The Peter Zeihan Podcast Series - China, Navy, Nukes, Tech, and Politics || Peter Zeihan

Episode Date: October 8, 2024

Join the Patreon here: https://www.patreon.com/PeterZeihan Our focus turns toward China today, specifically at the technological struggles facing the Chinese military and manufacturing industry. And yes, we're starting with the nuclear submarine that sank in port... Full Newsletter: https://mailchi.mp/zeihan/china-navy-nukes-tech-and-politics

Everybody, Peter Zine here coming to you from the Carolatac host. As you know, we've recently started posting all of our work onto Patreon where you can get access to all kinds of fun things like the Community Forum where I'm spending most of my time these days, as well as all of the videos, and you'll have the chance to query me in a public setting once a quarter. But that's not why you're here. You're here because you're about to watch a free video. That's right, because even if you're not signing up for Patreon,

all of the videos will still be posting to YouTube and all the normal sites just with a one week delay. So give you an idea of what you have in store for this week based on what we did last week. You may remember that Iran attacked Israel with a couple hundred ballistic missiles that's covered in there,

along with the missile defense technologies that largely defeated it. What's likely to happen with oil markets when and if Israel strikes back, we had a port strike that is one of the most economically consequential things to happen the United States in quite some time.

And of course, we talked about other little things like Chinese nuclear policy and naval policy. Anyway, all of that and more will be coming to you this week. And if you decide that you just can't live with this one week delay, then I suggest you head on over to Patreon. And for a low, low fee, you can sign up to get the videos as they come out. That's all for me. I'll see you wherever I see you. Hey, everybody, Peter Zion here coming to you from Salt Creek Beach, just outside of L.

in California. Today we're going to talk about nuclear policy technology, China, and the U.S. elections. That's going to get me in trouble pretty much everywhere. Okay, so the new news that leaked out over the course of the last few days is that back sometime in the spring, the Chinese's new nuclear attack submarine sank. At Doc, near Wuhan, it was a first-in-class ship, and first-in-class ships are notoriously buggy, but they usually don't just, you know, sink. and they had to fish it out of the river with a bunch of floating cranes.

Now, I don't want to suggest that submarine engineering is easy, especially nuclear submarine engineering, but I got to say that the definition of a submarine is something that doesn't sink unless there's a torpedo in it. So getting the basics wrong on this sort of thing is beyond embarrassing. And if you can kind of put this in context, imagine if in San Diego a nuclear-powered vessel sank in harbor and the government tried to hide it from everyone. That's basically what's gone down here. So very, very sloppy engineering work, a sloppier propaganda campaign. But from a strategic point of view, I think it's really important to understand what the Chinese do and do not have when it comes to nuclear deterrence. They have silos, ICBMs that would launch mostly from Western China.

They don't have a functional sub-arch, and they certainly don't have a bomber arc. So we're talking about one type of deterrent, not the three that the United States. United States has for redundancy. Now, whether that's good, bad, or indifferent, depends by what you care about. But the whole reason that the United States maintains the triad is so that no matter what flavor attack hits the United States, it always has at least one, probably two backup plans. And that sort of deterrence means that countries aren't going to nuke the United States, even before you consider things like missile defense. China is nowhere close to that, not a number of warheads and certainly not in delivery methods. And this brings us

to just to the general technological issues that the Chinese are trying to crack here. China has a lot of ambitions, and they say they're planning on going into this, that, or the other thing. But desire is not the same as performance. So consider, for example, semiconductors. The Chinese have something that's called deep ultabyte technology that they're pretty decent at, and chips that are in the kind of the 80 to 90 nanometer and dumber, they can make themselves. But when the chips get more advanced than that, it's like what you put into most automotives, for example, they need not just foreign equipment but foreign staff and foreign software.

And most of the chips that are being made today, things that are, as a rule, 20 nanometers and smaller, don't use that technology unless you want to be wildly inefficient with it. Instead, they use something called Extreme Ultraviolet lithography, which is a technology that is basically completely controlled by the Dutch company ASML. And even if the Chinese were able to get their hands on some of those more advanced machines, it's not like they could operate them. There's staffing issues, there's experience issues, there's software issues,

and the Dutch have built their machines with remote kill switches, so they have to be involved in the process. I don't mean to say this to insult the Chinese, I mean to say this to insult everyone. No country controls enough of the semiconductor supply chain for anything that's mid or high tier chips

to do it themselves. You're talking about a constellation of thousands of companies, dozens of countries, does take a village. And so the Chinese desire to do all of this in-house, it's just not going to happen, or at least not without a significant shift in how this technology works, and it's more likely to get more complicated than the future rather than less. Which means we pretty much know what's going to happen with U.S. politics and trade relations, because the parameters of what can and cannot be done with the technology is already known. So regardless of who wins the American

presidential election, and we all have our own. ideas on that. We're looking at a situation where on the Trump side, we know that tariffs are the plan, but the Biden administration has never repealed any of the tariffs that Trump put into place. And on the Harris side of the equation, we know that technological controls are the preferred tool, but I can't imagine a President Trump ever repealing those. So we're looking at a tightening technological noose as the United States does something that China just can't call on other countries. Because even at the depths of the Trump administration, when the relations with the Allies were at the lowest, you still had countries that needed the United States

for this, that of the other thing. And so the United States was able to do technological sanctions on things like lithography that basically stalled the entire Chinese technological push. They were able to use older technology like that DUV, I mentioned, in order to brute force through some relatively low-quality chips that hit a couple technological markers, but were huge energy hogs and took up a lot more space and generated a lot more heat, not the kind of thing that you're going to use to reset the technological tables. Especially when you start talking about some of the newer things at ASML is trying to work on something called a high numerical aperture, getting down to one nanometer chip. The Chinese don't even have a finger in that

world. Either does in the United States. It takes everyone. You play that across the economy, and there's only so much the Chinese can do. They just don't do the high-end stuff at all. They do the low end. They do the assembly. And that's a multi-trillion dollar operation. That is not something to be scoffed at. But that's not the same thing as parity, nuclear or otherwise.