The world abhors China’s one-child policy. Officials in Beijing must be quietly toasting its very existence as the Middle East burns.
A common thread linking events in Egypt, Bahrain, Tunisia, Libya and elsewhere 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—a Tiananmen Square 2.0. 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. It also could mean slower yuan gains amid fear that less growth will fan unrest.
Security forces are going all out 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, one that also touches on demographics, is a slower rate of yuan appreciation.
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 are increasingly demanding 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 cultural preference for boys, the decades ahead will see untold tens of millions of wifeless and frustrated Chinese men aged 20 to 45 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, let’s face it, is excellent at the long game. The US spent the 2000s waging counterproductive wars better fought by the forces of Facebook Inc. and Twitter Inc.—conflicts that cost precious lives, treasure and respect. 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.
Increased saving is the opposite of what China wants from its male population. It wants greater 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.
A favourite parlour game in Asia is guessing where citizens might try to emulate the Tunisians and Egyptians. North Korea? Sadly, scant few of the nation’s 24 million people have access to Al Jazeera or Google Inc.’s search engine. And Kim Jong Il isn’t a leader who would shy away from opening fire on anyone holding a protest banner.
The same goes for Myanmar’s junta-backed government. Its generals are hardly a cuddly bunch. They even shot at monks during anti-government demonstrations in 2007.
Yet East Asians are getting the domino-effect memo. Malaysia is not like Egypt, former prime minister Mahathir Mohamad said of his Muslim-majority nation this week. Leaders of populations with a history of people-power revolts—such as the Philippines and Indonesia—are facing similar questions from the media this week, and it’s a healthy dynamic.
Such pressures may increase the urgency to spread the benefits of growth, reduce corruption and accelerate the pace of democratization. You don’t fight these impulses with security and military forces. You do it by raising incomes more broadly and deeply than in the past.
That brings us back to China. The odds of President Hu Jintao going the way of Mubarak or Tunisia’s Zine El Abidine Ben Ali are tiny. Yet events abroad will only increase Beijing’s obsession with control. The risk is that China moves backward on opening up, allowing greater free speech and yuan reform.
Even if Middle East-like tensions don’t destabilize 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 no matter how fast China’s economy grows.
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