Money

Bachelors limit yuan appreciation

(China Daily)
Updated: 2011-03-12 09:29

NEW YORK - The increasing number of bachelors in China limits appreciation of the yuan more than government officials do, according to a Columbia University economist.

About 12 million aspiring grooms are saving more money to help them compete in a "marriage market" with relatively fewer women. That's leading to lower demand for domestic goods and services and is limiting the rise of consumer prices, according to Shang-Jin Wei, director of Columbia's Jerome A. Chazen Institute of International Business.

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China outstrips all countries with its sex ratio imbalance, according to research published in 2009 by the British Medical Journal, which estimated males under age 20 exceeded females by more than 32 million in 2005.

Structural factors such as the sex ratio account for about 90 percent of the divergence between the yuan's value and Chinese purchasing power, said Wei, a New York-based professor.

"The biological desire not to fail in the dating or marriage market is so strong, the men do this very aggressively," Wei said.

The yuan traded at 6.5729 against the dollar in Shanghai on Friday, close to a 17-year high, according to the China Foreign Exchange Trade System.

Chinese deposits by household savings have increased 21 percent during the past year to 32 trillion yuan ($4.9 trillion), as the currency gained 3.9 percent against the greenback since last June, when the yuan started to appreciate against the dollar after remaining largely unchanged during the global financial crisis period.

Bloomberg News