I wrote a post a few months ago imagining what China’s dominance might look like. I based my projections with a particular focus on biotech and AI revolution, and what that may signify if it ended in the wrong hands. Since then, as predicted by MI6 and MI5, China has become more assertive in Hong Kong, flew a bomber into Taiwanese airspace and increased tension in the sino-indian border since April.
What I did not know at the time though was the very precarious and vulnerable state China is in. This came about through coming to know Peter Zeihan’s work. Love him or hate him, I’m sure you’ll agree that his analysis has some weight. I felt the need to add this information after listening to his recent book Disunited Nations as an audiobook (read by an actor who absolutely ruins it). The video below is an interview of Zeihan by Grant Williams. I’ve been following Grant for a while for his insights on macro economy and highly recommend his website for further info.
I stress the fact that, as far as I know, Zeihan does not seem to have a grasp of AI and Biotech revolutions that’s currently unfolding and how much of a paradigm shift this will bring to the epoch of Anthropocene. If you’re curious, this interview of Dr. Ben Goertzel, a leading expert in Artificial General Intelligence, outlines China’s ambitions in these fields. But regardless of omitting such a powerful factor (and having a bit of a cocky ego), I think it’s important to gather whatever useful data from whomever to gain a more complete picture of what the future may look like, especially during times of uncertainty when planning for tomorrow feels really, really hard.
I’ve transcripted an excerpt from the China segment of the video with added pictures, in case you don’t feel like watching two dudes talk for an hour at this moment.
There are certain things that countries need if they are going to be successful in the long term.
- They need a border structure that prevents invaders from getting to them.
- They need naval access that allows them to access the wider world for trade and in order to prevent other people from coming to them.
- They need a stable demographic structure that allows them to generate sufficient investment to fund their system but also sufficient consumption to make it sustainable.
- They need access to resources, whether these resources are food supplies or energy supplies.
China, on every single measure, falls flat. Their borders are open, their coasts are not indented, they don’t have any good ports that are natural, their coasts are paralleled by the first island chain which is peopled by hostile forces. So even today, after the 40 year build up of naval forces we see in China, they still can’t penetrate the first island chain.
The One Child Policy, 40 years on, they’ve ran out of people who are aged 35 and under. So consumption lead is impossible. They’ve got a huge population that’s moving into mass retirement, and say what you will about the Chinese and their ethics, I don’t think they’re going to liquidate the retirees. So they’re going to have an Italian style pension crisis on top of everything else.
The End of the Global US Order
What growth we’ve seen out of China that might be sustainable, and that is stretching the definition of the word sustainble, is export driven. That requires access to a global market which they can’t guarantee. They can’t even gurantee their own supply lines within the East Asian sphere, much less reach the Western hemisphere or far side of Asia.
In addition, despite all the fluff and fury to the contrary, this is still a fossil fuel driven world. The Chinese get 85% of their energy from other continents. And most of it has to come from the middle East which means they have to sail by Iran, Pakistan, Sri Lanka, India, Myanmar, Thailand, Indonesia, Singapore, Vietnam, Malaysia and in many cases Taiwan itself. And that assumes that nobody with a Navy gets in the way like the United States or Japan.
This is not simply a weak country, this is a country that could only exist in a very specific moment in time when;
- the Americans are providing global strategic cover,
- there is a global demographic moment that wants a lot of consumption,
- and no one that is a traditional foe of China is allowed to do anything.
And that’s where we’ve been since 1990. And that’s almost over.
The Rise of Japan
Japan has a lot of things going against them. It’s the world’s oldest and fastest aging demography, consumption has been flat lined now for almost 20 years, it’s difficult to develop an island, it’s difficult to even imagine Japan being able to be self sufficient in food and energy.
However, to counter all of that they’ve got a couple of things going for them. First, they’re the first island chain as opposed to the mainland. So they face the deep blue – they don’t have to worry about any other country constraining them. And they have the second most powerful explorational navy complete with two fully functional super carriers, something Chinese don’t have at all. So if it ever did come to a fight, between the Chinese and the Japanese, the Japanese wouldn’t attack the main land, why would you do that? That’ll be stupid. You interfere with their shipment far from shore where the Chinese can’t do anything but issue protests to the UN. In fact, you send one ship down to the Indian Ocean just to cut the energy supply and that’s it. The lights go out in China in less than 6 weeks. It’s not a fair fight at all.
