Peter Zeihan was interviewed by Joe Rogan where Zeihan again predicted the collapse of China. This time Zeihan says it will happen within ten years. Zeihan has been predicting China’s meltdown since 2005. He repeats the call for China meltdown and possible breakup or breakdown multiple times. In 2010, he said it would happen within 3-5 years.
Nextbigfuture agrees that China under President Xi is screwing up. I also agree that China screwed itself royally with the one-child policy. The demographic decline will be a 1-2% per year economic headwind from now to 2050 because of a declining working-age population.
Zeihan ignores that China can still increase rural efficiency and continue to train people from the countryside and bring them into the urban areas. Zeihan does not try to consider any counterarguments once he has brief problem he can describe in four sentences and a conclusion he can pitch out in one sentence with three sentences of detail.
Zeihan covers a lot of ground. He makes broad and incorrect statements and has a bad analysis of history. He works off of incorrect and over-stated premises around population pyramids. He ignores critical factors and vital specifics.
My Public Track Record of Being Right 90% of the Time – Skip if You Do Not Need to Know
Why am I one of right people to call Peter Zeihan on his BS? I have a public record of predictions. I am ranked 49th on the public prediction site Metaculus and this is out of over 3000 predictors on the site. I have been top 39-40th in the 3 month, 6-month and 12-month time frames. Some of the people ranked ahead of me have been predicting many years before I started in November, 2019. I am probably in the top 1% of predictors.
A brier score of 0.25 is associated with expectations for many random guesses with 50% confidence getting about 50% correct. My brier score of 0.089 on over 400 resolved predictions means about 90% right on 90% confidence. I have about 40 that were wrong out of 400 with scores worse than 0.25 brier score.
Zeihan wants to conclude that China will collapse. There is an audience that wants to hear this conclusion. Anti-China speakers get paid to speak all the time.
Zeihan loves to use population pyramid analysis and some geography to come to absolute conclusions. It is easy to show this data and to make crazy conclusions that seem plausible at first.
There are times Zeihan and I can agree on a conclusion but often it is for different reasons. Here is a video where I explain why China loses badly attacking Taiwan and the US is guaranteed to defend. This is a case of a broken clock being right twice a day.
Zeihan Decades of Being Wrong
Zeihan has been repeating for a decade or two that the US will withdraw from being the global cop and will not protect the sealanes on the world’s oceans.
I have reviewed Zeihan and his mentor Freidman many times.
He makes too much of the Bretton Woods agreement.
He believes that when the US stops importing oil then they will stop protecting the seas and the US will lose interest in being the “global cop”.
He is overstating the US role policing order as opposed to the US and the US military industrial complex wanting to control things globally for different reasons.
For the last two years of the Trump administration there was a balance between oil supply and demand for total US oil usage. However, the US was still importing and exporting oil. They were taking in raw crude from others and refining it.
Here is a summary of what has been happening with US fossil fuel imports and exports.
Crude oil accounts for the largest share of U.S. total energy imports on an energy content basis. Even though the United States remained a net importer of crude oil in 2021, crude oil net imports were at the second lowest annual level since 1985. Some of imported crude oil is refined into petroleum products that are exported.
After declining nearly every year since 2005, U.S. total petroleum net imports increased in 2021, mostly because of an increase in U.S. crude oil net imports. U.S. crude oil imports increased in 2021 and crude oil exports decreased in part because of reductions in U.S. crude oil production in 2021 resulting from lingering effects of the economic response to the COVID-19 pandemic. U.S. crude oil exports dropped in 2021 after having increased every year since 2010 and reaching a record high in 2020. U.S. crude oil imports increased by about 235,000 b/d in 2021 to about 6.1 million b/d. Crude oil net imports were about 3.1 million b/d in 2021.
U.S. petroleum products (excluding crude oil) imports and exports both increased in 2021; imports by 19% and exports by 7%. Even though total annual petroleum products exports in 2021 were the highest on record, they were not enough to offset imports, and petroleum product net imports increased in 2021.
Total natural gas exports increased every year since 2014, and in 2017, the United States became a net exporter of natural gas for the first time since the late 1950s. In 2021, total natural gas exports reached a record high of 6.65 trillion cubic feet (Tcf), or about 18.23 billion cubic feet per day (Bcf/d). Increases in domestic natural gas production and increases in liquefied natural gas (LNG) export capacity have contributed to growth in U.S. natural gas exports. Even though U.S total imports of natural gas increased by 10% to about 7.69 Bc/d in 2021, natural gas exports contributed to record low natural gas net imports.
The US is now sending more oil to Europe and liquified natural gas because of the Ukraine War and forcing Europe to stop importing Russian oil.
The fracking revolution has been substantially reduced. There are anti-US domestic oil production policies.
Even if the US increases oil supply or drastically reduces demand.
1. Net Zero would not mean millions of barrels of different oil products are not moving in and out.
2. The US would not stop at net zero. They might end up being a net exporter which means sending oil and LNG out.
They still need to defend the in and out movement and trade.
