Posted 9:29 PM by Floyd

I have been to China twice, in 2000 and 2002, and in this post will describe what I saw of China's economy. Of course I saw practically nothing at the macro level, so I will talk about the living standards of the people that my wife Sherry and I visited, and the prices of consumer goods.

The people around my age with middle class jobs seemed to be doing pretty well. They had about 1000 square feet of living space -- not bad considering that Shanghai has 16 million people packed into a few hundred square kilometers. They had microwaves, washing machines, TV's, computers, VCR's or DVD players. Appliances were a little different, and perhaps cheaper than what I am used to, but were also more compact. (One washer I saw was about half the size of mine, but appeared to use its space efficiently and probably had more than half the capacity.) Dryers and dishwashers appear to be luxury items in China at the current time.

Most housing looks unimpressive from the outside, but nice on the inside. Everyone that we met seemed to have remodeled recently, and they all had nicer hardwood floors than I do. It makes sense to focus on interiors because the climate and pollution degrade the appearance of buildings. (On my first visit I would attempt to guess the age of structures, and would guess them as older than they really were by a factor of three or so.) A more practical shortcoming is that some several-story condos lack elevators.

I have heard that Shanghai's economy has grown faster than that of other cities. But two years ago I visited Baoji, a medium-sized town in the interior, and the standard of living was roughly the same. I did see some farmers briefly from the road and they did seem quite poor.

(I hope no one from China is offended by this. Twenty-five years ago China's economy was Communist and a basket case. I wouldn't be surprised if the Chinese standard of living at that time had been comparable to colonial America's. It is quite impressive that China has mostly caught up on centuries of progress in just a quarter century.)

One manifestation of Shanghai's growth was the incredible rate of construction. Everywhere you went in the city you could see several construction sites, most of which were obviously large buildings. Our 2000 trip was Sherry's first visit to Shanghai in almost five years. At that time there were hundreds, maybe thousands of tall (twenty-plus) story buildings, many of them condo complexes with little balconies running all the way up each wall. I asked Sherry how many of these buildings were new. She said 80 or 90%! There was a remarkable elevated freeway, which was new. There was a subway, half of which was new.

The Chinese currency, the yuan, is quite stable. In 2000 a dollar was worth around 8 yuan, and in 2002 8.25 yuan. I went to Mexico in 1994 when the dollar was worth 3 pesos; during our visit last Christmas a dollar was 9 and a fraction, and is now worth more than 10! People do not pester you for dollars and you can't buy things with them (though you can tip a bellboy with a buck). An American acquaintance went to China almost ten years ago and said that people would pester him for dollars.

Groceries are cheap. I went to a Lawson's which is a convenience store like a 7-11, and bought a breakfast pastry, a diet coke, and two Halls candy rolls for my cold. This cost 12 yuan, or $1.50. My next trip was for another pastry, a diet coke, a small packet of tissues, and a beer. This cost 11 yuan. I would expect to pay $3 or $4 for the same goods at a 7-11.

A trip to a restaurant cost maybe half what it would in the US. But a cup of coffee cost three or four dollars. This is because people go to a cafe to hang out and play cards all night, and don't buy many drinks. These cafes did not even sell coffee to go. Coffee as a commodity, at the Shanghai Starbucks, was only slightly more expensive than here. (I didn't think much of Chinese coffee, but it was easier to find coffee in Shanghai than Diet Coke. It was also hard to find cold drinks, which is strange considering Shanghai has a climate like Houston's.)