| Preference for Sons in China leads to U.S financial crisis? | |
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| Jul 13, 2009 05:00 |   |
 | Recently, an article entitled “Preference for Sons in China May Lead to Bubbles in U.S.” has been frequently cited on the internet. The article written by Justin Lahart was posted on the Wall Street Jornal. The article states that Chinese parents’ preference for sons has led to a severe sex ratio imbalance (Noticeably, the application of ultrasounds aggravates the sex ratio imbalance: far more boys than girls are born in China). The severe sex ratio imbalance has given rise to a growing number of “leftover” unmarried men. It has become more and more difficult for men to find wives. The marriage cost (In China, men bear almost the entire marriage cost) becomes higher and higher. Chinese families with sons try their best to save more to make their sons more attractive and hold an advantageous position in the competitive marriage mart in China; hence a very high saving rates in China. As a whole, the country (China) has a high saving glut and a large amount of foreign currency, then China uses the foreign exchange reserve to buy U.S national debt, which in turn contributes to the U.S housing and credit bubbles, even worse the U.S Financial Crisis. After reading the article, I thought the article is very amusing and funny. Hence, I’d like to post the original article here and share it with you guys. Can you identify with the author’s logic and reasoning? |
| Jul 13, 2009 05:01 | #1 |
| (Source: Wall Street Journal http://blogs.wsj.com/ June 18, 2009, 11:07 PM ET Preference for Sons in China May Lead to Bubbles in U.S. Chinese parents’ preference for sons has given rise to a brewing social problem. With the advent of inexpensive ultrasounds, far more boys than girls are born in China – which has in turn given rise to a growing number of rootless, unmarried men. The “missing women” problem may have also contributed to the U.S. housing and credit bubbles, new research suggests. Through the first half of this decade, America bought far more than it produced, running up an a massive tab with its trading counterparts. In an effort to explain why this had happened, then-Fed governor Ben Bernanke in 2005 identified a “global savings glut.” Developing countries – China in particular – were saving more. Those savings were getting put into long-term debt, pushing interest rates lower. “In particular, during the past few years, the key asset-price effects of the global saving glut appear to have occurred in the market for residential investment, as low mortgage rates have supported record levels of home construction and strong gains in housing prices,” Mr. Bernanke said. Mr. Bernanke’s explanation for the savings glut in the developing world was that the financial crises of the 1990s had convinced countries that they needed to hold more cash in reserve. While there is probably truth to that, the jump in China’s savings still raises an eyebrow. In 2007, Chinese household savings as a share of disposable income was 30%, up from 16% in 1990. One possible reason for the jump in savings: The dearth of women is making China’s marriage market extremely competitive, and families with boys are accumulating wealth to make their sons more attractive matches. In a paper recently posted to the National Bureau of Economic Research’s website, economists Shan-Jin Wei, at Columbia University’s Graduate School of Business, and Xiaobo Zhangk, at the International Food Policy offer evidence why this might be so. They find that in areas where the male-to-female sex for young Chinese is high, savings rates are higher, too. And they find that households with sons save more in high male-to-sex ratio regions. “[W]hile the paper focuses on evidence from China, the basic mechanism can in principle be applied to other countries,” the economists note. “Indeed, 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.” |
| Jul 13, 2009 22:04 | #2 |
| Quote:Originally Posted by LEONARDO Chinese parents’ preference for sons has given rise to a brewing social problem. With the advent of inexpensive ultrasounds, far more boys than girls are born in China – which has in turn given rise to a growing number of rootless, unmarried men. The “missing women” problem may have also contributed to the U.S. housing and credit... I agree with the first paragraph. Chinese parents' preference for sons did cause a brewing social problem. Many a couple uses ultrasounds (B 超in Chinese) identify the fetal sex and undergo sex-selective abortion. Sex ratio for the newly born population has deviated from its normal value in China, particularly in rural China; in contrast, the action of fetal sex appraisal illegally implemented in some medical or health agencies is becoming much fiercer than ever before. The competition is fierce. Annually, how many fetuses were aborted in China due to the illegal fetal sex appraisal? We don’t know the exact figure. I hope the government at all levels can crack down on health institutions who engaged in illegal fetal sex appraisal and sex-selective abortion. It poses a big social problem for China. How can the author relate it to U.S economic bubbles? Uhhm, I understand why I can’t become a famous writer: I lack the extensive imagination and the ability in relating two seemingly irrelative things.    |
| Jul 14, 2009 05:07 | #3 |
