My wife and I try to limit ourselves to a budget similar to what a Chinese family might earn. That’s about $400 a month for the two of us, which would be average for a Chinese teacher, and at the low-end for people working in my hospital (In China it’s not considered rude to talk about money, so I’m pretty open about it).
After a few months here in the city, our budget keeps feeling tighter, even though we are trying to eat less Western food, and we almost never go shopping.
So where is it going?
Every morning I eat a delicious crepe type thing with egg, cilantro, onions, chili paste, and a fried dough stick (youtiao). Typically this costs me 3rmb, but this week the price went up to 3.5rmb (about a 15% increase).
The man who makes my breakfast at a street stand was embarrassed to tell me that I hadn’t given him enough money, which the other customers found hilarious. The lady next to me summed up what everyone was laughing at in a single word, “涨(zhang),” which has come to mean inflation.
Prices have been rising for several months now, and “Zhang” was actually the 2010 word of the year, but the consumer price index (CPI) has been rising faster in these first few months of 2011.
There is another notable difference in the market. We used to get questions about where we are from and if we like Chinese food. Now each time we buy eggs or vegetables, the person wants to know how much it would cost in the US. When I tell them what we would pay in the States, it ripples through the stands of the hawkers followed by angry snorts. Groceries are often MORE expensive here in China than at home, especially meat.
When prices go up 15% suddenly our $400 feels like $340, and that makes our budget seem much tighter than it used to be.
China’s inflation is starting to be a big problem for the gov’t. Officially the CPI, which looks at the price of several different kinds of goods, rose 4.9% compared to what it was the previous year. Like all official statistics in China, those numbers are optimistic (it is probably closer to 8%). Food prices, which are just part of those statistics, increased over 10%, which means the poorest people feel it most.
Over the past few months the Gov’t has released countless statements on their epic battle against increasing prices, but so far their measures have had little effect. Now with the drought effecting China’s wheat crops, and rising oil prices (officially a “sensitive” topic), growing inflation seems inevitable.
For the Party, it couldn’t come at worse time, already set on edge by spreading protests throughout the Middle East.
My wife and I can always increase our budget (really, you don’t have to worry about us), but for the rest of the Chinese people, this isn’t an option. Inflation is the ultimate destroyer of wealth, and the Party’s legitimacy comes from growing the middle class.
When I came back to work after the holiday I was chatting with a Chinese co-worker about what had happened in Egypt. She asked what the causes were behind the protests, and I simplified it as “one person was in power too long, people couldn’t find good jobs, and the price of everything was going up.” She smiled and said, “Sounds like China.”