My Shanghai holiday
By George Chen
The opinions expressed are the author’s own.
While Chinese lawmakers gathered in Beijing for the annual parliamentary meeting, I returned to my hometown Shanghai for a holiday.
The lawmakers are keen to discuss China’s macroeconomic matters these days, but I am more interested in being a microeconomic observer. For example, how much does an apple cost in Shanghai these days?
During my holiday, I brought my girlfriend, a Hong Kongner, to Shanghai No.1 Food Store on the historic Nanjing Road. The store is a favorite place from my childhood as I felt I could buy food items from all over the world under one roof.
But, today a shock lay in store.
Apples imported from Japan sell for 198 yuan (about US$30) each. My girlfriend was also shocked: “I think it’s even more expensive than those in SOGO in Causeway Bay (Hong Kong).” I believe her.
I shared the expensive apple story at a family dinner. To my shock again, my Shanghai relatives didn’t seem particularly surprised to hear this. “It’s normal. You have supply and you have demand, so I say it’s normal,” my uncle said.
Now you might want to challenge my uncle with a simple question — are Shanghai people so rich these days that they eat 198 yuan apples? We know the sad but true answer. No. You can clearly see the rapidly enlarging income gap between the super-rich, the middle class and the poor.
Speaking of income gaps and how to solve them, I wrote a column before my holiday and I took the property market as a case study. Read it here.
My 198 yuan apple story may sound too extreme. A “normal” apple is not that expensive in Shanghai. Fifty yuan (US$7.6) will buy you a pack of apples that you can probably eat for a week. To me, it seems cheap enough but to my father, who’s been observing microeconomic changes in China for the last five years since his retirement, still found cause for complaint.
“The price of apples shot up too fast. Last year, 50 yuan would buy a large basket that you wouldn’t be able to finish in a month,” he said.
The spokesman for China’s top economic planner, the National Development and Reform Commission, told the media this week that China’s February CPI would start to decline. Investment bank Nomura also issued an updated estimate on March 9 that the February CPI reading could be 4.8 percent on year because of a fall in food prices.
To meet the official goal of keeping inflation to a 4 percent average this year, the government has raised interest rates three times and banks’ reserve requirements five times since October, while also using a series of direct controls to cap price rises.
China’s top leaders have declared that their priority this year is to control inflation. So far, complaints about rising prices have amounted to little more than grumbles, but serious inflation has sparked social unrest in China in the past.
I sent a short message to my father in Shanghai to tell him the Nomura estimate and he quickly replied: “Can you invite the analyst to visit Shanghai and I’ll treat him to some apples.”
One of my social science professors once warned me: “Remember, politicians are all liars, in the West and in China.” So, I guess as a microeconomic observer, my Shanghai holiday should make more sense than the ongoing meetings in the Great Hall of the People in Beijing, for a realistic indication of what’s going on in China.
Photo: A man buys vegetables at a local food market in Shanghai December 11, 2010. REUTERS/Carlos Barria