The Chinese save because? .... Read this!

I don't think the following explains it all; yet, an interesting point that the NY Times' Floyd Norris brings to our attenion:

In a working paper released by the National Bureau of Economic Research today, two economists, Shang-Jin Wei of Columbia University and Xiaobo Zhang of the International Food Policy Research Institute, note that “By 2005, men outnumbered women at age 25 or below by about 30 million.” In 2007 there were about five boys born for every four girls.

“Families with sons compete with each other to raise their savings rate in response to ever-rising pressure in the marriage market. Competitive saving by these families spills over to greater savings by other families, possibly through raising the prices of nontradable goods such as housing.”

“Across Chinese provinces, there is clear evidence that local savings rates tend to be higher in regions with more unbalanced sex ratios.”

In other words, parents want their sons to marry, and they figure that girls are more likely to want to marry rich boys.

The authors note that while they looked only at China, “other economies known to have a strong sex ratio imbalance include Korea, Taiwan, Hong Kong, Singapore and India. These countries also happen to have high savings rates.”

Maybe in the new academic year, I can bug a few Chinese students about this :-) and, BTW, ever wonder what happens to the money saved? Click here.