Peter Zeihan on Vietnam

Peter Zeihan on Vietnam — Top Country to Watch

Vietnam is a top country to watch, according the geostrategist Peter Zeihan, as discussed on the Jordan Harbinger Podcast on Jan 17th 2023 (watch below) and one of his Youtube shorts on SE Asia in March 2023. Zeihan is “most bullish” on SE Asian in general (source), particularly Vietnam, and extremely bearish on China. He bases his optimisism on education, demographics and technological development.

Many international companies agree with Zeihan — Vietnam has been one of the principal beneficiaries of international companies’ divestment from China, as they carefully excise their supply-chains away from the CCP and through nearby Vietnam. Top brands such as Samsung, Foxconn, and Adidias now use Vietnam as their top manufacturing location (read more).

About Vietnam, Zeihan says:

“I’d watch south-east Asia pretty closely. [In the USA], we’ve got good relations with most of them. The one that matters the most by far is Vietnam:

  • good educational system,
  • decent demographic structure, and
  • their trying to leapfrog China in terms of technological aptitude.

And their doing a decent job of it! They are definitely the country that has benefitted the most from China dropping pieces of the manufacturing systems.”

Peter Zeihan, 2023, Jordan Harbinger Ep. 781

On Vietnamese education, Zeihan points-out that approximately 40% of Vietnamese graduates are in STEM fields (source), which bodes well for moving-up from textiles and agriculture to mid-tech fabrication and R&D (Samsung is already setting-up its largest R&D centre in Vietnam).

In his latest book The End of the World is Just the Beginning, Zeihan writes of Vietnam:

Vietnam is hoping to leverage its dense population clusters, excellent ports, rapidly evolving educational system, and top-down, no-dissent-allowed political system to jump over China completely and become the next Thailand.

Peter Zeihan, 2022, “The End of the World is Just the Beginning”

He also lists Vietnam as one of the top 17 countries that should fare well in a grim future of resource constraints, along with France, the United States, Canada, New Zealand, Sweden, Argentina, Australia, Turkey, Nigeria, India, Uruguay, Paraguay, Thailand, Myanmar, Italy, and Spain.

“Decent Demographic Structure” — Zeihan on Vietnamese Demographics

To assess a country’s long-term viability, Zeihan focuses on demographics; in particular, a country’s age-cohort pyramid (below) and birth-rates are key to project a population’s workforce and economic vitality into the future.

Vietnam’s demographic structure is “decent” according to Zeihan. He notes that Vietnam is currently in a demographic sweet-spot, with a large cohort in the 25 to 40 age-group who are at their most-economically productive right now (source), and thus very attractive to foreign-capital. Vietnam’s population is not projected to peak until 2050, giving it the possibility of learning from the collapses of its north-east Asian neighbours.

NE Asian countries like China and South Korea are on the cusp of massive demographic catastrophes, with declines starting in 2021-2024. Demographics are destiny, according to Zeihan, who grimly remarks that there is no economic theory to even understand how such countries will survive amidst their catastrophic demographic decline (for China, Zeihan predicts the CCP will fall within a decade).

age-cohort pyramid for Vietnam China and South Korea show Vietnam is the best, demographically
Population pyramids for Vietnam, China and South Korea. Source:

One thing to note about Vietnam’s population pyramid is the bulge of 30-35 year olds, i.e., Vietnam’s Millennials. This cohort was born in the late 1980’s, right after the 1986 Doi Moi economic liberalizations which marked the end of the so-called “Subsidy Era” — aka, command-and-control economics, collectivization, no private property, no private business. After decades of stagnant GDP and being a laggard among its SE Asian peers, the Doi Moi marked an inflection point whereby Vietnam suddenly re-embraced the global capitalist system, and its GDP rocketed-up to a growth-rate consistent with its SE Asian capitalist peers (albeit starting from a much lower level), lagged only by Cambodia.

GDP/capita growth rates of Vietnam compared to other SE Asian countries, since 1970
GDP/capita growth rates of Vietnam compared to other SE Asian countries, since 1970. Data from

With Vietnam’s renewed global-connections and economic liberties came a mini baby-boom — happy and hopeful Vietnamese got to work in private enterprice and got to work making babies. Fast forward to today, that bulge of 30-35 year olds is now at their peak earnings and spending power.

However, since the Doi Moi baby-boom, birth-rates have dropped in Vietnam and Zeihan warns of its own demographic demise if Vietnam doesn’t aggressively boost its birthrate by the 2050:

[F]urther forward, in the 2050s, are countries who started their birth rate collapse a bit later, and so who still may have a chance to avoid demographic disillusion if they can get today’s twenty- and thirty-somethings to have a whole mess of kids, but honestly, these late arrivals’ birth rate collapses have been so severe it doesn’t look great: Bangladesh, India, Indonesia, Mexico, Vietnam, Iran, Turkey, Morocco, Uzbekistan, Saudi Arabia, Chile, the Czech Republic.

