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China’s Certain Collapse, After the War

July 19, 2023

On August 30, 1941, the Yelnya Offensive began with the Soviet Army pushing out the invading Germans. By September 8th, the Germans finally retreated amid heavy fighting, leaving combined casualties on both sides exceeding 50,000.

Journalists, who later visited the small town of Yelnya, described the area as completely destroyed. All able bodied men and woman within Yelnya were either killed or captured by the Germans prior to the Soviets pushing them out.

A century earlier, in 1812, Yelnya was at the center of the French invasion of Russia. Two centuries prior to that, in the mid-1600’s, Yelnya was again involved in the Russo-Polish war.

Most recently, in 2022, Yelnya was once again the center of a key military operation. Located near the Ukrainian border, Russia set up tents and housing, staged tanks, and even prepared blood supplies. Satellite images showed everything transpiring as clear as day.

Yet, despite hundreds of years of war history and photo proof of what was coming, most of the world didn’t believe what was about to unfold, again

Invasions, Planned for Years

Although there were numerous denials of planned military action, Russia invaded Ukraine on February 24, 2022. The evidence that Russians would eventually cross over into Ukraine was overwhelming, with dozens of examples throughout 2021. Still, the majority of the world was shocked by what happened with most financial markets tumbling on the initial news.

Source: WM

How could the world have ignored what was going to unfold in early 2022? Did everyone think that Russia’s military build up was a bluff? Did we all ignore history?

By the middle of 2022, the Russian invasion of Ukraine became Europe’s largest military operation and refugee crisis since World War II. Now, as everyone knows, the war continues to grind on, without any sort of solution on the table to bring the fighting to an end. Escalation seems the only strategy.

Meanwhile, the rest of the world is sniffing out where they should position themselves. The rumored fall of the US empire has other super powers jockeying for position, while second-string empires figure out who to align themselves with. Simultaneously, several world leaders are trying to cement themselves in the world history books. Their time in power is running out due to their personal age and health, internal power struggles by domestic factions, and sovereign population pyramid time bombs about to detonate (more on that a little later).

China is Preparing

Similar to Russia’s move on Ukraine, China is currently preparing to invade Taiwan. The only difference is that China is vocal about what they are going to do, and have publicly laid out their exact plans. Of course, much of this messaging is hidden is vague innuendos. But, if you look at the big picture, what’s coming next – possibly soon – is very clear.

Before we review the most recent events that have unfolded, it’s important to mention the “One China” policy. Without diving into history (you can here), China has vowed to unify Taiwan with the mainland, using force if necessary. This has been written out in Chinese policy and has also been stated in numerous speeches.

Chinese President, Xi Jinping, has been explicitly consolidating and solidifying his power, all while telling China to prepare for war. Earlier this month, Xi upped the narrative by telling his military to deepen war and combat planning. He has also extended warnings to corporations within China to prepare, and now the US government is even seeing increased hacking attempts from the Chinese.

China Invades Next

Beginning in 2015, China began a complete overhaul of their entire military and later identified 5 specific major combat scenarios. Three of those scenarios specifically identify military operations against Taiwan. Of those three operations, two have already been simulated with live fire drills in August 2022 and April 2023. The third simulation, which is thought to be an amphibious assault, is suspected to be getting prepared as I write.

Upon completion of these three combat scenarios (relating to Taiwan), the Chinese Army (PLA) will have proven they can invade Taiwan. Beyond current military operations drills, China is also actively preparing by:

Does all of this mean that China’s invasion of Taiwan is a certainty?

Is China just a Paper Tiger?

Or is all of this war talk a result of Thucydides’s Trap?

In the short term, we just don’t know. Conflict between China and Taiwan appears to be a real possibility, which will almost certainly also mean conflict between China and the US.

However, in the long term, China will collapse.

China’s Certain Collapse

There’s no denying the exponential rise of China over the past couple of decades. There are numerous eye-popping statistics to demonstrate the empire’s rapid expansion. For example, China consumed more concrete in 3 years than the US did in an entire century!

