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Bachelors limit yuan appreciation
Updated: 2011-03-12 (China Daily) Bloomberg News NEW YORK - The increasing number of bachelors in China limits appreciation of the yuan more than government officials do, according to a Columbia University economist.
About 12 million aspiring grooms are saving more money to help them compete in a "marriage market" with relatively fewer women. That's leading to lower demand for domestic goods and services and is limiting the rise of consumer prices, according to Shang-Jin Wei, director of Columbia's Jerome A. Chazen Institute of International Business.
With significantly more 20-25 year old males than females, the boys are under extreme pressure save as much as possible. This reduces buying so prices remain lower.China outstrips all countries with its sex ratio imbalance, according to research published in 2009 by the British Medical Journal, which estimated males under age 20 exceeded females by more than 32 million in 2005.
That’s not natural, there ought to be a closer ratio, usually more females. How much has the single child policy and the cultural desire to have male children had on this imbalance?Structural factors such as the sex ratio account for about 90 percent of the divergence between the yuan's value and Chinese purchasing power, said Wei, a New York-based professor.
"The biological desire not to fail in the dating or marriage market is so strong, the men do this very aggressively," Wei said.
Pressure is on to be married with children by the age of 25. This is one of the reasons for soaring divorce rates and family stress.The yuan traded at 6.5729 against the dollar in Shanghai on Friday, close to a 17-year high, according to the China Foreign Exchange Trade System.
The Australian dollar is still trading at a similar rate as it was in 2005, usually around 6 rmb to 1 AUD but both are trading 25% higher than US dollar.Chinese deposits by household savings have increased 21 percent during the past year to 32 trillion yuan ($4.9 trillion), as the currency gained 3.9 percent against the greenback since last June, when the yuan started to appreciate against the dollar after remaining largely unchanged during the global financial crisis period.
The average family has saved 21% more this year and those savings have gained in value against the US dollar.
This is also an indication of families having a higher disposable income but not spending all of it.
