Saturday, May 14, 2016

Comparing the Basic Cost of Living in the United States and China

It took thirty five years but costs are now integrated with global costs. this also implies that farm incomes are equally robust.  Where weakness exists is that pensions and wages are still weak and far below standards elsewhere.

China now needs to engage in establishing a minimum income system that capitalizes the base properly and increases demand from the villages.

That funds a burgeoning service industry and stabilizes the internal economy.

Comparing the Basic Cost of Living in the United States and China

When I first came to the United States 20 years ago, everything seemed very expensive to me, almost astronomical—especially vegetables. But over the years, the cost of basic foods has not risen much in the United States, whereas almost everything in China has become much more expensive, even though people’s incomes are much lower.

My friends in Guangdong recently told me that vegetables there are far more expensive than in the U.S.—I was shocked. Some Internet users say that prices were only temporarily high during the Chinese New Year festival, and that is was to compensate farmers who had to work during that time. 

However, prices did not come down after the New Year. Even after the winter storms passed and the weather turned warmer, vegetable and pork prices remained high in March and continued going up at an alarming rate. The high price of groceries in China today is truly shocking.


In the 1990s, Red Delicious apples in a U.S. supermarket were 99 cents a pound, roughly equivalent to 9 yuan. Although I had a monthly stipend of $2,000 at the time and could afford to buy the apples, I did think they were expensive. At that time, apples in China were only one tenth of what they cost in the U.S. 

Twenty years later, the price of Red Delicious apple in the U.S. is around $1.29 per pound. Percentage-wise, this price increase is much less than the average income increase. Moreover, supermarkets always have specials, and the price frequently drops to 99 cents. At the current conversion rate, it is about seven yuan a pound, and this price is similar to the cost of Red Delicious apples in China today.

This is a typical example of rising costs in China, which have increased by several hundred percent, with some items going up more than one thousand percent. 

Vegetables, Meat and More

In comparison to China, the increase of grocery prices in the U.S. has indeed been minor. Cabbage was very cheap 20 years ago, about 30 to 40 cents a pound; nowadays, it is over 40 cents a pound. A large cucumber used to be 50 cents; it is now 67 cents. A package of scallions were 99 cents; they are now $1.29. The price of pork was $1 to $4 a pound and still is in the same range today. For a few dollars one can buy a big pack of chicken parts. The price of beef has not changed much either. In my opinion only egg prices have gone up quite a bit: three dozen eggs are $5 now. But overall, food prices in the U.S. are indeed stable.

Income Levels

To really understand my shock over China’s soaring food prices, we need to compare income levels. Prices in China have increased a lot, but salaries have increased very little. Take Guangzhou for example, the average monthly income is about 7,000 yuan ($1,080), while the average monthly income in Virginia is around 25,000-30,000 yuan ($3,860-4,633), or roughly four times more.  

And yet, prices for food, alcohol, and tobacco rose 6 percent year on year in China, according to data from China’s National Bureau of Statistics. Fresh vegetable went up 35.8 percent, and meat rose 16.5 percent on average, with pork going up 28.4 percent. 

There is a huge income difference between China and the U.S., but food prices in China are higher.

Food Quality

In recent years, to ease the problem of food being unaffordable for many people, Chinese cities have implemented a so called “vegetable basket” project. A variety of special government funds and support policies also exist. People at the bottom of the social ladder have a hard time making a living, so grocery prices are therefore a great concern. 

There are also problems with food quality. Produce sold at farmers markets is less expensive, but not necessarily of good quality. Supermarkets have a little better quality assurance, but prices are much higher. 

China’s official explanation for the high price of vegetables and meat is often “weather and transportation problems.” But in the U.S., be it Thanksgiving or Christmas, blizzard or hurricane, prices in supermarkets don’t go up, and they even have lots of discounts. 

China’s prices have caught up with the international level very fast, but people’s incomes have not caught up. It shows how far away China still is from being a mature market economy.

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