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    Does it become hard to enable global growth it the bride shortage in China is not solved?

    Güven Sak, PhD27 June 2009 - Okunma Sayısı: 1210



    This week 2009 Global Development Finance report of the World Bank was discussed at TEPAV. Here you are three conclusions to be drawn from the meeting: First, 2010 will be better than 2009. Second, the recovery to take place in 2010 will not offset the damage created over 2009. Third, the source of global growth will be domestic markets; in particular Chinese and American domestic markets. If you like, let us switch to a more amusing topic. Source of growth will be domestic markets, and to this end consumers of countries with large domestic markets and in particular Chinese consumers will have to consume more and save less. However, a study published in June 2009 expressed that high domestic savings rate of China stemmed from a highly structural factor. High savings rate of China was closely related to the gradually rising sex (males/females) ratio. The rise in bride shortage in a way led to a "saving competition". Do you wonder the relationship between sex ratio, one-child policy and the balance of the world? If you are curious about what Shang-Jin Wei and Xiaobo Zhang wrote on an issue which is not much addressed in the literature of economics, please go on reading. And we have to say that what they have written is highly amusing.

    Sex ratio of the world is around 1.06. This means: Around 106 boys are born per 100 girls. This is valid at least for societies that did not undergo a serious draught. If you wonder, the ratio is similar for Turkey. But, why is this so? This is so because mortality rate among infant boys is higher than that for girls. So nature or God, whichever your disposition chooses, know what it has done and gives more boys as an extra reserve. In 1980, sex ratio was around the mentioned level. However, the one-child policy implemented for the last thirty years lead to a rapid change in the ratio as of the 21st century. As the figures are examined, it is seen that the ratio changed into 120 boys per 100 girls in 2005. And the change does not stop there: In 2007 it turns into 124 boys to 100 girls. As a result of the "one-child policy" implemented for almost thirty years the country has a surplus of 32 million males as per the results of the 2005 census. The "bride shortage" problem in China appears as the males grow to marriageable ages. Before mentioning how this bride shortage problem affects the bride price (cai li) in China, let us touch upon the importance of the number thirty million.  This number, for instance is equal to the population of Canada or the number of male population of Italy. Though a part of this population has different sexual preferences, the outcome does not change: They have to make higher effort to find a woman to marry than in other countries; for instance in Turkey.

    In 1980s bride price sums in China were small. An article in Wall Street Journal (WSJ) daily published on the issue on June 6 2009 says that back then it just a couple of dresses would be bought with that amount. But in 1990s, "cai li" started to rise: first it became a couple thousand of yuans corresponding to 200 to 400 dollars. After 2002, the price started to go up rapidly and suddenly jumped up to 6000-10.000 yuan level. Nowadays, the sum has reached around 40.000 yuans as the article on WSJ suggests. This corresponds to around five-year income of a peasant and to around 6.000 dollars. Competition has got intense recently; in other words bride shortage has gained importance. As a result, "runaway bride" incidents have increased. No, brides do not take the jewelry given as a present at the marriage ceremony; they only take the "cai li" sum when they run away. Again, this is what the article on WSJ says.

    So, what is the correlation between these incidents and high savings rate of China?  Savings rate of China has increased by around 15 points since 1990. Total domestic savings rate have rose from 35 percent in 1990s to 50 percent in 2007. Note for example that savings rate in Turkey is still around 15 percent level. This is on one hand bad for the world because: high savings rate of China means high current account deficit for us. On the other hand, it can be said that if the current world growth is dependent on the consumption by the Chinese, we have a hard task to accomplish. One-child policy and rising sex ratio of China also disrupts the balance of the world.

    Study conducted by Shang-Jin Wei and Xiaobo Zhang shows that the rise in total savings rate stems from the competitive savings motive. Savings rate is higher in parts of China where sex ratio is higher. In regions where the number of males is higher than the number of females consumption is lower. Savings rate go up because of lower income in particular in rural areas of China.

    What do competitive savings mean? Parents with a son save whatever they can to ensure that their son will have a good chance of marriage. For instance, they want to buy a big house for their son. They want to invest more on his education or look for funds to enable him win the university exams. This way, they try to raise the chance of their son among limited number of brides. As known, there is a shortage of brides which leads to a "savings competition".  As house prices rise due to this competition, parents which have a girl baby also need to save more. Therefore, Chinese people make a lot of savings. Sex ratio unbalanced by the one child policy encourages Chinese people to make competitive savings and thus increase savings rate as a whole.

    So, how shall we assess this outcome? At first glance, it can be said that the "Material Girl" by Madonna have proven correct. What was she saying? "Only boys who save their pennies/make my rainy day." However, it does not end there. Did you note that what is told here is beyond "of course it is necessary to save to get married"? Let us finish with two conclusions: First, we already knew that savings rate is closely connected with culture. This is basically what applies here. Given the one-child policy, parents who certainly want to have a son eventually push up the sex ratio. It is not public policy but culture that affects savings rate. In an atmosphere where sex ratio goes up the mentioned competitive savings motive can come as a result. This is the first conclusion. Second conclusion is related more to the current milieu.  Considering that the sex ratio and the Chinese culture of a couple thousand years will not change overnight, what shall be done to sustain global economic growth? Surplus males in China can be distributed among the rest of the world or plenty of foreign brides can be sent to China. Otherwise it seems that China will not consume at all. We do not have any other ideas for solution.


    This commentary was published in Referans daily on 27.06.2009