You may be familiar with the economics of China’s artificially low currency, but how does its marriage economy fare? Did you know that the nightmare of being forever alone is closer to reality in the Middle Kingdom? Starting with an overview of Chinese market economics, I’m going to attempt to explain the current wife drought that is gripping the Asian giant.
Since adapting Deng Xiaoping’s policies of ‘socialism with Chinese characteristics’ in 1978, essentially a hybrid of free market capitalism and socialism from the Maoist years, critics of China’s integration with the global economy still have beef with the way the country goes about its international trade.
China has less of a mixed market economy than a centrally planned one with a huge public sector of state-owned enterprises claiming 40-50 percent of national GDP. And whilst state subsidies for steel and auto parts manufacturing industries guarantee lower prices of Chinese goods around the world, instilling in us cheap expectations of anything tagged Made in China; they provide an unfair advantage against relatively expensive foreign goods and services.
Even more financially uproarious is China’s heavily undervalued currency (renmenbi). Pegged to the U.S. dollar until 2005, these days the yuan (single unit renmenbi) has been allowed to float in a narrow margin of 0.3 percent above or below the previous day’s market closing price. By keeping the value of the yuan on a tight leash, China ensures that its goods and services remain internationally competitive. Exactly how undervalued the yuan is contested from all accounts, but recent studies point to a figure of about 37.5 percent below its fundamental exchange rate. The Big Mac Index, which compares the relative prices of MacDonalds Big Macs in multiple countries, indicates an even higher gap, 44 percent.
It’s common to see Congressmen and investment bankers (it’s hard to differentiate the interests of the two) griping about the undervalued renmenbi, with Republican presidential contender Mitt Romney declaring China a ‘currency manipulator’ who doesn’t play by the rules. To modern capitalists raised with the promise of free trade to wherever the invisible hand points, it’s truly a clash of civilizations.
But China’s exchange rate isn’t the only thing that’s fixed.
Citing one of the national interest objectives – and arguably the most important, stability (he xie), the Chinese Communist Party introduced the infamous One-child policy to contain soaring population growth within the same year of opening up to world trade. Official statements justify the policy by its alleviation of national economic, social and environmental problems, and authorities estimate the policy to have prevented more than 650 million births from 1980 to now.
Looking beyond the sheer monotony and near-certain pampering of single children, disturbing trends appear. Coupled with traditional Confucian values of patriarchal male dominance, including but not confined to reasons of: sons carrying on the family lineage by name, and daughters marrying out into their husbands’ families and caring for in-laws rather than their own parents, it’s no small wonder that the one-child policy has forced couples to illegally abort, abandon or leave to die their baby girls. Each year, the recorded sex ratio at birth is roughly 120 males to 100 females. Australia’s sex ratio at birth is 106 males to 100 females. The end result is that there are more than 35 million ‘missing women’ in China.
Not only is the employment system skewed to favour men over women (women contribute only 16 percent share of household income in low-income households), the entire gender demographic has damned women from day one. To add insult to injury, couples in rural provinces are permitted to have more than one child if the firstborn is a girl.
What has arisen out of this gender crisis next is alarming, and affecting millions of young Chinese men already. Bachelors of marrying-age enter the marriage market – and many exit years later, deflated. Some are doomed to spend their lives in singledom. Projections suggest that by 2030, more than 25 percent of Chinese men in their late 30s will never have married – ironically a natural prevention of the uncontrollable population growth the government so fears.
The chase is on.
In the most basic of economic terms, demand for brides is in desperate excess of supply. Like the Chinese exchange rate, females are constitutionally and culturally undervalued (and males are outrageously overvalued). We can take the fundamental ‘exchange rate’ as 105-107 males per 100 females, the natural sex ratio at birth in most other countries.
At the officially set sex ratio, the quantity of males supplied outstrips the quantity demanded by the female population, creating a male surplus (unfortunately polygamy was outlawed in China by the Kuomintang in the early 1900s, although a woman taking on several male concubines would be interesting.)
In a flexible market, increased competition for brides means that men must increase the prices of their dowries and salaries until perfect equilibrium is reached in which distribution of brides goes only to the best ‘buyers’ in the market (feminists come at me). But for now, recent policy statements and funding to offset effects of the one-child policy notwithstanding, it’s up to China to use its capital reserves to buy up excess supply of men, by catering to their pent-up frustrations with higher salary jobs and all the material comforts that (state) capitalism can offer.
May the best man win!