The US is still making other stuff. Huge amounts of money need to be defended to move things in and out.
If the economy evolved where production and demand were more localized. The US military industrial complex would make up reasons to intervene and “protect things” or “defend things”.
Zeihan is predicting that the US military industrial complex will choose to go into permanent retirement. Does he even try to listen to his bizarro bottom lines?
Zeihan makes a big deal of the Pax Americana period. Pax Americana (Latin for “American Peace”) is a term applied to the concept of relative peace in the Western Hemisphere and later the world beginning around the middle of the 20th century. It was caused by the preponderance of power enjoyed by the United States. Although some would also credit several powers having nuclear weapons.
Zeihan ignores the Pax Britannica. Pax Britannica (Latin for “British Peace”) was the period of relative peace between the Great Powers during which the British Empire became the global hegemonic power and adopted the role of a global police force. Between 1815 and 1914, a period referred to as Britain’s “imperial century”, around 10,000,000 square miles (26,000,000 km2) of territory and roughly 400 million people were added to the British Empire. Britain’s Royal Navy controlled most of the key maritime trade routes and enjoyed unchallenged sea power.
Zeihan predicts that without America as cop that world will go into fighting and chaos and world trade will collapse. This will be followed by the collapse of countries.
Zeihan has decent population pyramid analysis and some of his other analysis and problem identification is useful.
However, I do not agree with the end predictions and conclusions that emerge after the analysis.
I have listed what are some Zeihan predictions and I have put up counter predictions. So we will see who is right.
There does need to some time ranges on the predictions.
Reviewing Zeihan and STRATFOR
STRATFOR is a geopolitical consultancy which was founded in 1996 by George Friedman. Friedman wrote the book “The Coming War with Japan” in 1991. For prediction accuracy, you may recall the terrible second war of the Pacific between the USA and Japan…Oh that’s right it never happened in our reality.
The book claimed a military confrontation between the United States and Japan is likely within the next 20 years. According to the authors, the issues are the same as they were in 1941: Japan needs to control access to its mineral supplies in Southeast Asia and to have an export market it can dominate. In order to do this, Japan must force the United States out of the western Pacific. There is little effort to explore the substantial differences between the 1940s and the 1990s.
Those were Friedman’s mistakes. Let us look at Zeihan.
Zeihan led the 2010 STRATFOR forecast for the decade. Zeihan was at STRATFOR from 2000 to 2012. He made their predictive models.
The 2005 prediction of Zeihan and STRATFOR:
In 2005, STRATFOR forecasted – China will suffer a meltdown like Japan and East and Southeast Asia before it. The staggering proportion of bad debt, enormous even in relation to official dollar reserves, represents a defining crisis for China. China will not disappear by any means, any more than Japan or South Korea has. However, extrapolating from the last 30 years is unreasonable. … At the same time that we see China shifting into a dramatically different mode.
In their 2010 Review of 2005, they claim that China’s slowdown from 2005-2010 meant that they were somewhat right about China. Nothing remotely similar to a Japan-style crisis happened and the slowdown was similar to China’s growth changes from 1993-2000.
Southeast Asia had the big recession in 1997. Malaysia and Thailand had a few more stumbles afterward. They are back to growth in the 4-8% per year range. So even if China has a full-blown recession, it does not follow that it would not return to 4-6% GDP growth. The US has recessions and then returns to 1 to 4% GDP growth. The US had -3 to 2.5% GDP growth during the 2008-2016 Obama Presidency.
Japan’s growth has been -2% to 2% from 1989 onwards. With a -5% in 2009.
China has not yet faced its Japan-style crisis but we continue to forecast that it will — and before 2015. [per Zeihan]
The ability of China to continue to supply cheap exports to the United States might come into danger. Not on the whole, because all of the Chinese regional cities will still have an interest in doing that, even once the Chinese system cracks. But you’re going to have to pay very close attention to your supply chain there as the politics of China become unglued.
In 2010, Zeihan said we expect the economic collapse of China in this coming decade. We’ve been talking for awhile about how the economic system there is remarkably unstable and we think that they’re going to reach a break point as all of the internal inconsistencies come to light and shatter. By the end of the decade, it’ll be pretty obvious to everybody that the China miracle is over.
China is now having slower growth. This has been made worse by the COVID pandemic for the past two to three years and because President Xi has been prioritizing his own power over allowing China’s technology companies to grow. China also had a property bubble and debt bubble.
There are debt bubbles and recessions but has not headed into a Japan-style lost decade.
Zeihan also says that China has not had innovation and China’s workers are less productive than Mexican workers. Yes, China has stolen or copied technology but China has companies and people that are innovation in science and technology.
Zeihan covers a lot of ground. He makes broad and incorrect statements and analysis of history. He works off of incorrect and over-stated premises around population pyramids. He ignores critical factors and vital specifics. His methodology is flawed, broken and his track record is terrible.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.