The Peter Zeihan Podcast Series - The Future of Singapore || Peter Zeihan

Episode Date: December 27, 2024

From humble beginnings to a global trading hub, Singapore has solidified itself as a key player in the region and beyond.Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://mailchi.mp/zeihan/the-future-of-singapore

Everybody, Peter Zine here, come to you from the slopes of Mount Taranaki in New Zealand's Egmont National Park. Today, I am taking an entry from the Ask Peter Forum on the Patreon page. Specifically, it's what do I think the future of Singapore is strategically and economically. Oh, hey, Taranaki's peeking out. Mountain can be a little shy. Anyway, broadly positive. So quick, let me dial back. You know, 200 years there wasn't a Singapore. It was a small fishing village and some marshy

islands off the tip of the Melee Peninsula. But the Brits put a base there. And as the world became wealthier and there was more trade between east and west, most of it transported by water, because moving things by water is about 1.12th the cost of moving it by truck. And basically everything between Japan, Korea, Taiwan, and China and Europe passed by. And so it emerged as the single most strategic piece of real estate on the planet. And so during the Cold War, the Americans pursued a very tight alliance with the Singaporeans. And the Singaporeans, because they couldn't resist a land invasion from Malaysia, which kind of wanted to conquer them, signed the deal and built a custom aircraft carrier birth for the

American super carriers. Now, in the post-Cold War world, Singapore has continued to do well because this has been China's time to shine. basically the Chinese between 1990 and 2020 had a huge number of people in their 20s, 30s, 40s, and 50s, but no youth and no retirees. So all the money that you would normally spend on raising the next generation or retiring the previous one was spent on consumption

and especially on industrial expansion. And the Singaporeans were able to cut out of all of that. And of course the oil trade from Persian Gulf to Northeast Asia got them plenty of money on the other end, maintaining things like oil depots so that everyone could get whatever they needed, whatever they needed it. Now, those days are rapidly coming to an end. The Chinese are dying out. The demographic moment that was through the 1990s to the 2020s is over, and we're now looking at the dissolution of China as a modern nation state over the next 10 years, and the disappearance probably of the Han ethnicity before the end of the century. It's that bad, and the numbers keep getting worse every time they release new data. But the oil trade is probably in danger, too, because, without the Americans keeping the Persian Gulf open, the likelihood of Saudi Arabia and Iran going at it is pretty robust. And that's half of globally traded oil that all of a sudden is in some degree of danger.

So the old methods that the Singaporeans have been using to generate their wealth are somewhat limited. But two things to keep in mind. First of all, Singapore hasn't simply just been taking rent out of everyone passing by. No, no, no, no. They have used all that income to train up one of the most sophisticated workforces in the world and the most precision instruments that humans build typically come from Singapore, very, very high-end manufacturing that slots into what other people do. In addition, it's a financial hub that serves not just itself, but all of Southeast Asia, to a lesser degree, a lot of East Asia as

well. And those two sectors are going to be incredibly important moving forward, because as the Chinese literally die away and as international trade shrinks in a de-globalizing world, regional trade is going to be more important. And unlike the French and the Germans, which have duped it out a few times, or the Koreans and the Japanese, or the Japanese and the Chinese and really anyone, the countries of Southeast Asia have not gone to war with one another since the time of the Kimmer kingdoms centuries ago. And there's certainly nothing in the post-colonial era. So you have a number of large states with reasonably developed infrastructure, with above-average educational levels for their socioeconomic status that are in close proximity that don't have a

history of going to war with one another. And in addition, most of Southeast Asia's islands or peninsula, there's a lot of mountains and a lot of jungle. So these countries can't go at each other in a conventional way if they have a fight. And so it's all diplomatic. But the best part is because they can't get at each other directly, they don't have a lot of connecting infrastructure among them, so everything goes on the water. Well, if you're trading between Vietnam, Indonesia, Malaysia and Thailand on water, it's harder to have a fight. And it's easier to build multi-step supply chains. And so that's what we have seen over the last 30 years. And Singapore slots into this very nicely with the finance, the managerial skills, and above all else, the high-end manufacturing

to make it all work. So you basically get Singapore with the high-end stuff and the finance. And then you have places like Thailand that do the middle. Malaysia is rising up to try to be the next Thailand. At the lower level, you've got Vietnam, who is desperate to skip stages of production, mostly out of its pathological need to compete with China, and where 40% of all college grads are already STEM grads, and they're already moving into low-end semiconductors. And then for the lower-end work, like assembly, Indonesia and Myanmar look really good. So everything that the Southeast Asians need to succeed is right there at hand. And what they might also need, things like resources and food, Australia and New Zealand are very close by. And if Singapore maintains its relationship with the

United States, then there's even, to a degree, an external security guarantor that the locals can call upon. Japan will probably come along for the party as well. So this is arguably after North America, the part of the world that I am most bullish on for the next 50 years. And I'm really curious to see what all the locals are going to make of it.