Video

HOT TAKE | Peter Zeihan Unveils China and India’s Challenges in Global Sourcing

Peter Zeihan emphasizes a shift in focus from reshoring or nearshoring to leveraging the advantages of the North American market. He highlights Mexico’s demographic advantages, with a younger workforce and higher consumption per person due to a later industrialization process.

Additionally, Zeihan underscores the logistical benefits of proximity, reducing the impact of international security issues and promoting a more manageable and familiar relationship. He suggests that the integration of Texas with Northern Mexico has played a significant role in the American growth story since 1992, indicating a promising trajectory for North American collaboration.

Transcript

Leah Archibald: We have in the past 10 years, solved some of the shortage problems by offshoring, by buying cheaper goods from Asian companies from India, from China, that is becoming less a viable option.

Peter Zeihan: Absolutely.

Leah Archibald: We saw that during the pandemic, part of that is shipping problems, crises of shipping availability, you’re telling you that it’s more actually than just recent challenges like that’s gonna be an ongoing challenge sourcing from Asia…

Peter Zeihan: Well, the Chinese situation is by far the most dramatic, so they’re facing the same birth rate collapses everybody else, but because they were a late comer to industrialization, they were able to apply the technologies of industrialization and urbanization as much faster rate, so they went from having seven kids to having less than one kid in four years, and now you put the one child policy on top of that, and this is the last decade that they will have any workforce… It’s that dramatic, they’re gonna cease to exist as a functional economy within 10 years, assuming nothing else goes wrong, and since this is a country that imports 80% of their energy and 80% of the inputs for the food stuff. You can imagine a lot of things going around, even if the politics were perfect and they are not. Now, India is a different picture, a much younger demographic much later to the industrialization process, much slower urbanization program, but the problem there, to be perfectly blunt, is quality, their infrastructure is substandard, the country is over-populated, so it’s kinda hard to generate the capital that you need to move up the value-added chain.

Peter Zeihan: It’s not that you don’t have some very skilled Indians, you do, which is that the very skilled Indians come to the United States, and as long as that is the environment, India can take a big chunk of the manufacturers market, but it will take it for itself. They won’t be producing as part of a broader network that’s still globally significant, it’s just not globally involved, so we need to look a lot closer to home for our labor situations.

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