China’s demographic woes

Bare branches

The economic rise of China is the big story of the last twenty years.  Will China’s stagnation and fall be the big story of the next twenty?

 

Someone to watch over me?

China faces two huge demographic problems.  The first is that the population is ageing extraordinarily quickly.  Other developed countries are all ageing as well, but China is undergoing a particularly speedy transformation to an old society.  This is thanks to its infamous “One Child” population control policy, which was introduced in 1978.  Limiting urban couples to one child, the policy is credited with cutting fertility dramatically and preventing about 300 million births over the last 30 years.

This “shortage” of young people is skewing the country’s average age higher and higher.  But the real issue is that the ratio of elderly dependants to people of working age is increasing very fast.  In the year 2030, the country will actually have more dependants than children.

In China, elderly people have traditionally been taken care of by their children.  But thanks to the One Child policy, the formula “4–2–1” is sometimes used to describe the outcome young Chinese can now look forward to: An only child will have 2 parents and 4 grandparents to look after.

The result: China can expect many of its older people to be institutionalized.   There simply won’t be enough young people to look after the older generation.  Market opportunity?  Perhaps, for someone.  But at the cost of social cohesion and a realignment of values, and for a society like China's, that may not be a good thing.

 

Seven brides for seven brothers - no, make that 5.8 brides

The looming problems of the elderly are not China’s only demographic challenge.  In the next 11 years, we will witness the even more far-reaching consequences of its second big problem, which in China is called “Bare Branches”.

For centuries, Chinese culture – like others in Asia – has valued girls less than boys.  Particularly in rural areas, couples want a boy who can contribute some muscle and help work the land with his father.

Now, with the One Child policy in place, if a couple’s first child is a girl, there may be no second chance for a boy.  (In certain provinces, a second child may be allowed if the first child born is a girl.)  For some couples, this means that if they have some control over the sex of their child, they will do what it takes to make sure their one child will be a boy.  And they do have control: If they know that their unborn child is a girl, they can abort the baby, or in extreme cases, abandon her to die upon birth, leaving the birth unreported.  In other words, they can ensure that they do not have a living daughter.  This leaves them a chance to try again for a son.

Sex-selective abortion and infanticide are both banned in China, but they happen anyway.  According to a 2002 article in The Guardian: “More than 300 out of 820 women surveyed in a central Chinese village had abortions, and more than a third of them admitted they were trying to select their offspring's sex.”

The result is that the country has a M:F sex ratio that is extraordinarily male-heavy.  In fact, taking all of China into account, for every 100 female births reported, there are 119 male births.  In some provinces, this ratio is as high as 135 boys to 100 girls, according to one study. There is no possible natural explanation for this; the unavoidable conclusion is that many baby girls are being aborted, or worse, allowed to die at birth.

The resulting male-female imbalance has dire consequences for China’s future outlook.  If you look at the segment of China’s population under age 20, there are currently 32 million more males than females!  According to a study by the Chinese Academy of Social Sciences, "the imbalance between the sexes is now so distorted that there are 111 million men in China – more than three times the population of Canada – who will not be able to find a wife."

These millions of young men are called “bare branches” in China: they are the branches of a family tree that will never bear fruit.

11 Changes - China's Demographic

Where the boys are

In the next 11 years, this shortage of women (or surplus of men, depending on how you look at it) could lead to widespread social instability in China.  Here are some of the scenarios I expect could develop:

