The Peter Zeihan Podcast Series - Changing Tides in the Chinese System

Episode Date: January 13, 2023

If we were to take the age-old saying of "s*** hitting the fan" and apply it to China...we would need a wind turbine and a few acres of cattle pastures.To put it nicely, China's outlook is...grim. They're facing demographic dissolution, a dying tech industry and a risk exposed energy sector, and we're barely scratching the surface. They are the single-most internationally exposed country in our collapsing world.So how does a country like that continue on? The short answer is CHANGE and perhaps a little collaboration with the USA. To that tune, President Xi may have just given us a sign that he gets it.Full Newsletter: https://zeihan.com/changing-tides-in-the-chinese-system/

Hey everybody, Peter Zeyn here, coming to you from my parents' backyard in Marshalltown, Iowa. Today we're going to talk about some of the things that are in motion, apparently, in the Chinese system. Now, for those of you who have been following me for a while, you know that I am not very bullish on China. It's facing not demographic collapse. It's far faster than that, just complete demographic dissolution. And economic collapse, it goes along with that within the decade, assuming that there are no other problems. The United States is put in a series of technological restrictions that basically kill the entire tech sector. Their energy sector is completely dependent upon the ability to access the Middle East, which is an area they can't reach and force. Their trade system and their economic structures and their employment structures are utterly dependent upon the U.S. Navy making it safe for their civilian vessels to hit the world over.

They are arguably the most internationally exposed country in the world. and on top of that, their financial sector and their agricultural sectors are absolute messes, things that make Enron look really well run. This is a country that is not going to last a whole lot longer. And in that environment, the question is, how do the Chinese prepare for the economic and if they want to politically continue? To this point, their solution has been absolutely rabid foaming at the mouth nationalism, convincing their people that it doesn't matter if you can feed your kids, it doesn't matter if you have your jewell. job, your Han Chinese, and Chairman Xi is your leader, and that's enough. And to that end, Chinese propaganda has gone from the aggressive to the absolutely hateful. The person who has probably played the biggest role from an international point of view in this is a guy by the name of

Zhajilan who has been the spokesman for the Ministry of Foreign Affairs. And he is kind of the poster child for what the Chinese call warrior wolf diplomacy, which is an unapologetic, nationalist, very hate and invective-filled approach to dealing with the rest of the world. So this is the guy who has popularized art that shows Australian soldiers with their knees on third world children. This is the guy who insists that COVID started at Fort Dietrich in the United States and was then spread to the world as a way to wipe out non-white people, that sort of thing. He's a real piece of work and he's a general ass hat. Anyway, as long as he was at the Ministry of Foreign Affairs, he was the voice of China on the international stage. Well, in the first week of

January, he was transferred very quietly away from the MFA, and he is now a small wig at the Department of Ocean and Boundary Affairs, which is about like getting taken from being the spokesman of God, and all of a sudden now you're responsible for, oh, what would be a great example here? You're in charge of Border Patrol in Northern Idaho. It's difficult to imagine someone falling so far so fast. Now the challenge we have at interpreting this is that no one really knows what Xi is thinking because Xi is in such a tight cult of personality that he doesn't really confide in anyone and it's very difficult for Intel to penetrate that sort of environment. But we know that Zhao was one of Xi's favorites. And so for Xi to be

not just demoted but put into a complete cubbyhole in the middle of no one, in terms of the bureaucracy is an indication that Ji knows that this strategy has utterly failed. There is no version of China that survives this unless it finds a way to work with the United States in a constructive way and one that basically gives the United States everything from a strategic point of view that it wants. The United States is the only country that even theoretically has the tools that could help China survive what's coming. And having somebody whose job it is to throw gravel into the gears of the diplomatic relationship obviously is not helping at all. But to have him so dramatically demoted

indicates that perhaps, just perhaps, just maybe kind of sort of, Xi is realizing that the end is approaching and he really needs to change diplomatic gears if there's any hope for China surviving the rest of this decade. So it's very prospective at this point. But if there was one person who needed to move in order to make a new approach happen, it was Zhao and now he's gone. Okay, that's it for me. Until next time.