MacroScope

Spend Save Man Woman

May 28, 2010

Far from being lauded as a virtue, China’s high savings rate has been blamed for the economic imbalances underlying the global financial crisis. The criticism being that the Chinese spend too little and rely too much on exporting to Western consumers.

The IMF and World Bank have long called for Beijing to ramp up social spending so its citizens will feel less need to save for a rainy day and instead consume more.

But in their intriguingly named paper,¬† ‘A Sexually Unbalanced Model of Current Account Imbalances‘, New York-based researchers Du Qingyuan and Wei Shang-Jin suggest China’s gender imbalance could also be a significant factor in the persistence of its high savings rate. spendsavemanwoman

The pair argue that intensifying competition in the Chinese marriage market is causing men — or indeed parents with sons — to raise their savings rates to improve their relative¬†allure among a shrinking pool of potential brides.

A draconian one-child policy, coupled with a traditional preference for male offspring and the availability of selective-sex abortion, has left the country of 1.3 billion facing its most serious demographic crisis.

An estimated 119 boys are born per 100 girls and the Chinese Academy of Social Sciences has warned that this could leave more than 24 million Chinese men of marrying age without spouses by 2020.

This anxiety over the worsening marriage prospects for men could explain why Chinese household savings as a share of disposable income has risen from 16 percent in 1990 to 30 percent in 2007.

According to Du and Wei’s theoretical model, China’s skewed gender demographics could potentially explain more than half of the country’s current account surplus and the U.S. current account deficit.

“When the sex ratio rises, the world interest rate becomes lower. Other countries with a balanced sex ratio could be induced to run a current account deficit…In other words, the effect is economically significant,” they write.

“Women hold up half the sky,” Mao Zedong famously said. Perhaps Tim Geithner should remember that the next time he goes to Beijing.

Comments
11 comments so far | RSS Comments RSS

Seems the IMF, World Bank and writers overlooked two things:

a) a consumer society is basically doomed
and, if you don’t believe a)
b) there’s always state-sponsored homosexuality

Posted by HBC | Report as abusive
 

The laws of supply and demand at work. Maybe it wasn’t such a good idea to throw infant females into the river after birth. Funny how women could actually be of some value. Who would have guessed.

Posted by Anonmucker | Report as abusive
 

Economists have always looked for catchy explanations for changes in saving rate. It is all about growth of income. High income results in higher change in savings and low income growth to lower changes in savings. If a person (male) were to have low income growth he cannot save to find a bride! See http://knol.google.com/k/savings-and-gro wth#

Posted by cwucnspt | Report as abusive
 

What? That comment by HBC doesn’t even make any sense.
Why are other countries trying to control how much individual citizens in China spend? I mean, China’s got a firm grip, but not that firm. Maybe if so many people didn’t go into debt in the states, we wouldn’t be so screwed.

Posted by happaliau | Report as abusive
 

The IMF and World bank says people should save less money? Use your brain people. They want you in debt bondage. Savings is equal to investment in economics. The high savings rate in China is one of the reasons that they are passing every other country at lightening speed. The other reasons are
1. The Chinese government controls the central bank unlike the privately owned fed in USA
2. The labor wage rate is still low but not the lowest in the world.

Posted by titemoney | Report as abusive
 

lets hope the brides start spending that stash of cash

Posted by Macedonian | Report as abusive
 

we are told here in America that we have spent too much and ought to save yet the western media tells China that it saves too much and should spend everything and wildly consume? Hypocrisy watch.

Posted by Rfairb | Report as abusive
 

The information about birth rates for boys and girls in China is old news. This has been known and reported on as a growing problem for about 10 years.
I’ll give all these elitist economist’s with too many initials behind their names, some news. If you come to China proper (not Beijing, Shanghai, or QuangZhou – but inland), you will witness (as I have for the past 5 years) what is really going on in China….
Get Schooled…. It’s educational.

Posted by edgyinchina | Report as abusive
 

High savings rates imply debt growth. You put the money in the bank and it gets lent out or even if doesn’t it creates a new liability in the banking system. One person’s virtuous savings is another’s non-virtuous debt. Cries of too much debt in the world are virtually the same as saying there are too many assets or that people are too rich. Too sides of the same coin.

Posted by JCJ | Report as abusive
 

Are Chinese so foolish that they don’t know how to enjoy their life.No. Chinese know better than America to live a lavish life.But they can not.First of all they must save their money in the bank for following potential uses:
1, medicine fee
Except civil servants,ordinary people must pay their own medicine fee themselves.If someone becomes seriously ill,the family is forced into poverty.If they have no savings,the hospital will reject them.Many many people die because they can not afford the medcine fee.
2,pension cost
This includes the pension cost of themselves and their parents.Government pays this for its employees after they retires. For the ordinary people such as farmers amd migrant workers,they must raise themselves when they don’t work.That’s why Chinese parents prefer boys to girls because kids are named after the father rather than the mother and the old ones usually live with their sons when they become too old.
3,education
The education cost is extremly high in China.Parents must pay this cost for their kinds from period of kindergarton to university.With more money,your kinds can go to a better school and receive better education.
4,the employment of their kinds
You have to offer bribe to the government officials if you want to obtain a better job.The best jobs are government employees who can not only be a grafter but also superior to others.If you become a high official,you are the master of other people and the country.

Lavish life is for government officials and entrepreneurs.They have plenty of savings and live an extravagant life which is more costly than Amercian.
For the people who have no work,no savings,and no others to help them,they have to go begging or starve to death.

Posted by xinqi6220 | Report as abusive
 

i think last commentator tell us the truth,that is more exact than any other experts analysis.if you live in china, you will get clear of everything that happens in china. the society here have no fareness. youngster have no hopes, no futures.

Posted by qiuhengchi | Report as abusive
 

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