The world we know today has largely been shaped by geography, populations and agriculture. Peter Zeihan has some useful analysis of how geography has shaped geopolitics.
He correctly notes the large advantages the US has had with the best farmland and the best connected river system. Rivers can transport goods at 15 times greater energy efficiency than trucks and two to three times better than trains. Pipelines can be as energy efficient as rivers but have a far higher capital cost.
However, Zeihan does not update to see how megaprojects and technology are overcoming the power of geography to dictate world power.
The US has had the advantage of geography that is resistant to invasion and wars. This is less relevant because nuclear weapons and modern militaries have eliminated most of the perceived gains countries could get from conquering other countries. Wars between developed countries with modern militaries have been very rare since WW2 and especially since the end of the cold war.
The main war that has been deterred by the US has been China’s desire to regain Taiwan. Many geopolitical analysts like to talk about what if the US abandons its role as global peacekeeper. The US did not stop the war between Iran and Iraq. There have been border wars between China and India and India and Pakistan. The US chosen to be not involved or minimally involved in certain situations for decades. The situation then is shaped by the dominant regional players.
* Megaconstruction has reshaped river systems and China has reshaped its inland waterways. * China has upgraded its agricultural land and is fixing pollution.
* Self-driving trucks will revolutionize logistics. It can bring down the cost by about 4 times and can increase the distance driven in a day by 2.5 times. This will give every highway the speed and capacity of a highspeed rail line. Rail will be crushed for cargo and this will further reduce the importance of river shipping.
Geography is already being overcome as countries that make investments eliminate the advantages of other countries or remove their own disadvantages.
Overcoming Dependence on US Consumers
Zeihan also talks about global dependence on the USA for security and markets.
Now the total world consumer spending is over $40 trillion. The US has $13.6 trillion and China is number two with $6 trillion. The European Union collectively has $9.7 trillion and Japan is next with $2.8 trillion. Germany has $2 trillion.
The World and US consumer spending is growing at about 3% per year. China is growing at 9% per year. China’s consumer spending growth is faster than its GDP growth. China’s share of GDP for consumer spending is about 44% when many countries have 54% to 68%. South Korea is the developed country with the next lowest share of consumer spending at 48%. China could grow consumer spending at a 9% pace for several years until it gets into the 55-65% range of share of GDP for spending. This is even if the GDP growth rate drops to 4-5% per year.
China is on track to get to about $8 trillion in consumer spending in 2021. In 2025, China should be at $11.2 trillion. They should reach $16 trillion in 2029. The US market should have still grown to around $17-18 trillion in 2029. The passing of the US consumer market should happen around 2030-2035. This should happen even if China drops from 6-7% down to 4-5% in the early 2020s. The US and China will be within 15% of each other from 2029-2037 in terms of overall consumer spending.
China Reshaped Its Rivers With Dams, Dredging and Megascale Construction
China is widening and deepening all of its major rivers. China has more than 75,000 miles (some 125,000 km) of navigable inland waterways, the most extensive system of any country in the world.
When the Yangtze is high in summer, it is navigable from its mouth to as far as Chongqing for ships of up to 5,000 tons.
Guoyuan, a 16-berth port connected to the railway in Chongqing, shipped 12 million tonnes of freight last year, but can handle up to 30 million tonnes. Every day, cargo shipped from Guangxi, Guizhou, Jiangsu, Shaanxi, Sichuan and Yunnan arrives for transfer to railroad cars, often bound for northern Europe, 16 days away.
By 2020, four new rail-water-road ports and nine specialized ports will have been built in Chongqing, and the aggregate cargo handling capacity of the municipality is expected to hit 220 million tons. The Mississippi waterway handles about 560 million tons each year.
The Yangtze is the world’s busiest river. More than 2.3 billion tons of cargo went through ports in 2016 and is growing at about 6 percent. This includes 330 million tonnes of exports and around 15 million containers.
The 40-year-old Nanjing Port had its channel deepened to 12.5 meters. The port’s capacity has exceeded 100 million tons. Nanjing can now handle ships of up to 80,000 tons.
The waterway from the estuary of the Yangtze to Nanjing was only 7 meters deep in 1998. The channel depth in Jiangsu has been gradually increased, first to 8.5 meters and then 10.5 meters, making it navigable by bulk carriers and oil tankers.
The Xi River is second in importance only to the Yangtze, being the major water transport artery of South China. Ships of 1,000 tons can sail up the Xi to Wuzhou, while smaller craft can sail up its middle and upper courses as well as up the Bei and Dong rivers and the tributaries of all these streams.
In 2008, heavy investments began in the Wu navigation channel. 430 km of the waterway were dredged and there was construction of berths, navigation facilities and huge ship elevators to raise boats up to 200 meters. Navigation was suspended in 2003 when Goupitan hydropower station opened and the water level differential arose. Now water transit has resumed, annual freight volume is expected to hit 15 million tonnes in three years and 100 million tonnes by 2030.
Agriculture Despite Inferior Land
China has agriculture production that has five times the value of US production. China has seven times less land per person and over 4 times the population of the USA.
China’s land now averages production that is only 20% less than the US per hectare.
Self-driving trucks will revolutionize logistics. It can bring down the cost by about 4 times and can increase the distance driven in a day by 2.5 times.
A self-driving truck would be able to deliver across the USA in about 1 day instead of 5 days.