China More Expensive Than the U.S.?
China used to be cheap. According to figures the World Bank uses to calculate Purchasing Power Parity (PPP), in 2003, a dollar’s worth of currency bought nearly five times as much in China as it did the U.S. A bag of groceries, or a hairdo, or a hotel room that would have cost $50 in the U.S. cost only RMB 90, or roughly $11, in China.
Talk to anyone in China, though — local or expatriate — and they’ll tell you that, lately, things have been getting a lot more expensive. When I went back to the U.S. a few months ago, I had the strange sensation — for the first time — that a lot of things were actually cheaper there than in Beijing.
The bloggers at Caixin magazine, one of China’s leading financial publications, must have had the same feeling, because they called some friends in the U.S. and put together a chart directly comparing prices for the same goods in Hangzhou and in Boston (which happen to be sister cities). They found, for a shopping list of groceries and fuel, that the total bill was actually larger in China ($217.37) than in the U.S. ($199.70). The price of a dozen eggs was over twice as expensive, and a liter of milk was nearly three times as costly, in China as in America.
Fuel prices in China are regulated, and while higher than in the U.S., are lower than in Europe. Public transport, which was not included on the list, is much cheaper in China. The point-to-point fare on Beijing’s subway is two yuan (30 cents U.S.), compared to $2.25 in New York City. A taxi from the airport to the city center costs RMB 100 ($15) in Beijing, compared to about twice that ($30) in Boston.
Personal services are also much cheaper in China, where labor is plentiful. I can still get a simple men’s haircut here for less than $10, compared to a typical $20 in the U.S. A full-time, live-in nanny costs around RMB 3,000 (US$ 450) per month (plus room and board), a price hard-stretched American parents could only dream of. On the other hand, in my experience, clothing in China costs at least as much — and often more — than clothing of comparable quality in the U.S. (there is plenty of low-quality, cheaper clothing to be had in China, but I find it tends to fray quickly).