  • Millions of men will see themselves as having no future, and therefore having no vested interest in their society.  How will they behave?  Will they resent the men who were fortunate enough to find mates?  Could the “have nots” resort to a violent backlash against the “haves”?  This would imply a serious rise in criminality.
  • Possibly to alleviate such an increase in aggressive behavior, the Chinese government could conscript an even bigger Army… and then send the Army off to do something useful so the men can “work off their tensions” – not to mention grab access to women (among other resources).  A war would also cull some of the surplus males, which I do not believe would disturb China’s leadership very much.  As such a military venture would have a limited objective (i.e. grab land and women rather than annihilate an enemy like the USA), the action would be local and non-nuclear. Here, I see three possibilities:
    • Annex North Korea.  Already one of the most politically isolated countries on earth, North Korea is a country that no one will shed a tear over if China decides to grab it.  In fact, many people will cheer China on, since the Chinese would be ridding the world of the country's insane leadership, and thus actually be reducing the risk of nuclear war in the region.
    • Annex Siberia.  The population density of China is 137 people per square kilometer.  Just across the Amur River, Siberia has a population density of 4 people per square kilometer.  This is roughly the equivalent of New York vs. North Dakota.  Siberia is huge, empty, and full of the resources that China needs.  (Sadly, the only thing it doesn’t have is lots of women.  But never mind.)  Would Russia put up a fight to keep Siberia?  Yes, I believe they would at first, but quickly they would end up settling for a large cash payment, and be happy to retreat west of the Urals.  Don’t forget, these are the people who sold Alaska.  The price will be high, but China can afford it.  China’s surplus male population would then be given incentives to go homestead among the Yakuts.
    • Annex Indochina.  If China marched south, would the West ride to the rescue of Vietnam, Laos or Cambodia?  What about Burma?  I’m not so sure.  The Philippines?  Malaysia?  Thailand?  Perhaps the real question is, could anyone actually stop China if this is what they decide to do?
  • Meanwhile, the sexual dynamics in China will become very interesting in the next 11 years.  Relatively scarce, women will have their pick of men; relatively abundant, men will be forced into more heated competition for women.  Much of this competition will play out in the economic arena, because women who can choose any mate they want will not necessarily choose the guy with the biggest muscles, but the one with the highest status.  And as usual, that means money.  So what will this lead to?  One or more of the following, I believe, are plausible consequences:
    • An increased savings rate, as men with a big bank account will have a better chance of attracting a wife.  (According to The Economist, parents of young boys are already building up their savings accounts to make them more attractive to potential mates.)
    • A housing bubble, as Chinese men buy up real estate to demonstrate their financial strength, and impress the ladies with a house they can offer her – a kind of dowry in reverse.
    • A desperate race on the part of most Chinese men to at least appear high-status (especially if they can’t afford expensive real estate), by acquiring other impressive assets and – for lack of a better term – bribes.  In the next 11 years, China will be a good place to be if you are in the business of selling up-market Swiss watches, German luxury cars and diamond jewelry.
    • As there will always be some men who cannot attract a wife the usual way, China (and indeed all of Asia) will see a huge increase in the abduction and trafficking in kidnapped women.  This also implies an increase in organized crime throughout the region.
  • In addition, there will be a brisk market in mail-order brides from outside China.  Expect a plethora of Internet marriage brokers to spring up, specializing in women from the Philippines, Thailand, Korea and South Asia.
  • While all this is going on, the Chinese government will take 4 other steps to alleviate the social instability caused by this imbalance:
    • Prostitution will be legalized, normalized, controlled and encouraged.
    • Gay marriage will be legalized.  A University of Shanghai sexologist wrote that 90% of China’s estimated 25 million homosexual men marry women in order to avoid revealing their true orientation.  Approving same-sex marriage would help “free up” women who would otherwise pair up with a gay man, perhaps unwittingly.
    • Emigration will become easier for single men, although the state will not want to see a brain drain and may find ways to prevent talent from leaving.  Nevertheless, the number of emigrants will increase dramatically as many men give up looking for a wife and decide to look in greener pastures.  Where will they go?  To countries with large Chinese diasporas: Southeast Asia, Australia, North America.
    • In the fullness of time, group marriages will be approved, as long as there are more men in the marriage than women.  (See more on this subject here.)

What does all this mean for China’s potential as an economic power?

“China will grow old before it grows rich,” is a phrase you see a lot these days.  There is no doubt that the country’s rapid growth has been phenomenal, but the problems outlined above may undercut its ability to keep on growing before serious social problems get in the way.

And China has other problems as well, for example its poisoned environment, hunger for resources (discussed here), slow-to-emerge middle class, and ultimately its lack of a democratic form of government.

In the next 11 years, if you do business in China, or expect to have Chinese customers, keep these issues in mind.  What scenarios could unfold here?  Many, and they are not all so pleasant.

 

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