The Peter Zeihan Podcast Series The Fire Hose of Chaos: The “Deal" With the Chinese
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May 20, 2025 Trade tensions are shaking China's already delicate economy. The dynamics of U.S. trade policies are proving to be a major factor, raising existential questions for China. Low consumption rates and demographic shifts add layers to this complex situation. While a new deal is on the table, it may not solve the deeper economic challenges that China faces. The intricate web of U.S.-China relations remains as tangled as ever, making the outcome uncertain.
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China's Stability via Employment
- China's economic system is based on maintaining political stability through guaranteed employment.
- This means financing cheap capital to keep people employed, even if jobs are inefficient or artificial.
China's Demographic Crisis
- China's demographics are worsening, with more people over 53 than under.
- This demographic shift severely reduces domestic consumption and economic growth potential.
China's Export Dependency
- U.S. tariffs halted trade, which is a catastrophe for China reliant on exports to the U.S.
- China must export goods as it cannot consume them domestically due to weak local demand.