Some perhaps surprising numbers around (de)globalization

I’m always on the lookout for information that surprises me…

Source: https://conversableeconomist.com/2023/05/26/globalization-evolves-not-reverses/

Copy and pasted:

…exports as a share of GDP have levelled off in recent years–while remaining near the all-time high. However, global flows of data and information are dramatically rising

Indeed, it may be that the US-China conflicts end rearranging the patterns of world trade, with reduced flows between the two countries, but with those international flows being redirected to other countries rather than reduced.

[T]he world is less globalized than many presume. Most activity that could take place either
within or across national borders is still domestic, not international. Roughly 20% of global economic output is exported (in value-added terms), FDI flows equal just 6% of gross fixed capital formation, about 7% of phone call minutes (including calls over the internet) are international, and only 4% of people live outside of the countries where they were born

Podcast notes – Peter Zeihan on global order and geopolitics (talk at Fort Benning)

After WW2, America used its Navy to keep global trade and shipping lanes open
Bribed our alliance to fight the Cold War – but Cold War ended 30 years ago

Americans are now done with this arrangement

Population structure was mostly a pyramid in past – more kids, less parents, fewer grandparents
On farms, kids are free labor
In town, kids are expensive pieces of furniture

China today – fastest aging society in human history – result of One Child Policy
By 2100, will have <50% of today’s population

CHINA

China imports 80% of oil needs – world’s most exposed trade route since most of it comes from Persian Gulf
China utterly dependent on US-maintained global order for these shipping guarantees

Xi has consolidated power even more than Mao
“No one wants to tell him bad news”
China vaccines don’t work against Covid – can’t move away from zero-Covid policy bc healthcare impacts would be crushing

World’s oil and gas investment is only half of what it was 10 years ago
Takes 3-8 years to develop at its fastest
Soonest energy inflation fixes itself is 2025
US blessed with lots of domestic shale – largely fixed our natural gas problems

RUSSIA
Lots of land that isn’t habitable yet can’t be easily defended
Lost control of many access points / invasion points that were controlled under the USSR
Only way Russia can protect its borders is to expand
Time’s not on Russia’s side – like China, a severe demographics problem (not enough children and young people)
Russia only has 2M troops – they’re irreplaceable, no more reserves

AFRICA
Over 5 decades, agricultural output increased by 5x
But heavily reliant on global inputs of eg, potash and other chemicals

Expects many wars of collapse as America withdraws from maintaining global order

MEXICO
One of healthiest demographies in the world
Mexico in 2060 will look approximately like US today
Exports 77% of all goods to the US – critical bilateral relationship
El Chapo ran a Korean-style conglomerate – many regional commanders that he loosely controls
He saw it as business, not warfare – once he was removed, violence increased (Sinaloa), multiple leaders
Sinaloa is largest crime group in the US today, and risk of it getting worse
Geographically similar to Afghanistan – rugged terrain, unsecurable border – may need similar tools to manage it

AMERICAN POLITICS
2×2 – economic conservative v liberal, social conservative v liberal
Military doesn’t participate in the domestic political conversation
“Greatest period of change we’ll experience in our lives”

AUDIENCE Q&A

After the Civil War, the US was split, focused domestically on re-integration, didn’t have time for diplomacy / foreign affairs
Dollar diplomacy arose – individual business interests went around the world and did what they wanted
Resulted in hemispheric chaos, led to China’s fall to Communism

Economics is an outgrowth of demography and geography (probably his core thesis)

Han (Chinese) have been around for 3K years, but only been united for 10% of it
Didn’t worry about Taiwan war until recently – but if everything else is collapsing, something to be said about choosing time/place for fight and controlling the narrative (from Xi’s perspective) – considers it 1/3 chance

If China falls:
-N China plain would be its own political entity
-City states from Shanghai to HK will integrate into extra national system / external alliances

China – sex imbalance of 5-20%
95m more men <40yo than women – driving population collapse

Bullish on Turkey – still a developing country, but all energy within arm’s reach, good agricultural inputs, good European cooperation, control / easy access to key bodies of water

Russia-Chinese alliance
Not capable of functional cooperation once you remove US’s overarching reach
Only settled border disputes ~10 years ago
Can’t sustain conflict given demography problems

Lecture notes – George Yeo – Geopolitics and Singapore, US, China

We’re in transition – old world giving birth to new world; will last many years

Trade was de-politicized – made possible by collapse of Soviet Union – but that’s over now
Countries broke off to form sovereign states – Gorbachev was not strong leader, Yeltsin was drunk often
Western tide flowed east ward
When Putin took power, he started to fight back
He knew Russia couldn’t fight on population, but could on weaponry / technology – invested in this

Ukraine war marks limit of flow of the Western tide eastward
Now it’s an inter tidal period
May see situation similar to Korean Peninsula
More or less ceasefire, de facto partition that may last decades

Rise of China
Creates insecurity in Anglo Saxon world
Five Eyes (intelligence cooperative) used to be a very quiet – decided Huawei was great threat – gave joint media presentation – very unusual for an industry that’s always quiet, discreet

Xi Jinping likes to say “changes not seen in 100 years” – keeps repeating it
China’s US ambassador gave speech after retirement – “America’s ill will for China has no bottom line and underlying it is racism”
“Never fight a war you cannot win, never fight a protracted war”
It was a scripted speech – signal from China leadership

China is preparing for war not because it wants it – but to avoid it, you must prepare for it
Plan on basis that you can withstand all attacks – then there’ll be peace

3 domains of warfare that China’s worried about
1) Nuclear warfare – must have deterrent capability; US cannot prevail in South China Sea; several hundred is not enough, dependent on strategic submarines which is why South China Sea is so important; game going on there; China will increase warheads to 1K, have counter strike capability
2) Cyberspace – fight will be from outer space to underground; assume undersea cables can all be tapped; NASA has said China wants to take over the moon, China space industry making rapid progress
3) Every dynasty has had epidemics – China recorded over 300 epidemics; lots of experience to handle; traditional way to handle is lockdowns; during SARS China locked down and stopped it; even have lockdown procedures for harems and inner palace / princes!; Shanghai lockdown was traumatic but can’t be helped – it’s a rehearsal for something worse in the future

These are what XJP means by challenges not seen in 100 years

China thought could have working relationship with US – but now it’s “don’t assume they won’t attack”

China wants more time, they are growing stronger

US has not been this divided since Civil War – which was decided by violence

Greatest uncertainty in world today is US politics – every institution has been weaponized and politicized

Democrats may face defeat in midterms

For China the big issue is Taiwan
Basis of US-China relations starting with Nixon was based on one China
Every US admin thinks Taiwan is a card, but it’s not — it’s the whole basis

Deep state is committed multi year program to fight China – won’t change based on Democrats or Republicans

Singapore very reliant on US for weapons, finances – best bet is ASEAN; can hide behind ASEAN position

As trade minister, most important was ASEAN – stronger it is, the more Singapore has buffer
If Singapore + Indonesia are aligned, can have ASEAN agreement
Impressed by Indo’s G20 leadership now

Globalization has crested, it’s decoupling because strategically necessary
Every country must protect itself

Stormy period ahead