As studies reveal, the gender ratio imbalance in China plays an important role in shaping the macroeconomic imbalances in the country.

I think this was world imbalance review week. We heard news on imbalances both from Paris and Washington. One was about China and the other one was about Turkey. If you wonder what the imbalances of the week are, please read on.

The topic of the G20 Finance Ministers' Meeting in Paris was the measures to be taken to tackle global macroeconomic imbalances. The ministers debated the same issue for the thousandth time. The main issue was the chronically high current account surplus of China and the chronically high current account deficit of the USA. China has excess domestic savings whereas the USA has a domestic savings gap. Everyone expected China to introduce measures to reduce domestic savings and encourage consumption.

IMF highlights

Meanwhile the IMF issued an evaluation note on Turkey's economy that focused on the short and medium-term economic imbalances in Turkey. The IMF stated that Turkey's economy is facing a series of imbalances that will be difficult to sustain both in the short term and the medium term. Rapid economic recovery fueled by domestic demand has pushed the current account deficit up. The deficit finance dynamics are also worrying. These are the short-term dimensions of the problem. On top of these, the high domestic saving gap triggering the current account deficit has had adverse effects on Turkey's competitiveness in the medium term. The remarks were striking.

I have emphasized the imbalances posed by Turkey's economy more than enough in these columns. I believe that we are riding faster than the car and the road conditions allow. Today let me focus on the global dimension of the issue. Chinese economists have been stressing the structural impediments to solving global imbalances. As the relevant studies reveal, the gender ratio imbalance in China plays an important role in shaping the macroeconomic imbalances in the country. Admit it, it sounds more interesting.

The bride shortage and current account deficit

Shang-Jin Wei et al. argue that the chronically high savings rate in China stems from the bride shortage. At least half of the rise in the savings rate from 1990 to 2007 came from this phenomenon. China's one-child policy of the 1980s combined with the determination to have a boy rather than a girl has led to a surplus of adult males. In the 2005 census, the surplus of males was 32 million. This has intensified the competition in the marriage market, increasing the bride price and thus the savings rate. Researchers believe that such a trend also has emerged in Korea, Hong Kong, India, Vietnam, Singapore and other Asian countries as opportunities to learn the gender of the fetus have grown. In fact, it is not important whether there is a surplus of females or males. One imbalance eventually causes another. Economics after all is like combined vessels.

The week before, referring to the example of the iPhone, I argued how the globalization of production has increased the current account defecit of the US. And here is another structural factor for you: the bride shortage in China is one of the main reasons for the current account surplus in China. To solve this problem, we need 30 million brides-to-be. How many young women in Turkey are of marriageable age? There is no quick solution then!

This commentary was published in Radikal daily on 22.02.2011