The common sense is since China is a developing country, things are much cheaper on this side of the Pacific. However, according to the research from renowned HR consulting firm Mercer, living in Shanghai, the biggest city of China, is quite expensive. If the cost of living in New York City is 100, Shanghai will be 92.1.

I can partially substantiate to that. Our living expense of this year is likely to double what we spent in 2003. Of course, we spend a bit more as our income also triples, and then there are factors like inflation and stronger Yuan (which hurts when I report our financials in dollars). But some things are really expensive here:

Housing Expenses

After several years of red-hot housing market, having a roof over your top is not easy. To buy, downtown apartments in a good (but not top-scale) apartment can sell for over $400/sqft (RMB 35,000/sqm), and that's price on "constructed area", which includes all public areas like community center, lobby and elevator -- usually the actual livable area in the apartment will be 15-30% smaller. In other words, one will pay $500 or more for each square foot you have in private.

To rent is a bit cheaper: my monthly rent on the 1,800-sqft downtown apartment is $2,200, but again we are talking about "constructed area" here; the livable space in the 4-bedroom suit is about 1,500 sqft. With this price I could easily rent a big house in Seattle with the garden and garage as extra.

Computer

Yes, China is a big manufacturer of computer and its accessories, but oftentimes computers are more expensive here. A local IT media just released an analysis (in Chinese) that shows ThinkPad T61 of the same configuration sells at 61% more expensive in China, Toshiba Portege R500 is 33% more expensive, and HP dv6527TX is 40% more expensive.

(On a side note, higher price ensures sufficient supply. Wii is never out-of-stock in local electronics markets. I paid $400 for one in summer, and our family has been enjoying it ever since.)

Term Life Insurance

Before I left the States for the Asia assignment, I secured a million-dollar 20-year term life policy insurance for $360/year. It is a fabulous decision: the cheapest quote I received in China was at least twice more expensive, and it will be very hard to get a million-dollar policy.

Is it because living here is more risky, or people usually live a shorter life? According to About.com (which based its data on U.S. Census Bureau's International Data Base), China's life expectancy in 2000 is 71.4 compared with U.S.'s 77.1. Not a big gap, and it shouldn't matter for me as a 30-year-old seeking a 20-year policy.

The only reason I can think of is the sales and marketing cost of insurance services in China is too high. Compared to the online quote and roaming medical check service I experienced during my U.S. policy application, there are too many personal service and medical checkup inconvenience here.

Admittedly, many things are much cheaper here too. For a balanced view, I will devote my next post to discuss those things that are at least 80% cheaper here. If you ever travelled to China, can you name some?