I recently sat down with Peter Zeihan for a special video interview. And it was truly eye-opening…
For regular readers, Peter needs no introduction.
He’s a geopolitics expert and New York Times best-selling author.
His fourth book, The End of the World Is Just the Beginning, just hit shelves this summer. And it’s a must-read if you want to know what’s next for our changing world.
That’s why I asked Peter to sit down with me for four quarterly interviews.
I shared part of our first interview with you back in September (catch up here). And in our second interview, Peter and I talked about the end of modern China – and what it means for different industries in the U.S. and around the world.
Now, the full interview is reserved for paid-up subscribers. But Peter’s insights were so fascinating, I had to share some of it with you. Below, you’ll find a seven-minute look into our conversation.
I hope you enjoy it as much as I did. To watch it, just click the image below. As always, you can also scroll down to read the transcript (edited lightly for flow).
And let me know what you think at [email protected].
Editor, Inside Wall Street with Nomi Prins
P.S. Our full, 40-minute conversation is due out to paid subscribers over the next few days. To learn how to get access to it, along with our next two quarterly sit-downs, simply go right here. You’ll also find out how to get a copy of Peter’s new book, The End of the World Is Just the Beginning, along with a few other bonus perks.
It’s a fantastic holiday present, with Christmas just around the corner. So be sure to read more about it right here.
Nomi Prins, Editor, Inside Wall Street with Nomi Prins: Thank you for coming on here and spending some time. I know you’re still in the middle of an incredibly frenetic book tour all around the world.
So today, we’re going to talk about that world in some more detail. And discuss particularly geopolitics and all of the unrest that is occurring in the world today, and how that feeds into some of the core subjects of your book.
From a geopolitical standpoint, where would you say we have to both be watching right now as well as potentially in the future?
You called the Russian invasion of Ukraine. With regard to that – and with regard to other trouble spots that you’re seeing in the world today… how that ultimately is causing unrest… and what that means for the United States…
What does that mean for people invested in the markets, and how do you see that playing out?
Peter Zeihan, Geopolitical Strategist: Well, why don’t we start with some baselines? As the world gets smaller, as the world breaks apart, there are certain things that you need in order to maintain a modern industrial, and especially a digital, lifestyle.
Food is one of the obvious ones, energy is one of the obvious ones, but also the raw materials that go into the things that allow us to manufacture.
And very few places have more than a short list of these things. And I think a good way to think about it is you break the world up into quadrants. So Western Hemisphere versus Eastern, Northern versus Southern.
That Northwestern quadrant, that is primarily North America – a major exporter of raw commodities, food, and energy.
Go to the Southwestern quadrant, food and energy. Southeastern quadrant – Australia, for example – food and energy again.
It’s only that last quadrant – the Northeastern quadrant that has Europe and Asia in it – that’s a net importer.
But it’s actually a little bit more truncated than that. Because if you draw a little circle around China and India, that’s half the world’s population. And everything in that quadrant that is not in that circle is still a net exporter of food and energy.
It’s just that one little bitty circle that is a net importer of everything except manufactured goods. And all the things that they need to make those manufacturing goods have to be imported as well.
That’s the part of the world we’re likely to see the greatest disruptions.
Because if anything goes wrong in terms of the raw commodities, or the energy, or the food, you have a degree of deindustrialization that is just kind of baked in. And there’s no way to undo that without a century of progress.
So that is the part of the world – specifically, East Asia – that I am most concerned about overall. And if you’re outside of that circle, you’re like, oh, we’re going to lose manufactured goods, we’re going to have to double our industrial plant.
This is a good problem. This is the kind of thing that you get record growth out of. There’s a transition period.
And this decade is that transition period, and that will be awkward in a lot of places. But China is staring down the maw of a deindustrialization process and, likely, at least in part, a “de-civilizational” process.
I have never been worried about China’s strength. It was always based on factors beyond their control, and those factors are not flipping. I am more concerned about what happens because of Chinese weakness.
Nomi: 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: 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’s problems accessing energy, the lights go out and 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 just 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 the 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.
And Chinese history, for most of the last 3,000 years, has been fractured. When you see those maps of this or that dynasty and how much territory it controls, that’s how it is at the peak. Sometimes they only held that for a few years, sometimes only for a few weeks, and then the system just breaks apart again.
Nomi’s Note: Nomi here again. I hope you enjoyed this sneak peek of my second sit-down with geopolitics expert Peter Zeihan. It’s one of four quarterly interviews I’m doing with Peter.
The best part is, you can still claim a copy of Peter’s new book, The End of the World Is Just the Beginning. 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, along with some bonus perks. Our second conversation is due out in full over the next few days. So be sure to click here to learn more.