[PETER ZEIHAN]
Hey everybody, Peter Zeihan here coming to you from the Gulf Shores. Today, I’m taking an entry from the ask Peter forum. And it’s if my estimation for the mass collapse of China comes true. Where is the manufacturing going to go? Well, first things first, if you remove a billion people from the global pool, you’ve lost stops. So yes, we’re still talking about tens of trillions of dollars of capital investment that needs to happen, but maybe not quite as much as we think. Now, once you’ve gotten past that, you’re basically looking at three factors that shape where this stuff’s gonna go. Number one, a place that is either has itself or is proximate to a significant consumer base, to justify the infrastructure development in the first place. Number two, sufficient number of people under 50, not just to consume, but actually to do the work that is necessary.
And then third, you would prefer somewhere where they’re not starting from scratch. There’s $35 trillion of leased an industrial plant in China. And even if we only need to relocate half of that, which would be overly optimistic, I would argue, having to do that in a place that doesn’t have a road and rail system would be a much heavier carry than a place that does. So this rules out any number of locations, though Africa doesn’t look too good because of this heavy infrastructure, and it’s too dependent on international imports, to make it system function. Europe doesn’t look that good, because it all has the infrastructure doesn’t have the consumption base. Japan kind of falls in the same category.
So when I think of this, I think of three regions. So in ascending order at the bottom is Argentina, good infrastructure, great educational system, positive demographics, probably the arguably the best one in the world for a country at its point of economic development. Of course, the downside is that it’s full of Argentine foreign policy. And yes, yes, yes, Malay, the new president is doing reasonably well. But one president does not make a pattern. So we will see. But if if, if Argentina is so successful at reinventing itself, it will easily become the manufacturing hub, and player not just for itself, but for the broader Southern Cone region. Brazil can’t compete in this, the infrastructure isn’t there, the education system isn’t there, and the country is aging rapidly. So you can see a world you’ve all beware Argentina gets a lot of these pieces, and then just treats Brazil as a captive market. Okay, that’s number one. Number two is North America. The United States obviously has the consumption base. But so to visit Mexico, it’s a pretty young country, Demographically speaking. And while most of North America has already been absorbed into the NAFTA system, central and southern Mexico really have it. So there’s a lot of low hanging fruit there, not just from a consumption point of view, but from a worker point of view. And then, of course, the United States is the world’s largest consumer market with top rate infrastructure.
So we’ll grab some chunks to the third section. And the point that I think in relative terms is going to be the best is Southeast Asia cure, you’ve got a cluster of countries that are partially integrate, we partially globalized and partially industrialize, but almost all of them still have significant reserves they can draw upon through labor. And as the place is better and better and better, the consumption situation is going to look better. The two countries that I’m arguably most interested in in relative terms are Vietnam and Indonesia, both have large populations proven, are at a beach, both have large populations in excess of 100 million people will score over a billion in the case of Indonesia, their infrastructure is OK, not great. But it’s rapidly expanding. And there’s some very clear population centers where this is all really serving as nodes for greater regional distribution. They’re also proximate to China. So this is a place where Chinese companies are already investing. These are countries to get along with the United States, there are places where the Americans are investing, these are places to do well with Japan. So the Japanese are investing and most importantly, they’re all at different stages of production. So it’s easy to imagine a supply chain system where the Vietnamese do the really high end stuff, men come down, but the ties and Malaysians for the middle manufacturing, and then lower end stuff in places like Indonesia. Vietnam is the one I’m most interested in because they’re trying to jump stages of production. And already 40% of the college grads are STEM graduates. So it’s easy to see them becoming the next Malaysia. But with a population. That’s roughly four times as large. That becomes significant. Very, very quick, quick. So do I get everything? Yeah, I think that’s everything. All right, everyone. Have a good one.
