Spend Save Man Woman
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.
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.
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.