Peter Zeihan, 2022, “The End of the World is Just the Beginning”

The Technological Prowess of Vietnam

For most foreigners, the word “Vietnam” conjures imagines of straw-hats and rice fields. Instead, what you should imagine are tinkerers, technophiles and craftsmen. As Peter Zeihan notes in a recent youtube short, 40% of Vietnamese graduates are in the STEM field (March 27, 2023).

The Vietnamese have a long history of exquisite craftsmanship and sophisticated artistry. We’re not talking about glamorous icons like Da Vinci or Renoir, but a more broad-based culture of guild-towns and artisanal villages cranking-out quality goods at-scale, some dating back hundreds of years. These guild-towns were once singularly dedicated to high-end specialized products for local aristocrats, from wood-furniture carving, to instrument making, to silk-weaving, silver-smithing, bronze-casting, embroidery-art, bamboo-weaving, and much more (read more here).

These guild-town were (and are) notorious for copying and mass-production, but with an eye for technical quality which puts regional competitors like India and Bangladesh to shame. This cultural legacy has neatly transitioned to modern export-industries, spurred on by FDI and provincial governments who compete amongst themselves to incentivize development through favorable Exports Zones, Industrial Zones, preferential tax treatment, and shiny new infrastructure (See the USAID-led Provincial Competitive Index which tracks how the business-friendliness of all Vietnamese provinces).

The results has been more and more international brands making Vietnam their principal base of manufacturing, including many technology companies like Samsung and Foxconn (read more).

SE Asian Configuration: a Very Bullish Combination

Zeihan explains in a recent Youtube short that among the entire world, he is most bullish on SE Asia. He explains that the SE Asian countries have complementary demographics and favourable geographies that facilitate their emergence as a regional powerhouse.

While older NE Asian countries fade-out of relevancy, the mid-aged countries like Vietnam and Indonesia are currently at their most productive and are excelling in mid-tech. They are already the beneficiaries of high-tech transfer from Japan and Korea, especially Vietnam. In the future, youth-heavy countries like Laos and Cambodia could be massive engines of growth, and are already punching-up above their weight in the low value-add sectors.

This configuration, with a mixture of demographcs and differentiation of technological prowess, is a wicked combination, according to Zeihan. Best of all, these countries are close together geographically and can piggy-back on the mature Chinese shipping and logistics infrastructure.

Vietnam does a lot of investing in Laos, but has a more rocky relationship with Cambodia. Unlike Vietnam, who is historically weary of China, both Laos and Cambodia are thought to be vassel-states of China, with entrenchment of Chinese interests among the political elites. Will they pivot to the West and Vietnam and bolster the global capitalist system? Or, will they align themselves according to Chinese interets?

On that dynamic, Zeihan is silent, but we expect it will be a strategic interest of his in the future.

Will Vietnam go the Way of China?

While China is in decline and increasingly hostile to foreigners, Vietnam is booming and outward-looking and inviting of foreigners — especially the USA (in fact, the Vietnamese are one of the USA’s biggest fans).

But, seasoned China-watchers have seen this before, such as the ADVChina documentarians who lived in China during the Zemin/Jintao period of liberalization. They remark how the Vietnam of today feels like the hopeful China of 15 years ago. This raises the obvious question of how sustainability: will Vietnam’s renewed enthusiasm for the global capitalist system persist into the future? Or, will Vietnam go the way of China under its own jingoistic version of a Vietnamese Xi Jinping?

Pew research: Vietnam likes the USA 2017
Pew research indicator: “Do you have a favourable view of the USA?” year 2017, the latest for Vietnam. Source:

In many ways, Vietnam has instituted more free-market reforms than has China. It has less state-interference in the economy. It has more generous allowances on foreign ownership on businesses. It has also more private property rights (the Vietnamese are allowed freehold ownership of land, unlike the Chinese in China, where leaseholds are the norm). Vietnam has signed more free-trade agreements, such as the CPTPP (whose signatories include Japan, Australia, Canada, New Zealand and more) and the EU-Vietnam Free Trade Agreement, including strong provisions for IP-protection. It is hoped that these institutions will keep Vietnam on the straight-and-narrow for decades to come — but only a serious test of these institutions will validate whether they can persist through crises, or if fickle Government Decrees can wipe-out these reforms as easily as they were ushered in.

What do the Vietnamese think of their own country and its prospects? The youth are among the most hopeful in the Asean group, but older generations are skeptical — if they can’t vote through ballads, they vote with their feet and dollars. Having lived once through a period where the government could literally come-in and took everything you owned, the Vietnamese, like the Chinese, are desperate to get their money out of the country. They use all the same tricks as Chinese communists to skirt draconian capital controls, like buying-up real estate in the USA to use as land-banks, or exploiting international student-programs in Canada/Australia to buy permanent residency — many use crypto-currencies, for which Vietnam is one of the most enthusiastic in adopting.

All of these serves as a reminder that once-prosperous and outward-looking countries can change suddenly — most of all places, like China, with authoritarian governments and weak legal institutions.

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