Everyone, Peter Zeihan here. It is the 18th of January and the news from earlier this week is that the Chinese have released a new batch of demographic data and it is in a word, atrocious. Two big pieces of information… first of all birth rates. In order to maintain your current population, a country needs a birth rate of roughly 2.1 children per woman. With the new data China is now at 1.16, which is the lowest in their history in the second lowest in human history ever. 

That’s on top of the fact that their biggest cities now have birth rates that are below point seven, make it impossible for them to maintain their population at all unless they read the countryside and China has been raiding the countryside for the last 40 years, and there are now not a lot of people left to pull in. That means just from this one statistic, 

China is already the fastest aging society in human history. The second big number is that China’s population peaked last year. In fact, with the population dropping by about 800,000 people. The scary thing about both of these figures is that we know they’re wrong. A couple of years ago, the Chinese started releasing bits and pieces out of their 2020 decade census. And they came to the grudging and public admission that they had over counted their population by in excess of 100 million people. With all of those missing millions having been born since the one child policy was adopted 40 years ago. So we’re talking about exclusively these 100 million people or so are people who would have been aged 40 or under the folks who have the kids. You combine that with the birth rate information.

And we are looking at the complete dissolution of the Chinese demography in a very short period of time. Because if you’re losing a lot of people, or if you’ve never had a lot of people under age 40, that suggests that the ability of the Chinese system to maintain a workforce and a tax base is dissolving before our eyes. And we’ve never seen a system anytime in history that’s been able to make it through this sort of transition without a massive, massive, massive change in the political and economic environment. And the possible changes the Chinese are about to experience are not what I would consider things that will make this work better.

The problem is, is that the Chinese model economic model is completely dependent upon globalization and internationalization. This is a country that imports 75 to 80% of their oil. This is the world’s largest importer of food. This is a country whose oil comes primarily from the Persian Gulf, which is no longer being patrolled by anyone with a Navy. And this is a country whose economic model is utterly dependent upon the ability to import raw materials and tech, and then export semi finished and finished goods to other markets that are in a different hemisphere for the most part, or at least a different continent. None of this works unless everyone gets along. And China has seen its economic and political relations with every single trading partner bottom out with the exception, of course, with the Russians, because there’s no shared love of genocide there.

So a couple things. First, to a degree, we’ve always known that this was coming. In addition to the one child policy, the Chinese have been the fastest urbanizing country in human history. And when you move off the farm and into the city, kids become a bit of a luxury good as opposed to free labor, so everyone has fewer of them. And the fact that urbanization happened at the same time as the one child policy just crunched down the birth rate even more, we’ve now seen the birth rate officially by the numbers, numbers that are probably over optimistic fall by more than 60% in just the last six years. And I do again, this is to a degree expected, because when the birth rate is low for long enough, eventually 3040 years on, it cuts into the number of people who are having the children in the first place.

So if you have a smaller generation with much lower birth rate, you get a catastrophically lower birth rate. And that’s exactly where we are right now. And this will not get better unless we figure out human cloning at scale. Second is the issue of timing. At the rate of degradation, there will have never been a country and we already have never had a huge country in human history in this sort of situation. But we don’t even have an economic theory for how an economy might function. If this China’s data continues on its current path for just another eight years, so 2030 is probably the use by date if it doesn’t break sooner. And that assumes nothing else goes wrong in the Chinese system. Nothing with agriculture, nothing with trade, nothing with finance, nothing with the Americans. Nothing with energy.

All right, that’s all I got for today. Take care