isn't how do you save China. It's gone. We're just basically marking time. The challenge in the short term is preparing for its fall, because when that industrial plant goes away, we're going to feel it. The second challenge a few years from now is how do you manage a post-China Asia where China is in degradation, decivization, and chaos. And then the longer term challenge for the latter half of this century will be, what do you do when what was the world's largest ethnic group vanishes from this world? because when you break down the industrial base, and we're already in a country where there's more people over age 50 than under age 50,

and they age out to the point that they can't even maintain their infrastructure, we have a sort of international crisis that we have never seen before. The Chinese are leading the way, and hopefully in their fall in dissolution, we can find some lessons that will help us manage other parts of the world that are experiencing extreme demographic decline because they're not alone.