The Peter Zeihan Podcast Series - China, Taiwan and My 2023 Prediction Breakdown - Question Time with Peter Zeihan: Episode 3

Episode Date: March 6, 2024

In this episode, we'll be discussing the complex relationship between China and Taiwan, China’s struggle with youth unemployment, and a look back at some of my predictions from 2023. Full Newsletter: https://mailchi.mp/zeihan/question-time-with-peter-zeihan-episode-3

Any updates for us on the China-Taiwan relationship? We have been months away from a war over Taiwan for five years now. Nothing's changed. There's one decision-maker. It's Xi. He's not getting good information. He's no longer a competent decision-maker. And the entire chain of command bot below him is seized up.

So fearmongers, that's the wrong word. That's not being fair. People who are concerned that Taiwan will fall, or that the Chinese are gunning for it. It's not that they're wrong. It's that we no longer have the capacity to predict what China is going to do because the decision-making system is collapsed. If China were to go for Taiwan today, would they be able to capture it?

I'd say even odds that they are. And yes, with every year that passes, their technological leaps will continue and they'll have more ships that were designed specifically for that task. But you've got to keep in mind, if Taiwan falls, they're going to be under some version of a naval blockade, and it's going to be an order of magnitude more painful for the Chinese and what's gone against the Russians, because the Chinese import most of the inputs for their own food, most of the inputs for their manufacturing system, and they need access to the world's consumers in order to function. You put a few destroyers in the Indian Ocean basin, you shut the entire system down. Now, five years ago, Chairman Xi knew that, but in the last five years, he's destroyed the decision-making apparatus and the information flows within the country. So the status of what's going on in his head, God, I mean, we've all had a boss like this.

You know, the guy who has multiple conversations in his head with himself and expects everyone to catch up with where he is without him saying anything to you. That's the whole country now. And so we're seeing policy failures across the board. The Taiwan policy in China is part of that. We've talked a lot about China and a lot of people disagree with what you've said in the last, couple years. Specifically, some other experts recently have pointed out that unemployment among the Chinese youth is quite high and seemingly quite different from what you've said. What's causing the discrepancy? Is it an information problem or what's going on? The Chinese to a certain

degree have some of the educational disconnects that we have in the United States. So the baby boomers worked primarily in blue collar work. Actually, that's not quite right. But there was a higher propensity blue color work, especially in the silent generation and then in the boomer generation. And everyone was like, you know, we don't want our kids to be working in the factories. We want them to be stockbrokers or lawyers or whatever. And so we pretty steadily shifted to a white collar economic system. And so now going back to a system where we build a lot of things is going to be a problem. And we have a skills shortage in a lot of blue collar sectors, which is one of the reasons I'm so

bullish on organized labor moving forward. The Chinese did the same thing. The older Chinese are mostly blue color. They built the country physically. They did the manufacturing and the infrastructure, but they wanted their kids to do something more value added in their eyes. So the entire educational system of China was shifted to white collar work, but the economy didn't turn.

In the United States, we were able to do design and outsource manufacturing. China has outsourced nothing. So you've got this big swell. of relatively well-educated young Chinese, and not very many of them because of the demographic collapse, that is completely unsuited to what their economy looks like. So you can have both. You can have skyrocketing labor costs and an unemployment problem at the same time. And overall, this is part of the problem with central planning is if you get it right,

it's brilliant, but if you get it wrong, you've fucked yourself. And that's exactly what's happen there in terms of the youth. Got it. All right. We're down to our last two questions. One easy one and one it might not be so rapid fire. Will you be doing an audio version of our new book that just came out? Oh, the 10 years on, Accidental Superpower?

Yes. I did the original audio when it dropped 10 years ago and the add-on chapters. I did the audio as well. It's available now. Awesome. We'll put a link in this video so you can all find it there. And now the not so rapid one. What predictions did you get wrong in 2023? Will they come true in 2024 or are you abandoning those? I mean, the biggest problem with everything is going to be the Ukraine war because

the Ukrainians have proven far more capable than we thought, but not undefeatable like it seemed like they were for a while in 2022. And the Russians the same thing performed ever more badly, but then yet still was able to learn. I think anyone who is watching, watching the Ukraine War who hasn't been humbled as a little bit of an idiot because so many of our conceptions and our frameworks for how this might go have proven wrong. And everyone who's attempted to shift gears to make a new long range production has also been proven wrong, which is why it kind of focused just on the factors in play of the day and no more than a quarter forward. The problem, the opportunity, not sure what the right word is.

a lot of what's going on with the Russian system and the Ukrainian system is very fragile. That is now dependent upon events that occur far beyond their shores that they can't influence much less control. That's true for Russian materials exports and energy exports. That's true for Ukrainian weapon flows. And we have a much more enmeshed system that's a lot messier than it used to be. So I can tell you without a doubt that the entire industrial base of Russia is weak and breaking and that the entire export regime of Russia will fail. That doesn't mean it's going to fail tomorrow. There's a lot of pieces in play here.

I never, never forget the boogeyman here. The Chinese break today, tomorrow, a year from now, that is going to overshadow everything. It's going to go on in Ukraine almost immediately and it's going to impact much, a wider array of factors. So all of the issues that I'm concerned about are all still in play, but the hardest part of my job is putting a date on things. That's why until now I've tried not to, but until now everything was not in motion. It's only been in the last two years that things have really broken free. And this interregnum that I was hoping I was going to be retired from is now here, we're in it. And as things break,

they will shift the time frame on everything else. And so we're kind of just marking time while things go away and trying to guess what they're going to sweep up with them. You know, I don't think it would be a proper end to a video if we didn't end on a note like that. So thank you for that. No problem. So that wraps up our first try at a rapid fire question series with Peter.

Drop what you think in the comments below. and we'll continue doing these every two weeks. You know, end of the new year. If you have questions, we'll also put the link to the Ask Peter forum on our website. So drop your questions there if you want to see them featured in the future. Thank you for your time, Peter, and looking forward to seeing you next time.

Until next time.