China's Skewed Sex Ratio Is Boosting The Country's Trade Surplus

China's decades long one-child policy and preference for male children has skewed the country's demographics.

The country has too many men.

However, this skewed male-to-female ratio may be what's partly responsible for China's huge trade surplus.

According to the first chapter of the Oxford Companion to the Economics of China, published by the NBER, China's skewed sex ratio is partly responsible for its high domestic savings rate.

Fewer women in the marriage market have made Chinese women pickier. One female contestant on a Chinese dating show famously said "I'd rather cry in a BMW than smile on a bicycle". For a man to get hitched, a good education and stable income is no longer enough and owning property has become almost a necessity.

This gender imbalance has caused young men and their parents to increase their savings. From the paper:

"This imbalance has caused young men, and especially their parents, to raise their savings rate in order to compete better in the marriage market. The same force has also contributed to a rise in the corporate savings because more parents with an unmarried son and more young men themselves have chosen to be entrepreneurs. Given the difficulty in getting a bank loan, new entrepreneurs and small firms must rely on self-savings to finance their operation and expansion. Wei and Zhang (2011) and Du and Wei (2013) estimate that this force has accounted for another one-third of the current account surplus...because the sex ratio imbalance is going to rise over the next decade, the part of the surplus due to this factor is not going away any time soon"

However, this could change with the recent abolition of the one-child policy, as the sex ratio normalizes and parents feel less pressured to save to find their son a wife.

Read the whole study at NBER.org