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US, China cost of living comparison misleading

By Cui Peng (People's Daily)

15:45, September 27, 2011

Edited and Translated by People's Daily Online

A recent cost of living comparison between China and the United States has caught the attention of many in China. Certain media saw mixed results after comparing the living costs in Beijing and New York. For example, certain ordinary foreign products were found to be more expensive in Beijing than in New York, and luxury goods were found to be even far more expensive in Beijing. However, the prices of urban public transportation services, human services, and intellectual property rights-related products and services are much higher in New York than in Beijing.

At first glance, it seems that living in Beijing or New York each has its own share of pros and cons. However, the comparison of living costs is not just about product prices but also about the people's quality of life. One cannot understand the essence of the problem without considering the income of the residents of the two cities.

For instance, a meal at a western fast food restaurant in Beijing costs about 30 yuan, which is equivalent to the 5 U.S. dollars that the same meal costs in the United States. The gap is large in terms of income in the two countries. Data shows that the per capita annual income stood at around 50,000 U.S. dollars or about 320,000 yuan in 2010, while that in Beijing stood at 29,000 yuan, marking a gap of about 10 times. Given the huge gap in income and similar goods prices, it is easy to tell that which country has higher living costs.

Some said that the comparison was not scientific in terms such as the selection of different types and quality of food in the aforementioned instance. The remarks are reasonable because it is very difficult to compare the prices in the two countries in a comprehensive and accurate manner. However, it is noteworthy that the reason why the topic has drawn so much attention lies in that residents in some major Chinese cities are very sensitive to the current high pressure of life. Instead of making accurate judgments over price comparisons or coveting foreign living quality, the ordinary people have found a topic to express their practical pressure of life.

Take income into consideration first. It is learned that employees' incomes in developed countries generally account for more than 55 percent of the national revenue, which means that workers' get most of these countries' national income during the first distribution. Chinese employees' incomes however have been declining since the 1990s and currently account for less than 40 percent of the national revenue. The fact that workers are unable to enjoy a greater share of the wealth is directly reflected by slow income growth, which has gradually made consumer less confident when facing the high prices of commodities.

With slow income growth, employees' burdens however are increasing and the first concern for them is housing. One laborer said that he would be very satisfied if he had a job with a monthly salary of 4,000 yuan in 2002 because he believed that he would be able to buy a house without a doubt after working for several years. At present however, a laborer who earns as much as 10,000 yuan per month cannot even imagine buying a new house before he is 40 years old. When taking social security, high education and medical fees into account, a person would not be able to meet the demands of a family if he does not work very hard. Considering all these, how dare people think about quality of life?

Although price comparison is merely about numbers, it reflects the people's livelihood. Maybe price comparisons would be a more relaxing subject of conversation when people's incomes can maintain a reasonable growth and when they have relatively fewer burdens and become more satisfied with their life quality.

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