Geopolitical prognosticator Peter Zeihan tells Channel 4 News about his theory that China’s demographic numbers are drastically worse than publicly reported, and the shrinking population puts an expiration date on their export-based economic model. “The one-child policy was absolutely part of the problem, but the real issue was that they just industrialized too fast,” he said. “In a single generation, they went from 90% of the population living on rice farms to 60% of the population living in high-rise condos. There’s simply no room to have children.” “The Chinese population started imploding back in the ’90s, according to official Chinese statistics. The American birth rate has been higher than the Chinese birth rate since 1991. They’re now shrinking, according to their formal statistics, by more than six million people a year.” “Informally, within the Shanghai Academy of Sciences, they’re having an open debate about how many people they have overcounted. The low-ball number is about 100 million. The higher-ball number is closer to 350 million,” he explained. “If you go somewhere in the middle of that, it suggests that the average age in China is already 54, which is older than any country in Europe.” This means China’s population is overcounted somewhere between the entire population of Vietnam (100 million) and the entire population of the U.S. (350 million), is further shrinking at a rate of the entire population of Singapore per year. “Let me give you a couple of first- and second-order effects of this,” he continued. “China’s economic model is based on over-financialization-it basically prints currency and confiscates private savings to fund everything. That makes them price-insensitive for everything from cement to copper to oil. The world’s largest consumer of raw materials goes to zero in a very short period of time. That, for example, would be very bad for Russia, Australia, and Saudi Arabia, just to pick three.” “Second, China is the workshop of the world. They have cornered the market in all the low-tech manufacturing and assembly that no one else can do, and they do it at scale. That goes away,” he said. “So we need to find a new way to manufacture products, because nowhere else in the world is there a large cadre of behaved folks who will do what they’re told for relatively modest compensation.” “The United States right now has 12 supercarriers… If you remove the Chinese threat, the United States still has that hardware. So imagine, if you will, an America with global reach but not even regional interests. We got a glimpse of what that looks like in Venezuela last month.”

JACKIE LONG, CHANNEL 4 NEWS: One of your other big predictions is that China will collapse in the next decade. That’s certainly not an outlook I would say lots of people would share. What’s your analysis on that? PETER ZEIHAN, GEOPOLITICAL ANALYST: The short version is that the Chinese population started imploding back in the ’90s. We now know that, according to official Chinese statistics, the American birth rate has been higher than the Chinese birth rate since 1991. They’re now shrinking, according to their formal statistics, by more than six million people a year. Informally, within the Shanghai Academy of Sciences, they’re having an open debate about how many people they have overcounted. The low-ball number is about 100 million. The higher-ball number is closer to 350 million. If you go somewhere in the middle of that, it suggests that the average age in China is already 54, which is older than any country in Europe. So demographically speaking, they’re not going to be able to maintain the production levels. They already have seen consumption levels fall off. They’re having problems with their tax base, and they are completely dependent on exports to maintain their economic and political systems. That has no more than ten years to run. JACKIE LONG: I mean, the Chinese obviously had that one-child policy, which presumably is partly what’s left them with the sort of demographic time bomb they’re facing now. But could they introduce a two-, three-, four-child policy to reverse the change? PETER ZEIHAN: A couple of problems there. The one-child policy was absolutely part of the problem, but the real issue was that they just industrialized too fast. In a single generation, they went from 90% of the population living on rice farms to 60% of the population living in high-rise condos. There’s simply no room to have children anymore. Part of what we’re seeing across the Chinese space now is that even when they liberalized one child and went to two child, three child, and now as many as you want, the birth rate actually went down. There no longer are enough people under age 40 to even pretend to regenerate the demographic structure. The question is just how gutted is it? To give you an idea of how desperate it’s gotten for people under 30, the new top app that is being downloaded by parents for their kids in China is called Are You Alive? Because suicide has become so robust, job opportunities for the young have become so poor, and so many people are living alone because they can’t afford to do otherwise. JACKIE LONG: One of the things that people who think the prediction of China’s collapse is a bit premature say is that you’re not necessarily factoring in what the Chinese leader might do to improve things. PETER ZEIHAN: Certainly we’re getting a lesson in that from Donald Trump right now, because in many ways he’s modeling his decision-making process off of Xi Jinping. It’s been eight years now since Xi Jinping last purged his cabinet of anyone who would speak to him about the truth, and now he’s just been ingesting propaganda. That kind of messes with your decision-making. So we see a lot of disconnects in policy in China, where an order is handed down from this guy who has written something like-geez, what is it-300,000 pages of ideological treatises in the last 25 years. As somebody who’s written a few books, 300,000 pages is a lot. It’s a lot. He can’t keep track of the policy, even if people still provide him with the information, because he punishes people who bring him information he doesn’t like. So they just stop collecting that statistic. We don’t have good eyes into China anymore because the government statistics have become meaningless, and companies that did things like due diligence have been chased out of the country. So we’re just left with this kind of blank wall and our fear. Americans are very good at filling in the blanks when they’re motivated by fear. JACKIE LONG: And so if this collapse does happen, say within a decade, what does the world order look like then? PETER ZEIHAN: Well, that’s a longer conversation than we probably have time for. But let me give you a couple of first- and second-order effects. Number one, China-because of its economic model, which is based on over-financialization-basically prints currency and confiscates private savings to fund everything. That makes them price-insensitive for everything from cement to copper to oil. The world’s largest consumer of raw materials goes to zero in a very short period of time. That, for example, would be very bad for Russia, Australia, and Saudi Arabia, just to pick three. Second, China is the workshop of the world. They have cornered the market in all the low-tech manufacturing and assembly that no one else can do, and they do it at scale. That goes away. So we need to find a new way to manufacture product, because nowhere else in the world is there a large cadre of behaved folks who will do what they’re told for relatively modest compensation. So maybe that’s automation, but we have to do it quickly and with less capital than we have before. Maybe it means that we all have to take a hit to our standard of living and get back into manufacturing in a very big way. There’s a lot of choices that will color what happens, but the biggest issue is going to be strategic. The United States right now has 12 supercarriers. We’re in the process of updating some of our older ones with newer models. The Ford class is now out. The second one is going through sea trials, and it’s designed to fight in multiple theaters at the same time. If you remove the Chinese threat, the United States still has the hardware. So imagine, if you will, an America with global reach but not even regional interests. We got a glimpse of what that looks like in Venezuela last month.

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