Rachel’s note: Yesterday, we shared a sneak preview of former Wall Street insider Nomi Prins’ recent conversation with geopolitical expert Peter Zeihan.
They left off on a bold claim from Peter. As he put it, he’s not worried about China’s strength… He’s “more concerned about what happens because of Chinese weakness.”
In the next part of their conversation below, Peter tells Nomi about the end of China as a modern entity – and what it means for the world as we know it. Read on…
Nomi Prins, Editor, Inside Wall Street: A lot of our subscribers look at China. They look at what’s happening between the United States and China politically, geopolitically, and how that impacts prices, supply chains, and that sort of thing.
And as you said, you’re concerned about China changing, degrading to one extent, becoming less of a superpower. What does that mean in the chain of those events? Is China going to collapse, and where are we going to go?
Peter Zeihan, Geopolitical Strategist: It’s absolutely going to collapse. The specifics of how that happens – Chinese history is replete with examples of how it all goes to hell in a very short period of time.
There’s any number of scenarios we can talk about. They start in different areas, but they kind of all funnel down to the same core problems.
If there are problems accessing energy, the lights go out, the trains stop running, and the agricultural system collapses. People forget that agriculture is an industrial sector.
Or they just lose access to the food imports and we jump right to that.
Or the population collapse proves to be so accelerated that they lose competitiveness and access to international trade and manufacturers. In which case, they lose the income that allows them to buy the raw materials that allow them to grow their own food.
I think the most likely outcome is that we face a depopulation of the cities.
As the possibility of participating in industrialized agriculture dwindles, you either lose a few hundred million people from famine… Or several hundred million urbanized Chinese move back to subsistence farming.
Either ends China as a modern entity. And in that scenario, you would probably have a neo-Maoist tyranny in the north centered on Beijing, which is 70% of the population. That’s where the famine would probably be the worst.
And then the city-states of the south from Shanghai down to Guangzhou go their own way and partner with foreign powers.
That means bringing in technology, capital, and raw materials to be synthesized, processed, and metabolized with the local labor and infrastructure, to participate in some degree of international supply chains.
Which is what they’ve done for most of the last 1,300 years.
The exception is a unified China. China has very rarely held together under its own strength.
Nomi: That’s actually really interesting. Because Shanghai, to me, having been in those places, is so very different psychologically – from the standpoint of international elements and everything – than Beijing is.
Has this period with COVID, with supply chain disruption, with what’s happening with respect to the relationship between Russia and China and the oil and the energy components of that, accelerated fragmentation of China?
Peter: Absolutely, and not just of China – the wider world. COVID did more to break apart globalization than the Trump administration did. And the Trump administration was giving it its all for a good long time there.
So… what’s the best way to phrase this? A degree of breakdown in regionalization or localization is inevitable for most of the world. And so you’ve got to look at what these places looked like in the time before 1945.
I’m not saying that everyone is going back to that. Many are going to go back further. But it will give you an idea of who could kind of hold the center themselves without being part of a broader system.
Nomi’s Note: Nomi here. I hope you enjoyed this sneak peek at my second sit-down with geopolitics expert Peter Zeihan. It’s one of four quarterly interviews I’m doing with Peter.
If you liked it, good news… You can still claim a copy of Peter’s new book, The End of the World Is Just the Beginning, at an even lower price than ever. With the holidays around the corner, it’s an awesome present for friends and family.
Plus, you’ll get full access to all four of our conversations – videos included – along with some bonus perks. So be sure to go here to learn more.