One overlooked and unintended consequence of the one-child policy: it pushes up China’s savings rate. A study by Shang-Jin Wei and Xiaobo Zhang, first published in 2009, updated in January this year and just re-released by Columbia Business School, where Wei holds the N.T. Wang chair of Chinese business and economy, finds:
Not only that households with sons save more than households with daughters in all regions, but that households with sons tend to raise their savings rate if they also happen to live in a region with a more skewed sex ratio.
The cause and effect is straightforward: parents with a son raise their savings in a competitive manner in order to improve their son’s relative attractiveness for marriage. About half of the increase in the savings rate of the last 25 years, Wei says, can be attributed to the rise in the sex ratio imbalance.
None of the discussion about global imbalances has brought family planning policy or women’s rights to the table, because people do not see these issues as related to economic policy. Our research suggests that this is a serious omission.
A thought to throw into the discussion on global imbalances at the forthcoming round of the Annual Strategic and Economic Dialogue between China and the U.S. that take place next Monday and Tuesday, loathe though we are to create yet another point of friction between Beijing and Washington.