Despite China’s growing military, it remains constrained by geography and dependent upon U.S. secured trade routes.
Even if China manages to expand its Navy to the point where it can break through the First Island Chain, it still needs to find a way to replace the U.S.-maintained international system. And that’s no easy feat. The Chinese proved they could adapt and buy themselves some time during the Iran War, but it could not avoid the pitfalls associated with being the world’s largest oil importer.
Hey, everybody. Peter Zeihan here, coming to you from Yosemite National Park. This is Royal Arch Lake. This is the very first place I ever went camping when I came to Yosemite years ago. So it’s kind of cool to be back almost by accident. Anyway, taking a question from the Patreon page today specifically, why don’t I see the Chinese going all bonsai in their neighborhood?
Why are they not being more militaristic? I would argue that until eight years ago, when chairman G. Jinping got rid of his last real advisors, he had a very accurate understanding of the world about how China was arguably the country in world history, most dependent upon international trade, and how China utterly lacked the military means in order to protect that trade, even within sight of its own shore.
Trying to basically faces three layers of problems. Number one, their chief sources of demand, primarily the United States, but to a slightly lesser degree, the European Union are on the other side of continents from them, and they’re broadly hostile. That means unless they can find a consumption source to absorb their goods, their current economic model won’t work at all.
And since their own demographics are so totally horrid, they know that that consumption boost can’t happen at home and the developing world, writ large, has less than half the consumption power of the United States, and much less the US and the EU put together. So there is no option for China except to maintain some version of the current system.
And the United States is the one that has a global Navy. That’s problem one. Problem two even if the Chinese could float a navy that was equal to the United States, and right now we outgunned them roughly 15 to 1, they still need to get through the first island chain that is Japan, Taiwan, the Philippines, Indonesia, Malaysia and Singapore.
It’s not so much that those countries are de facto US allies. In most cases, it’s that if the Chinese are going to project power to the wider world, they have to get past these islands regardless of who controls them. And it’s much, much, much, much, much easier to sink ships, especially commercial ships in a straight than it is to dominate an archipelago.
You’re talking about a combined population in the zone. That is, Indonesia has 250 million people by itself, so well over half a billion. I don’t think I’ve ever done that math before. Taiwan has about 30. Philippines I think is 70 these days. Lots of people. Well, well, well beyond the capacity of the People’s Liberation Army Navy. That’s what they actually call their navy, as well as the People’s Liberation Army.
The Chinese Army is not designed to project power and hold territory. It’s mostly for domestic control, which is something that does pretty well. Anyway, so that’s problem two. Problem three. Let’s assume that they can outrun the US Navy and dominate the first island chain. And those are some wishful thinking there that doesn’t solve their problem.
They still have to get to North America to dominate that commercial base. So have to get to Europe to dominate the commercial base. They still have to get to the Middle East to have energy. The Chinese system, from a strategic point of view, has always been in a bind. And so I’ve always found it hilarious that the official stance of CCP is that the United States.
Should patrol the world and secure the ceilings on behalf of China. Their official plan is that we can’t do it, so you should do it for us. So no no no no, not a lot has changed. We have had a little bit of color that has come in because of the Iran war, in that the United States bungled everything.
And the Chinese, I don’t want to say that they bungled or that they had a a home run. It was somewhere in between. It exposed just how vulnerable they were to energy disruptions. And they did showcase through switching for petrochemical inputs and for using EVs, that they could reduce their demands by about 2 million barrels per day, maybe not even quite that much.
But, you know, that’s a significant volume to reduce your crude by. That’s like, geez. United Kingdom uses about that much, but that’s it. So even after all the fuel switching, even after going over to electric vehicles, even after shutting down some of their refineries, they were still far and away the world’s largest oil importer from all the same places as before.
Nothing really changed. If I was going to highlight one thing that may be pointed the other way, it’s not so much that the Chinese have more flexibility, it’s that we found out just how dependent other countries were on them. Now, we understand in the United States how much were dependent on the Chinese for manufactured goods. But over the course of this conflict, Korea, Taiwan, Vietnam, Australia, the Philippines all discovered how much they were dependent upon Chinese refined product.
So, yes, the math really hasn’t changed for China in terms of any sort of major conflict. But we now know that if they do go down, they’re going to be taking the fuel systems of a half a dozen countries that the United States cares a fair amount as a side effect. And the only way to fix that is for these countries to secure their own energy and specifically to develop their own refining base, which for some of these countries is something they gave up on decades ago.
So it’s not so much that we know that China is in a stronger place. They’re not. So they may have just tethered themselves to a few countries in the meantime.
