This article in the New York Times helped confirm something that I have been casually observing in the past 14 months in China: that prices for consumer goods, from eggs to jeans to cars, are totally chaotic and in some cases are either way too high or way too low, with no apparent explanation for the insane prices.
This article specifically quotes milk prices as an example of how inflation in China has begun to carry the prices of common goods way beyond the reach of the ordinary person:
“The money supply is too large,” said Andy Xie, an economist based in Shanghai who formerly worked at Morgan Stanley. “They increased the money supply to stimulate the economy. Now land prices have jumped 20 times in some places, 100 times in others. Inflation is broad-based. Go into a supermarket. Milk is more expensive in China than it is in the U.S.”
In Shanghai, where the average monthly wage is about $350, a gallon of milk now costs about $5.50.
I see this kind of thing everyday, and it wouldn’t be so crazy if there weren’t also products that were incredibly cheap, and also if there weren’t consumers so consistently making choices that to my eye seem absurd.
A little anecdote: I recently went “guang4jie1″ (sort of like window shopping) with a female Chinese friend of mine, who has maybe a bit of a problem with spending money. Although her monthly salary is lower than mine (my salary is about 4,000 yuan, or around $600), she compulsively buys things, mostly clothes but also other stuff like expensive meals and spa treatments, that I would never even dream of buying on a salary like hers.
A couple of weeks ago when I met up with her she casually bought a pair of 1,000 yuan boots and a 500 yuan dress in preparation for a holiday trip she was about to go on.
There’s a double-mystery here. The first part of the mystery is: whose money is she spending? Is it her parents’? Is it really hers and she spends no money most of the time and splurges on big things? Or is she just now, at the tender age of 24, beginning to burrow into a hole of debt that will one day haunt her like debt is haunting so many Americans now? I have no idea. I’ve never asked her where she gets her money from; although I have mentioned that it seems like she spends a lot of money.
The second part of the mystery becomes clear when you take a look at the 1,000 yuan boots she bought. We were in a department store in the middle of town and the boots were these kind of rhinestone-studded suede numbers that would sell for $40 in the U.S., I think. But she paid almost $150 for them.
As she was shoe-shopping I found a pair of classically ugly, cheap men’s pleather shoes in the men’s footwear section. I don’t have a picture at the moment…I’ll try to go back and take one later, but these shoes were clearly pleather (fake leather), had cheap white soles with barely any traction, and were labeled with the brand name “FASHION” (this is a common brand name in China). The price tag was over 500 yuan, more than $80.
This makes no sense. You can buy a pair of Adidas just down the road for the same price, and the quality is far better, the shoes are made of much more durable and attractive material, and everyone knows that the shoes are expensive and nice. (Yeah, Adidas is considered “nice” here, and Puma is like super nice.)
On top of that, you can find these same shoes on the Internet for less than 100 yuan. Or in a seedier store in a crappier part of town. The reason for the high price seemed to be the location. You’re in department store, so some of the items will be double what they are elsewhere.
I have no idea how the retailers get away with this. It seems similar to the fruit phenomenon, which is that an apple costs 1 yuan when bought in the village next to the university, but 5 yuan when bought at a convenience store in the city.
Or the fact that a towel can cost 150 yuan in the city’s biggest mall, but 20 yuan at a smaller store outside the city center.
Crazier still is the fact that foreign-produced brand-name goods are often far more expensive than in the U.S. Levi’s jeans are the first thing that comes to mind. At home you can usually get a pair of Levi’s at Sears or some department store for around $30 or $40. But I’ve never seen a pair of Levi’s here for less than 400 yuan, about $60, and prices can go as high as 600 yuan, $90.
The higher you go, the more expensive stuff gets. There’s a Lacoste outlet store in this town (most of whose goods appear to be knockoffs) where the jeans cost a couple thousand yuan.
Cars are also often more expensive, and there’s a slightly hilarious and insane theory that a few Chinese people have told me that foreign car companies intentionally sell their cars for a higher price here because they think that Chinese people find prestige in more expensive things. Who knows where this theory comes from, but the only logical explanation I can see would be shipping costs and import taxes. The idea that a car company would raise its prices to attract customers, especially in a market like China where everybody just buys the nicest car they can afford, is ridiculous.
But with all that said, there is still one thing that seems to hold this world together like glue: you can still buy noodles and eggs for lunch for about 4 yuan, which is around 60 cents. If you live economically, which most people do, you can eat for only about 20 yuan per day ($3), which is almost exactly what my daily food budget is. That doesn’t include the yogurt I occasionally eat in the morning (5 yuan peanut noodles and hun dun dumpling soup is better anyway, just not as convenient), the Starbucks instant coffee I buy online, or my occasional pizza dinner, but it’s pretty consistent. In a good week I probably spend less than $50 on meals, and I always eat out.
Of course, if food prices caught up with the price of almost everything else here excluding rent (which they could do in the coming years — the CPI for food in China rose over 9 percent over the last 12 months as of October) even my life would be completely impossible here, even though my salary is higher than the average by about 2,000 yuan (around $300).
The reason: the rent for my tiny apartment is 1,300 yuan per month ($191), my student loans are still about 800 yuan per month ($112), and the various expenses of life invariably quickly eat up the remaining $300-odd of that $600-ish-a-month salary.
Luckily I have been able to find private students over the past six months or so to increase that income so that I don’t have to spend my savings to stay here, but it comes at the price of losing most of my days off in order to teach privately.
The whole money problem, however, is basically due to the fact that I can’t lower my living standards to that of most of the people here. In order to survive with prices like this and income like that, there’s certain food you have to eat every day, certain places you have to live, certain clothes you have to buy. Last year living at the college I more or less lived in those conditions and ate that food. But I don’t think I would want to do it again.
Anyway, I still have enough time to study and to write, and teaching English here is for the most part enjoyable and rewarding. But sometimes it’s a shock to think about the income gap between here and the U.S., and then see how much stuff still costs here.