The world abhors China’s one child policy, but officials in Beijing must be quietly toasting its very existence as the Middle East burns. A thread linking events in Egypt, Bahrain, Tunisia and Libya is big populations of disaffected youth.
They’re angry about greed, corruption, the rich-poor divide and unaccountable leaders. Many Chinese harbour similar gripes, yet demographics works in the Communist Party’s favour.
Had China not instituted population control in 1979, there would be tens of millions more underemployed and aggrieved young men milling about in China’s cities. Just the type to foment revolution. Only, they were never born. Turns out, the policy is a boon for Chinese regime control.
The longer-term implications are far less advantageous.
China’s working-age population will start shrinking in 2020, denting growth. For now, though, demographics is a key reason China isn’t Egypt.
Security forces are going all guns to quell scattered protests, dubbed the Jasmine Revolution. China’s great firewall of censorship is taking no chances. And knowing just how vital social stability is to their leaders, a critical mass of Chinese are unlikely to test them anytime soon.
A side-effect of the mass paranoia permeating the most populous nation is a slower rate of yuan appreciation amid fear that less growth will fan unrest.
The most immediate issue is calming the masses. Surging food prices are fuelling inflation. That’s unsettling many of the nation’s 1.3 billion people, who increasingly demand higher wages. If you thought exports were everything before Hosni Mubarak was ousted, they’re even more important now.
China’s sex ratio also has a role here. In a recent paper, Columbia University’s Qingyuan Du and Shang-Jin Wei argue that the real imbalance doesn’t involve trade or the yuan; it’s a dearth of women.
Call it China’s “testosterone glut”. Thanks to a preference for boys, the decades ahead will see tens of millions of wifeless and frustrated Chinese men wondering what the future holds. The key risk is that concerns about demographics postpone the day when traders decide the yuan’s value, not the Communist Party.
China is excellent at the long game. The US spent the 2000s waging counterproductive wars. China spent those years scouring the globe for resources and making friends in Africa, Asia and Latin America.
Officials in Beijing won’t make the same mistake Japan did in 1985 by being browbeaten into raising its currency. And the unintended consequences of the one-child policy appear somewhat related: Chinese men, according to Du and Wei, will assume that a big pile of savings is what they need to find a good wife.
More saving is the opposite of what China wants. It wants more consumption to develop a more self-sufficient domestic economy. Today’s one-child policy may further depress tomorrow’s consumption.
Chinese are getting antsy, as evidenced by recent internet messages urging people to gather in 13 major cities to demand food, jobs, housing and justice. The speed with which China clamped down on protests and cyber traffic shows just how shaken it is by events in the Middle East.
Even if Middle East-like tensions don’t destabilise China, they are a graphic signal that the most dynamic economy needs to be moving forward, and fast. The masses won’t remain docile forever.
n Ethel Hazelhurst’s Trading Agenda will be back next week
William Pesek is a Bloomberg columnist. The opinions expressed are his own.