| GUESTBETTA | It is said there will be over 30,000,000 male surpluses. How do these men find wives? More male bachelors, more rape crimes. China is a monogamous country. It doesn't allow one woman to marry couples of men. More savings does not help. |
| Jul 14, 2009 20:48 | #4 |
| Prenatal ultrasound (Baby ultrasound) is originally used for detecting the deformed fetus. Unfortunately, it was used to tell the sex of the baby. Baby ultrasound killed many female fetuses in China. |
| Jul 17, 2009 22:17 | #5 |
| It's stupid to do ultrasounds for the sake of detecting the sex of baby and then abort the baby with sex that you don't like. Most females prefer sons than daughters, so do i. In my opinion, from financial perspective, parents liabilities to children are paid off once the children finish the schooling that enable them to earn a good living and support themselves for further study if they want |
| Jul 22, 2009 22:35 | #6 |
| Using baby ultrasounds to tell the sex of babies is disgusting. Countless baby girls were aborted so that China has a severe sex ratio imbalance. |
| Jul 28, 2009 17:22 | #7 |
| So now that a hand full of you have decided to point out the obvious... that throwing off sex ratios through an unnatural process is foolish... lets return to the question at hand; should we look for a connection between demographic changes in China and the U.S. real estate bubble? I think there are better things to blame than the one-child policy, like the irrational spending habits of so many U.S. mortgage holders and the equally irriesponsible lending practices of so many investment banks. Blaming China for financing U.S. overconsumption is like blaming a friend who loaned you money for your hangover after a night of drinking; sure you would not have been able to poison yourself to the same extent without help, but agency, and thus the burden of responsibility should fall on the shoulders of those actively making unwise choices. If we are going to assert that the one Child policy is responsible for a misallocation of resources and capital in the U.S., we are not so much looking for rational causes for a phenomenon, but rather seeking an excuse to blame China for our own vile investment decisions, their disastrous consequences. |
| Jul 29, 2009 22:45 | #8 |
| GUESTSAM | ALECESNE, Americans have irrational spending habits and their credit consumption system is problematic. They don't examine themselves. They need to find "scapegoats". Today, they blame China's one-child policy for the economic dysfunction. Tomorrow, they might blame India, Russia, Canada, Australia, UK or even Africa for their economic ailment. It is very stupid to find scapegoats to cover up the truth. Hope American people can realize that. |
| Aug 17, 2009 11:57 | #9 |
| As an American, I can readily agree with the conclusions of the Wall Street Journal article, and I offer aditional well-founded scientific proof! 1) Maybe it is a world-wide phenomenon but I do see a lot of this in the USA, and that is the socio-economic imperative that says "rather than look inward as to the root causes of the recent and ongoing financial debacles, look outward and decisively place blame". Until fairly recently it was fashionable to blame the USSR (until it ceased to exist) and then to blame Russia. But because Russia has its own economic problems, the focus then shifted briefly to blaming OPEC and terrorism, but this was thought to be so outlandish a notion that even the most misinformed dummies wouldn't buy it! So what's left? Face it, China is doing so well financially due to coercing the USA to buy huge amounts of quality manufactured goods cost-effectively produced by China. Even American flags come with a "Made in China" sticker! Unsuspecting American citizens literally FORCED to buy goods made in China! Reprehensible to be sure. So naturally, let us blame the Chinese. The first part, placing blame, was therefore firmly and irrefutably determined. Now we must o determine causality; to find the scientific correlation as to why we are blaming the Chinese. 2) I maintain that the sex ratio imbalance in China, for whatever the reason, is at the root of the problem because, as any endichronologist-geneticist will tell you, larger numbers of males produce larger amounts of testosterone which in turn produces a pheremone-like substance that stimulates the dreaded GS-factor. Unfortunately, this GS-factor stimulant is airborne and because of the Earth's rotation it wafts across the Pacific Ocean and permeates the air in the USA. Areas most affected include manufacturing centers and especially political centers of brilliance, the most notable of which is Washington, DC. The result is drastic change at the very foundations of rational thought, creating the recent economic meltdown as well as the current drive to spend the USA into bankruptcy. So my friends, it should be obvious that China and the industrious Chinese people are at the root of all the financial and economic problems in the USA because of the dreaded GS-factor: plain old Greed and Stupidity. Shame on you Chinese people! |
| Aug 17, 2009 19:02 | #10 |
| Go ahead, Seth. Now American savings per family is 6%,which is a dramatic change from comsumption thru lending. Buying American is a political slogan now. China will begin structural change in development accordingly. M |
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