Example of Real Inflation in China


Here is a tell-tale sign of what’s happening while my wife and I have been living in China.

On a regular basis we order a Papa Johns Pepperoni Pizza to enjoy some food that tastes like home. Its not cheap - actually fairly expensive by US prices. We usually get a small 12" pepperoni pizza for 108RMB or about ~$15.50USD.

However the other night I was surprised when I ordered the same pepperoni pizza and the price jumped up 19% to 129RMB or ~$18.50USD.

It’s really a fact of life over here -- prices have been rising quite dramatically since I arrived in July. It’s not uncommon to see restaurant menus with prices scratched out and marked up 20%.

Combine inflation with the rapid decline of the dollar and it amazing how expensive things are getting in a country that is supposedly a worldwide supplier of low cost manufacturing.

I wonder what happens when China prices rise to the point that its no longer a low cost producer for US goods?

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Comments (10)


I've noticed this in Beijing as well. I always find it unbelievable that the same product can be one price in a local market, and twice the price even in a regular supermarket. I guess thats China though.

On the pizza front we are a bit luckier in Beijing; a decent 12" pizza can be had for about 50RMB.

2mill:

does china permit foreigners - such as yourself - to purchase real estate? i bet you can make a quick buck there (or maybe not, if you use the usa real estate as a guide)! what kind of mortgage rates do typical chinese folks get when they purchase homes?

also, how much does indian food cost over there (if available)? or are you not a big fan of indian food?

- s.b.

What will happen?

China will be the most powerful country by then.

Here in Australia fruit and vegetables are often twice the price or more in the supermarket as they are in the "fresh market".

I doubt there's much Indian food available in China outside Beijing and Shanghai. My wife doesn't think there is an Indian restaurant in Tianjin, her home city (and one of the biggest cities in China).

Interesting to here. I'm headed to Shenzhen for work for a week on Monday and I had noticed the hotel we normally stay at was about 30% more expensive than it was last year. Still dirt cheap compared to the states or hong kong, but quite a bit more expensive than it use to be.

Then it becomes more effective for the US to produce things domestically or import from the remaining 3rd world countries, and China becomes a net importer and even more dominant global economy.

I love indian food and there are several close by. There are several restaurents and the prices vary widely.

If we take my favorite Indian dish - chicken tikki marsala -- it seems to range between 35RMB (~ $5USD) and 55RMB (~$7.80USD) plus of course rice and naan bread.

Hi s.b.

Foreigners can buy real estate in China only after they have lived in China for more than 1 year. Also, foreigners can only purchase real estate to live in, they are not allowed to purchase properties to rent out.

You should also bear in mind that real estate in China is really a 70 year lease rather than a freehold or leasehold as you are probably used to. Also, there 2nd hand housing market is quite immature. Given the huge levels of construction, most people purchase new builds.

In China interest rates are the same at all banks. There are 2 different interest rates: "housing-fund" and "commercial". The first 500000RMB or so can be borrowed at the preferential housing fund rate, the remainder at the commercial rate. I am paying around 6.65% on my mortgage overall (My wife is Chinese so we can access the lower rate). Minimum down-payment is 30% (40% in Shanghai for investment properties).

The real estate market has boomed in China over the past few years although has slowed alot in recent months (particularly in Shenzhen). There are probably good opportunities to make money, but the real-estate market here is volatile and confusing. There are so many differences to what we are familiar with outside of China, it is difficult to really work out whether property is still a good investment here.

I had Papa John's tonight, 12" pepperoni, extra garlic sauce, extra pepperoncini's from one on Xizhang Zhong Road and the total was 87 RMB delivered free to my door at my Hotel. I'm not sure why you have to pay so much. I feel stupid as heck for ordering pizza in Shanghai, but I've had nothing but Chinese food for 8 days in a row, I earned it. I even ate turtle this week with poached quail eggs.

This is already happening. China is loosing many jobs to vietnam, the philippines and other lesser asia pacific nations.

GREAT blog it is much like mine, check it out and tell me what you think.

Jason Dragon
http://capitalactive.wordpress.com/

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