China is one of the few major countries where men have to pay a “bride price” in order to marry.
And this cost has accelerated in recent years due to the shortage of girls caused by China’s ‘One Child Policy’ from 1980 – 2015. Rural families wanted boys to help with the farm work. So many parents selectively aborted female foetuses.
We don’t have exact numbers for the number of missing girls. But we do know that in 1981, the first year of the Policy, official figures showed “a loss of 230,000 baby girls“.
And we also know that the shortage of girls means the “bride price” has now reached Rmb 288k ($40k) in some regions. This is 14x average rural disposable income.
Our World in Data and China’s National Bureau of Statistics now publish data for the male: female sex ratio at birth as the chart shows:
- Like most poorer and male-dominated countries, China has always suffered from female infanticide
- The “normal level” of excess male births ranges between 103/105: 100 around the world
- China was already higher at 106: 100 in 1950-1979. And then it averaged 114: 100 in 1980 – 2021
- It was even higher during the main period of the One Child Policy from 1988-2018 at 116: 100
Essentially, China “lost” around 54 million girls between 1988-2018, and has “lost” 73 million girls since 1980.
This is a tragedy in itself, of course. But the longer-term consequences of the policy are now becoming clear:
- The total number of births fell by 40% after 1979 due to the policy as the chart shows
- And since 2017 the decline has accelerated: only 10m babies were born in 2022 versus 18m in 2016
- Fewer girls born in the past means fewer potential mothers today – creating a downward spiral
- Meanwhile, deaths are rising, and exceeded births for the first time last year
It also has major social and economic impacts, which will continue for decades to come:
- Fewer births mean lower demand for housing; Babies who haven’t been born, don’t need homes to live in.
- And fewer female births further reduce household formation; Men can’t marry women who don’t exist
These simple demographic facts highlight the ongoing problem with China’s post-2008 “subprime on steroids” stimulus policy.
The idea was that it would effectively “print babies” to boost domestic consumption.
But instead, as in the West, it has simply taken asset prices to unsustainable levels.
As the chart shows, China now has the highest real estate prices in the world relative to income. Even London and New York look “cheap” at 16x and 10x income, versus Shanghai at 47x and Beijing at 45x.
CHINA IS GOING TO GROW OLD BEFORE IT GETS RICH
This is all obviously very bad news for everyone who has speculated in the real estate sector, as discussed here many times as the mania developed.
It is also very bad news for China’s hopes of avoiding the “middle-income trap” identified by Nobel Prize-winner, Sir Arthur Lewis.
As the chart shows, it has a long way to go to reach Western standards of living. And official data shows that actual per capita consumption spend last year was only $3.5k.
Sadly, China is not middle class by Western standards. Average consumption spend is up to 20x this level in the USA and richer Western countries.
Instead, the stimulus policy has meant real estate is 29% of China’s GDP, a shockingly high figure.
So the risks are increasing for China’s economy as the real estate bubble bursts – as retiring Chinese premier Li Keqiang warned last week:
“There are many risks and hidden dangers in the real estate market…Localities in China have piled up mountains of debt both on and off the books.”
Unfortunately, companies in the West, and around Asia, have also indulged in similar wishful thinking. They all wanted to believe that China had somehow become middle class overnight. They built vast amounts of new capacity to supply its future needs.
As the charts show, the chemical industry highlights the problem. The USA alone has wasted $200bn:
- Notionally, China seemed to be responsible for 1/3rd – 2/3rds of total global demand
- Yet in reality, this demand growth was wishful thinking, and the world now has 218 million tonnes of excess capacity
- As my colleagues John Richardson notes, this is a four-fold increase from the pre-stimulus period in 2007
Everyone is now set to be a loser as the real estate bubble continues to burst. Those who bought apartments they couldn’t afford will lose them. Those who built new capacity to supply this speculative bubble will have to close down. And the millions of people around the world who invested in China’s “growth miracle” will likely lose their shirts.