Sunday, February 17, 2013

How China's lonely bachelors are helping its economy grow

chinese-businessmenFORTUNE? -- They say a good man is hard to find, but that's not the case in China, where men overwhelmingly outnumber women. The ratio of men of marriageable/dating age (15-30 years old) to every woman is 1.15 -- an unusual imbalance that's created a rat race of bachelors vying for the affections of a limited pool of young women. Many may want to marry, but never will.

Oddly enough, China's lonely bachelors have actually helped the country experience extraordinary growth. And in the coming years, the trend will likely continue as the ratio gets progressively out of balance, said Columbia University professor Shang-Jin Wei recently at a symposium.

Because of the imbalance, many women can cherry-pick their life partners. There's of course an ugly side, too: The shortage of young women has also driven prostitution and human trafficking in some parts of the country. Nonetheless, since men started outnumbering women in 2002, it has become almost an unspoken prerequisite for bachelors to have enough for a down payment on a home before attracting a wife. Which, in turn, has bred fierce competition among the male population.

MORE:?If you could put?China's?problems in a bottle - Maotai

"Acquiring wealth becomes far more important," says Wei, director of?the Jerome A. Chazen Institute of International Business at Columbia. In fact, China's bachelors helped drive its growing housing market. Last year, Wei and other experts published a study that showed up to 48% or ($8 trillion worth) of the rise in property values across 35 major cities is linked to the country's gender imbalance.

Over the past 10 years, China's economy has grown about 10% annually. Wei estimates the gender imbalance, on average, contributed 2 percentage points?annually during that period. Investors often speculate how long China can grow at such a fast pace, and whether it's in for a hard landing.

History suggests the growth has to slow. Typically when income per capita reaches about $17,000, growth on average starts declining about 2% a year.?In China, income per capita in 2011 stood at $5,445. It will be some time before it reaches its peak, but growth has already started decelerating. In 2012, GDP?growth slowed to 7.8% from 9.3% in 2011 and 10.4% in 2010.

Yet the country's demographic kink could offset future slowdown, Wein says. Over the next 10 years, the male-to-female ratio will rise to 1.2 men per woman, in part, one of the many unintended consequences of China's three-decade-old policy limiting couples to one child in a culture where parents overwhelmingly favor males over females.

To be sure, China has many other demographic challenges. It also has a rapidly aging population, which has contributed to the shortage of working-age people. And it remains to be seen how these obstacles will help or hurt its economy.

Source: http://rss.cnn.com/~r/rss/magazines_fortune/~3/-1392LuB7yw/

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