How do Chinese people live?

I’ve always had trouble reconciling average income in China with the high cost of living and rampant evidence conspicuous spending. How are Chinese people doing it? This week, I found some answers (the data is very interesting though I couldn’t write about it extensively without it being axed on the editor’s chopping block). Read it here or on China Daily:

http://www.chinadaily.com.cn/metro/2010-09/02/content_11245996.htm

(A report with lots of numbers for the data geeks among you:
http://www.eeo.com.cn/ens/homepage/briefs/2010/08/18/178536.shtml)

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After a year of being back, I’m starting to come out of my honeymoon with Beijing.

I no longer rave about fantastic manicures for RMB30 to friends in New York who still pay $20, because I realize it cost me another RMB40 in roundtrip cab fare to get to and from the nail salon. And how do I assess the value of forty minutes spent inhaling exhaust fumes in gridlock traffic under Changhong Bridge?

The bargain deals at Yaxiu have also lost their appeal because I’ve now tossed out two batches of trendy clothing articles that fell apart after a few washes and shoes with heels that needed to be re-glued after one season. Luckily, my signature “Ray-Ban” glasses are still holding up, but when the legs on these RMB15 babies give out, I’ll probably replace them with authentic specs. As they say, “yi fen qian yi fen huo,” “what you pay for is what you get.”

When I started apartment hunting for digs in the heart of town, I was shocked at how quickly prices have risen. Nominally, renting in Beijing is still cheaper than renting in Manhattan, but living alone with modern amenities is a luxury in both cities. Six months ago, a friend of mine was living in a posh studio at The Place for RMB4500. When I checked out the building last month, real estate agents scoffed at the idea of finding anything under RMB6500.

“But, but, but what about the global economic slowdown and all the empty apartments idling in Beijing?”

“Sorry, sweetheart, this is China and asset bubbles are still de rigueur.”

The bottom line: Beijing is expensive. If a former financial industry peon and “sea turtle” like me finds the city pricey, then how do Chinese people live?

With a lot of stress.

Everyone feels the pressure of high living costs, but no one has the solution. The government keeps a constant hand on the gears, shifting up or down to balance between affordable housing and economic growth. Young people fret over their (in)ability to fulfill the Chinese dream – own a home – all over the internet. Last week, I was invited to host a talk show on Youmi, a popular Chinese online broadcaster. While my show (about studying abroad) garnered interest, the episode that drew record viewership numbers on Youmi that week featured Ren Zhiqiang, the real estate tycoon. People wanted to hear what he has to say about property prices – so much so that he will be on for another episode this week.

Besides housing, which is also a big expenditure in markets outside of Beijing and China, other goods are costly as well. Cars and luxury goods, for example, are heavily taxed. Food, a basic life staple, is deceptively dear. A meal for two average office workers going on a week night date could easily cost $10 at a Beijing fast food restaurant. The same meal would probably cost $20 in New York.

Yes, Beijing is cheaper but the spending ratios are out of whack. The CIA’s official estimate for per capita GDP in the US (in purchasing power parity terms) is about 7.5 times more than that of China’s. So, how do Chinese people live when they make one-seventh of what Americans make, but spend half as much as Americans do on their meals?

The question piques my curiosity even more when I try to reconcile relatively low income figures – an average office worker with a “decent” job in Beijing makes somewhere between RMB5000-8000 a month – with the rampant consumption I see around me. (A friend who works as an anchorwoman for a well-known television station confirmed the salary numbers, adding that even prestigious presenters are “very poor” going off salary alone). From orange Lamborghinis to RMB80 cocktails in Sanlitun – are Chinese people living beyond their means?

Partly, yes. Chinese people do believe in having the appropriate “pai chang” (“set up”). To get business done, you need to spring for the necessary expenses, like lavish dinners and fancy wheels, even if it means going into debt.

But the bigger part of the answer, I believe, lies in the “grey.” From school-teachers moonlighting as private tutors to office workers earning “wai kuai” (“outside income”), everyone in China seems to have more than one paying gig. And some of it may not be dutifully accounted. A new report by an economist estimated that real per capita GDP in 2008 in China was about twice the level estimated by the National Bureau of Statistics.

Perhaps it’s the other fifty percent of “grey income” that is helping Chinese people get by. If that’s the case, someone sign me up for some “wai kuai” quick!

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