China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) growth averaging 9.5% through 2018, a pace described by the World Bank as “the fastest sustained expansion by a major economy in history.” –ECRSR

There are many factors that contributed to China’s ascension to the world stage, but none that were more important than their population growth. Starting in 1949, with the establishment of the People’s Republic of China (PRC), death rates significantly decreased with average lifespans going from 35 years in 1948 to 66 years in 1976. Birthrates, on the other hand, actually decreased to about 4.0, but infant mortality rates drastically decreased. The combination of all these factors led to what the chart below shows:

China Population Growth

Adding to all of this, China overhauled its economy in 1978 and opened its borders to foreign commerce. This event coincided almost perfectly with the massive explosion of working class individuals and led to the economic boom that no nation has ever replicated since.

However, just a year after, in 1979, the PRC introduced the now infamous One Child Policy. Spanning from 1979 until 2015, this policy was enforced with numerous exceptions that changed over time. Regardless, the ultimate result of slowing down population growth has had enormous impacts across China’s society, culture, economy, and demographics.

The most significant impact is shown in China’s population pyramid, which quantifies population by age group. A population pyramid that has an ever expanding younger base ensures that future generations continue to grow. But when the younger portion of the population starts to decline, future generations grow at a slower rate.

China Population Collapse

Source: PP

Furthermore, if birthrates decline, future generations shrink exponentially as less people have less babies. This scenario is the exact opposite of what lead to China’s rise – more people raising more babies. Today, in 2023, not only does China have a shrinking population due to their One Child Policy, but they now have one of the lowest birth rates in the world.

China Birthrate Collapse

Source: BBC

In order for any nation (or humanity) to grow, the birthrate must be 2.1 – “one for each woman, one for her partner, and an extra 0.1 to counteract those that die as infants.” China’s official birthrate is 1.3, but in major cities like Beijing or Shanghai, the birthrate is as low as 0.7. (Some experts believe that the rate could be even lower than what is being reported.)

China’s population isn’t slowing in growth. China’s population is now shrinking for the first time in 60 years

China’s Workforce Collapse

Although China’s death rate is higher than their birthrate (which causes population decline), that doesn’t mean that the largest portion of their population is going to disappear. In fact, as lifespans increase due to increased medical care and healthier living practices, China’s population will have a much higher average age in the future.

This higher average age will mean that there will be less younger people supporting more older people. Workforces will be required to be more productive with less people available. Additionally, social services such as retirement and healthcare systems will be stretched and possibly broken.

By 2050, China’s population will be the largest older population on earth – by a long shot.

china population collapse

Source: NYT

By 2050, people age 65 and older will make up nearly 40 percent of the population in some parts of East Asia and Europe. That’s almost twice the share of older adults in Florida, America’s retirement capital. Extraordinary numbers of retirees will be dependent on a shrinking number of working-age people to support them. –NYT

Desperation Before the Collapse of China

In order for China to change their population trend they would have to open their borders to immigrants and/or implement some sort of extreme child birthing program. China already experiences a net negative immigration rate (especially among the wealthy), and there are no signs of any Orwellian baby program underway.

The impending weakness within China’s workforce could be offset by automation (such as robotics and AI), but there will still be a consumer issue. Typically nations with younger populations have high consumption rates. China may end up with stagflation at best (similar to Japan), or disaster at worst (there is no modern example of a society contracting in population). Finding some sort of equilibrium to balance China’s internal demands will be near impossible without major economic and societal disruption.

Xi Jinping and the current Chinese ruling power are keenly aware of this situation. They know that the Chinese empire is at risk due to population decline, and they know that something has to change if they want to challenge the current world order.

The Chinese current capacity to produce goods – whether that’s for normal commerce or for military needs – will only decline from here. There will be more people exiting the workforce than joining it.

Knowing all of this, will China strike soon? Does Xi Jinping believe that China will be better prepared now or later to make a move?

Only time will tell.

Soon, I’ll dive into where investors can hide out, and profit from this likely scenario.


***Some notes:

  • Of course this entire scenario of population collapse will take time.
  • China will still be a heavyweight consumer of all things for a long time ahead.
  • This analysis about China is more about the long term future of the nation AND the likelihood that China will make a military move soon to disrupt world order. As in, it’s now or never.