One reads quite a bit about the disparities in economic development in China between the coasts and the interior, and about the rising income disparities between those who have benefited from the new economy and those who have not. One thing that doesn’t really show up in the statistics are the parallel economies in Shanghai (and Beijing, and probably most other large cities) between people living a fairly traditional Chinese lifestyle and those living a cosmopolitan global lifestyle. They are almost in different countries.
We are living in “low corner” Shanghai (the wrong side of the tracks) since many of the universities were moved to the far northeast Yangpu district after the revolution. This is a very high density neighborhood, made up mostly of crumbling 5-6 story concrete block apartments which usually have no air conditioning or heat. Many of the local people are elderly; I suspect that most of them were moved here after their communal apartments towards the city center were torn down and redeveloped. There are many more rusting bicycles than Mercedes. With the new line-10 subway line and a huge shopping and entertainment complex near here, the neighborhood will probably be changing quite a bit over the next few years.
A block or two around the corner there is a local supermarket, a wet-market, and lots of food stalls and stores. There are quite a few small restaurants in the area, along with clothing shops, etc. The economics of living a Chinese lifestyle here are orders of magnitude from the Bund and the former French concession – I estimate about a 1:50 difference!
Lunch for two from a neighborhood food stall consistently costs the two of us under 5 Yuan (US 75 cents). Dinner for two with beer at a modest Chinese restaurant costs under 40 Yuan. By comparison, two lattes at one of the hundreds of packed local Starbucks cost 50 Yuan; a western-style lunch for two with coffee at a trendy restaurant in the former French concession costs almost 300. A complete suit of traditional women’s clothing at a neighborhood shop costs 39 Yuan (US$6); a Chinese-made polo shirt from the crowded Uniqlo shop at the nearby mall costs 149 Yuan ($23); Asian-brand slacks at the mall are 150-250 Yuan. For those who prefer Western designer brands, they are a bit more expensive than in the US due to value added tax, and sell like hotcakes.
In short, there are parallel economies here which have little if anything in common and confuse the meaning of the economic statistics, especially when it comes to purchase power parity. Someone who eats traditional plain food, wears traditional clothes, lives in an older-style apartment, and drinks local beer and ordinary tea has a cost of living about one tenth that of a middle class consumer living a cosmopolitan lifestyle in a modern condo in an outer district who shops at mid-market Chinese or western/Japanese chains. Add a condo in an up-market neighborhood (high corner Puxi or a fashionable area of Pudong where real estate costs are at NYC levels), a western brand of car and designer clothes and accessories, and the cost of living jumps by over 500% above the “ordinary” middle class.
The question then is: when calculating purchase power parity for life in China, what life do we choose? Probably not our many neighbors who appear to live on a thousand or two US dollars per person per year. On the other hand, for those expats who want to live exactly as they did in the US or Europe (and their Chinese counterparts who want to do the same), the cost of living in Shanghai is about the same as in New York City or San Francisco, so there is no purchase power parity adjustment. One dilemma is that choosing either the “ordinary” or the high-end middle class lifestyle makes the economic statistics corrected for purchase power parity seriously understate the quality of life of the majority of the population, for whom the correction would be much greater.
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