Covid and Demographic Shifts
What is unique about this moment in history is that the 2020’s, this decade, is the decade where the entire developed world and a substantial portion of the developing world don’t just simply move from having more mature adults than more children, but more retirees than mature adults than children. Everything we understand about economics does not work in that environment. Fascism doesn’t work, well I hope it doesn’t work, socialism doesn’t work, capitalism doesn’t work. So everything that we have taught outselves for the entirity of our adult lives for the last 12, 15 generations is about to be wrong. And that’s happening at the same time the Americans are pulling the rug out from under everything. And Covid just happened to come in at this moment.
Most of the advanced countries are going to age out in mass retirement between 2022 and 2024’s so two to four years from now. Corona virus has now removed a year, and any country that drops into a sever recession in 2020 will not be able to grow back to where they were in January by the end of next year. So they’re facing demographic collapse and a change in economic structure, before they can possibly recover to where they were three months ago. Now going from where they were three months ago to this collapsed system, and having this transition period of two to three years to change what’s been happening for half a millenia? That’s still a really freaking tall order. But now, they won’t even have that opportunity. So we are looking at hard crashes and hard collapses in a substantial proportion of the world.
– Peter Zeihan in an interview
I’ve learnt a lot through watching Zeihan’s talks. His webinar from May 20th that looks deeper into Covid can be accessed here. Another, slightly older one from before the pandemic which shows where the world was heading before the virus pandemic hit. This other interview from May looks broadly at various continents but his book digs deeper into each subject and outlines the reasons for each statement so I highly recommend reading it.
I agree with him that taking demographics into long term predictions is crucial. Access to resources is another very important factor that I hadn’t properly considered before, with huge implications over what lack of US strategic cover will mean for global trade in the coming decades. De-globalisation over future pandemic risks and geopolitical tensions will on-shore many production and services – at extra cost to the consumer until robots take over. But it could also be seen as an opportunity to strengthen our resilience against future catastrophes that are much worse than Covid 19. How we conduct the re-integration of returning industries and farming will be incredibly important. We will be given an opportunity to be an environmental flagship country that shows the true potential to adapt in a regenerative, sustainable direction. Or we may see the enormous ecological damage, which we are currently exporting to other countries, return onshore too. Can we afford this with only 40 harvests left of topsoil in the UK?
Again, I think it boils down to our behaviour. How much is ENOUGH. What do we really want and need? What is true wealth? Do we really need all the physical things that we desire to be happy and content? In this video, Bruce Damer describes how the virus maybe Gaia’s self balancing homeostatic system gently nudging us towards slowing our consumption metabolism. Don’t be fooled by his hippy looks and spiritual slants. He’s a hardcore reductionist engineer/scientist who designs NASA missions and figures out the origin of life.
Damer predicts that there will be wave upon wave of future pandemics which will begin to reshape our habits. Once second and third waves hit, as there was in 1919, with likely introduction of new mutations and novel forms of antibiotic resistant pathogens entering the arena, Damer believes the evolutionary shaping will start. “So if the viral pandemics are the chosen method to tame this wild beast of human desire and consumption, it’s going to do it in a kind of staged way, again and again and again and slow the metabolic rate of consumption”. A form of ‘Darwinian natural selection at the species level, at the mimetic level and genetic level to bring the planet and us into homeostasis’.
Though there are some credible reports (1, 2, 3) which suggests that Covid 19 is a man-made virus from gain of function research in Wuhan, I suspect that naturally forming viral and bacterial pandemics are likely to increase in frequency and scale in the near future. The decreased risk of China becoming the next global super power has made me relax a little, but we still don’t know how AI, robotics and genetic engineering will change the course of history. What we do know for certain though, is that we are entering a de-stabilising world order with minimum 2 degrees to upward of 5 degrees of global warming by 2100.
To end this post, I’d like to ponder again what we can leave for the 7th generation in the future. What responsibilities do we have as citizens of Earth? The only spec of dust that we know of in the visible Universe which is this beautiful and habitable? Jizoku in Japanese can be read as ‘Earth Tribe’ like in the logo 地族, or with the use of other Chinese characters 持続 – ‘Sustain’. When we take on a more integrated perspective, of us as an Earth bound tribe capable of great things, we can begin to view glimpses of futures where we become the agent of regeneration and guardians of ecosystems. Let’s hope we find the necessary compassion and empathy as a species to overcome our differences and build something beautiful that can last beyond the 7th generation.
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
― Kate Raworth, Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist