The Peter Zeihan Podcast Series - Should We Worry About Chinese Land Purchases in the US? || Peter Zeihan

Episode Date: February 23, 2024

I've had a lot of you write in concerned about Chinese land purchases in the United States. There's not much to be concerned about here, but let me paint the full picture for you. Full Newsletter: https://mailchi.mp/zeihan/should-we-worry-about-chinese-land-purchases-in-the-us

Hey everybody, Peter Zeyn here, coming to from Colorado. Today, we're going to take another question from the Ask Peter list, which we'll put at the end of this video, so you know you can send your own questions in. And it is, am I worried about the Chinese buying up land across the United States? Short version, really not. Hold of private property in the United States. Only about 3% of it is foreign held.

And half of that is Canada. So, you know, if you're going to be stressed about someone, worry about our neighbors to the north. The Chinese don't even crack into the top 10 list. In the last three years, Chinese purchases of say farmland has essentially dropped to zero. And that was before we started seeing changes in the regulatory structure in a lot of states to just bar it completely. Most of the money we see coming from China, the United States is in the form of capital flight. It's not government institutions.

It's individuals trying to get their cash from out from under the CCP's thumb. and then the Chinese government working to prevent people from sending money abroad. One of the things to keep in mind about the Chinese system is one of the ways that the Chinese government finances everything, is it forces its citizens into a very short list of investment opportunities, which include primarily deposit accounts at banks, and then the banks, which are run by the state, funnel that money at sub-market rates to industry in order to keep job creation high. It's the model that has allowed China to expand its industrial plants so much, but it's come at the cost of creativity and dynamism.

And I'd say that most of those Chinese state-owned companies now that are benefiting from this sort of system are among the less efficient companies in the world, and they're just being kept alive on a capital drip feed that the Chinese citizens have to pay for. Now, that's not the entire Chinese economy, but for the state-run chunk, that pretty well describes it. Okay, any other angles to this that matter? Oh, yeah. If we ever do get into a situation with the Chinese where relations really do breach or we do have an exchange of fire, I'm also not concerned about whatever holdings the Chinese have in the corporate world. Right now, in February of 2023, we're going through kind of the final phase of finally disposing of a company called Sitko. Now, Citgo was the refining and marketing arm of Pedavasa, which is the Venezuelan state energy company.

They bought slash merge slash built it back in the 70s and the 80s. And then Hugo Chavez came in in the 90s and took over Venezuela and basically ran the place into the ground economically. And they eventually had to walk away from Citgo for a mix of reasons, everything from sanctions to complete mismanagement in Venezuela. so they could no longer supply Sitgo refineries with fuel. And now it is basically been seized by the government in bankruptcy hearings and is being distributed to other companies. Basically, if you've got a claim against Peta Vesa or Citgo, everyone is making their case heard now

or just a plain old cash offer to take it over. This is kind of the neat way of disposing of foreign assets over time and using the legal system. But if you go back to World War II, we had no problem with the government just seizing everything that the Germans had in the American economic system and I have no doubt

that if push really does come to shove the same will happen to the Chinese assets as well. So I'm not suggesting we shouldn't watch these issues but these are not the sorts of things that keep me up at night.