China’s economy is choking on overinvestment in infrastructure, construction and heavy industry (such as steel and autos, both of which suffer from overcapacity). Both Chinese and Western economists argue that China needs to shift resources into the service sector, which remains underdeveloped. Indeed, this reallocation of resources is a central plank of China’s own economic reform plans.
Yet implementation has been slow. Why has Beijing been reluctant to close down surplus steel factories, cut off funding for the construction of “ghost cities,” or slow down the expansion of high-speed rail and other expensive infrastructure projects?
While there are no doubt many factors that play into such decisions, there is one that deserves more attention that it has received: China’s leaders fear the consequences of high unemployment among so-called “bare branches” or young, low-status men who lack good marriage prospects.
China has one of the most skewed sex ratios in the world. For the population under age 15, there are roughly 117 males for every 100 females (the natural rate should be no higher than 105-100). This is a result of extreme gender discrimination favoring males. Female fetuses (identified through ultrasound) are aborted. And young girls are more likely to die of illness or neglect.
With so many more men than women, a large number of men will never find marriage partners. Those least likely to marry are low-income, less educated, low status males. These same men are poorly integrated into communities and make up a large proportion of the internal migrant population that relocates from rural areas to cities in search of work. These males are called “bare branches” in China because they represent endpoints on the family tree.
Research by Valerie Hudson and Andrea den Boer establishes that societies with large and growing numbers of bare branches are at risk of rising crime and civil unrest. This is especially true if inadequate employment opportunities are available for unmarried young men.
How does this relate to China’s slowness to carry out economic reform? Males are overrepresented among Chinese factory and construction workers. Indeed, the proportion of female workers in these sectors is actually declining. On the other hand, females make up a disproportionate share of workers in the service sector.
Some economists believe that China’s official unemployment rate understates the true reality. The rate of unemployment is politically sensitive since unemployed workers are more likely to engage in civil unrest and other anti-regime activities. China’s growth model has actually exacerbated the unemployment problem because infrastructure, construction and heavy industry are relatively capital-intensive, meaning that a given level of investment produces fewer jobs than would be the case were the same investment devoted to service sectors (which are relatively labor intensive). In other words, a greater emphasis on services would soak up more labor overall and reduce dangerous levels of unemployment.
The problem, however, is that the gender distribution of unemployment would shift in ways that heighten the risk of unrest, especially during the transitional period. Most of the jobs added as a result of expansion of services would be taken up by women while most of the jobs lost by curtailing investment in construction, infrastructure and heavy industry would be those currently occupied by males – and especially bare branch males.
Rising employment could nevertheless be accompanied by growing civil and political unrest if the proportion of bare branch males among those who remain unemployed also rises. Alongside other factors, this may help explain why Chinese authorities have been slow to implement economic reforms that they themselves acknowledge are needed for the overall health of the Chinese economy.