hey everybody Peter Zion here coming to you from home in Colorado and if you haven't been blind and we been marginally aware of international news you know that the information out of China these past few weeks uh through July and August and into September has just been a atrocious uh consumer spending is down lending is down which should never happen in a country that is just capitally driven uh the chines basically four-speed capital and everything and so lending should always be going up and it's not uh we've had the foreign minister go missing and then
be dismissed the same is now happening for the defense minister the head of their missile forces uh information that's coming out about youth unemployment is atrocious so they just stopped collecting the data Al together uh information on bond transactions has gone and if you're going to try to get into a more sustainable economic structure you obviously need a bond market they're not collecting information on patents anymore so supposedly the uh moving up the value edit scale that the Chinese been talking about for years is now not even part of the plan uh it feels like
we're looking at a broadscale societal and economic and political breakdown and we are uh the shock though is that this is all happening at once and after years if not Decades of the story of rising China and hearing that from Beijing and oftentimes from political parties in the United States and around the world for it to all of a sudden go completely inverted J seems like quite a shock but here's a thing it it hasn't all been happening at once it's just that this is when we're noticing it if you look back on the last
few years things have been odd and all things China so first let's deal with this from the outside point of view and then from the inside point of view so outside think of what's going on the last few years we've got the Ukraine war we've got the Iranians on the war path we had four years of the Trump Administration we had two years of more internally focused situation under the Biden Administration the Europeans were dealing with the tail end of their financial crisis uh the Japanese have been preoccupied with the remilitarization program everyone has been
dealing with their own stuff and it's only kind of now that the noise out of China's gotten so loud that we're even noticing that it's not good news anymore as for the Chinese two big things number one co co co co co for three years it was nothing but coid and any sort of statistical release or news out of China was always viewed Through The Eyes of coid and even if there was bad news you could always lay that at the alar of Co consumption was down clearly that's coid problems with Supply chains that's clearly
with coid problems with linking their industrial production to needes in The Wider world that was because we adjusted our consumption because of coid and so we're only now kind of getting our first good look after years of Co and then also within the Chinese system that had a significant shift when chairman G he started a series of purges under the guys of an anti-corruption campaign and in his first five years he removed every Regional Power Center so they could never rise to National prominence and then he went through and gutted the two factions uh of
the previous presidents uh huan taao and Jen zimin that put him in power to make sure that they could never come back and then he spent the last couple of years gutting the bureaucrats and the private sector of anyone who might be able to rise national uh prominence as part of that he's removed certain sorts of data collection to make sure that they can't assist anyone from rising so for example uh College dissertation the information is not published anymore it's probably not even collected anymore so no one can take the economic route to prominence and
political bi biographies are no longer put together by the state so any sort of local politician or younger politician has no way to rise in a situation that might down the road generate a potential rival so we've seen this ever tip mean information vacuum across the Chinese space all of these things have been going on for five and six years and during that five and six year period we had an inflection point that was absolutely the high point of the Chinese system and that's largely demographic uh we still don't have what I would consider to
be truly accurate information but the most recent full data to be released by the Chinese in the last 2 3 months tell us that the birth rate has dropped in China by nearly 70% since 2017 that's the fastest drop in the historical record not of China of humanity throughout all of recorded history and in that time frame if the Shanghai Academy of Sciences is right they've overcounted their population by over 100 million people all of whom would have been working age people under age 40 meaning that in the last five or six years they've hit
not just Peak Workforce in the last year Peak work for probably in the earlier part of that process and they just don't have enough Millennials to do consumption at all and we've seen the cost of the workforce increaseed by a factor of 14 or 15 in the last 22 years so in the last five or six years in China if you could somehow have a crystal bow enough access to all the data especially the stuff we're not collecting anymore we would see that they've already fallen off the cliff and it's only in the last few
months that it's become so obvious that it's cut through the Clutter and the noise and the preoccupations we all have with everything else in our lives and now it's obvious that this system is breaking down the demographic collapse is not correctable there are not enough people under age 40 for them to even try even if they had the macroeconomic structures that allowed or encouraged people to have families of the road and we're seeing an ever increasing rate of decline in terms of their industrial competitiveness on top of that we have the issues with the Ukraine
war with China starting to come into the crosshairs of sanctions we have China being more and more exposed to energy and food insecurity because the Europeans have taken everything else that is approximate to them so they don't have to use Russia and the infrastructure between Russia and China is so thin that stuff has to go out west past Europe through so Suz were around Africa and around India and around Vietnam before getting there making it the most exposed supply lines in the world so we're going to see more disruptions moving forward based on what's going
on in China with demographics and political classification and we're almost certainly going to see disruptions and their ability to access the wider world for trade and merchandise exports and that's before you consider that the Biden Administration is the most protectionist uh Administration in the United States has had at least in a century far more so than Donald Trump so the Chinese are getting HIIT from every single angle and chairman G is so purged the system that it's a open question whether he can even become aware in in a reasonable amount of time that something needs
to be done much less have the capability to come with a coherent policy to deal with whatever the issue is as it arises So demographically speaking we know that this is China's final decade as a coherent economic power but now we see exposure and political failure that absolutely can bring that date forward and that assumes that no one in Washington or London or Japan or the rest put their fingers on the scale and push this forward this has been coming for a long time but because of all the noise we missed a lot of the
signals in the last five years of just how quickly it was coming and now it's here the biggest risk in all of this is whether or not we have enough time to adapt now things like construction standing for industrial projects in the United States have risen to a level we didn't even see in World War II the past of the industrial expansion and the reshoring trend really is huge should have hopefully started 5 years earlier but better late than mether uh the the biggest concern I have now is that the information vacuum out of China
is so complete and the decision-making capacity in China has so collapsed and the pace of decline is now so Steep and the fact that we're coming so late to the understanding of all of these things means that we might not all realize that China really is broken until the product simply stops arriving there's a lot of industrial demand for product in this country for things like transmission towers and uh Transformers and other industrial equipment that is necessary to build out the industrial plant here that's still made in China that we're still depending upon and some
of these things already have weight lists that are more than 36 months but and we might now be in a situation where it's not obvious that the stuff is never coming until the shipments simply don't arrive and at that point we will be in a bit of a pickle because we will not built out our industrial plant fast enough in order to get by without the Chinese in the midterm uh that's our biggest risk now uh luckily from an industrial growth point of view and an employment point of view this is a good problem but
it does mean that the Chinese collapse is likely to cause a lot of followon damage here because of shortage and the only way around that is to build more and make sure that we don't need those products in the first place unfortunately we need a lot of those products in the first place and already could build no real way around that except for to start yesterday
