David Skidmore, Drake University
As odd as it sounds, China’s economic policy is being held hostage by its heavily skewed sex ratio.
China’s excess of young, unmarriageable males poses an acute dilemma for President Xi Jinping and other leaders as they set the country’s path for the next five years during the 19th Chinese Communist Party Congress, which opened on Oct. 18.
After years of heavy spending and investment to boost growth and employment, China is at risk of economic stagnation if it doesn’t restructure the economy. Yet there is peril that doing so will lead to dangerous levels of unrest among the millions of unmarried men – known as ‘bare branches’ – who will be laid off from shuttered unneeded steel, coal and auto factories.
So far Xi has tempered reform and kept the money taps open in order to avoid political instability. As the costs of domestic economic imbalances rise and international pressures to cut excess industrial capacity grow, Xi will have to decide what to do about the bare branches strewn in his way. And that won’t be an easy task, as my research on the intersection of economics and politics suggests.
China’s Spending Spree
This dilemma has been building for almost a decade since Chinese leaders responded to the 2008 global financial crisis by channeling massive investments into infrastructure and heavy industry to sustain economic growth and prevent political unrest.
This post was published at FinancialSense on 10/19/2017.
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