How to live easy in China on $475 a month

McClatchy NewspapersApril 24, 2012 

— Young consumers in today’s China, while facing a constantly changing economic landscape, are reaping the benefits of their giant nation’s continuing rise, and they seem well aware of it.

While average salaries remain low by Western standards – about $760 a month – they are rising quickly, and even people earning as little as $475 a month, a common wage for new workers right out of college or those going into factories, get by without much stress.

“I like to buy new clothes and shoes, and I spend about 300 to 500 yuan ($50 to $80) average on them per month,” said Kong Yawen, a 25-year-old resident of the eastern coastal city of Qingdao, who works in the international sales office of a private firm that manufactures tires and sometimes goes by her adopted English name of Sophia. “I just applied for a gym card last month and it cost me 900 yuan (about $143). I can use it for a year. On the weekend I go to watch a movie or go shopping with my friends.”

Not exactly the austere lifestyle that many Americans might imagine for someone who makes that $475 a month starting salary.

How Chinese consumers spend their money is a growing concern in China, where the leadership in Beijing believes that boosting the amount the average Chinese spends for goods and services is key to the continued growth of the economy. But how much consumer flexibility can there be when salaries seem so low, especially in a nation where saving seems to be a compulsion?

As it turns out, however, hundreds of millions of people live quite comfortably, if not lavishly, on so little, while actually saving money every month. Basic necessities such as housing, food and electricity are relatively inexpensive, companies and the government pick up much of the health care costs, public transportation is very cheap and reliable, and taxes are low or nonexistent for people at the bottom end of the pay scale. While China’s real estate prices skyrocketed over the past decade, rents did not keep pace.

Kong, who graduated from Shandong Jianzhu University last year, shares her nearly 1,000-square-foot Qingdao apartment with two colleagues, occupying the largest bedroom in a three-bedroom flat. Her share of the rent, $95 a month, is about 20 percent of her income. Her portion of the monthly bills is just $12.50 for water, electricity and gas _ an almost negligible amount for items that are major expenses for many Americans. Internet access costs her $3, riding the bus is another $8 per month, and she spends about $80 a month on food. Because she earns less than 3,500 yuan a month – about $550 – she has no tax liability.

Costs are similarly low for Xie Haoran and Wang Yongyi, a married couple who live in the Pudong section of Shanghai.

Xie, an affable 25-year-old, invited McClatchy in for a look at the couple’s modest, sixth-floor apartment crammed with their belongings in a mixed-use neighborhood. The chain-smoking Xie makes about 3,800 yuan a month, about $600. His wife earns about $875 a month. Their rent, $254, including electricity and water, consumes about a fifth of their income.

Xie toils long, difficult hours, working 24 hours straight, then resting for 48 hours before going right back at it for another 24. His job involves checking legal paperwork for cargo coming up the Huangpu River into Shanghai. It never lets up – just like the non-stop freighters that traverse the river day and night, supplying China’s largest city with the raw components needed to drive its breakneck economy. Xie, who earned his bachelor’s degree last year and has worked the job for nine months, never gets a week off for vacation and his schedule never changes. It amounts to working 54 hours a week, on average.

Wang, who is also 25, works for a privately owned Chinese firm in its purchasing office. She handles the couple’s day-to-day family finances. Both send 1,000 yuan (almost $160) a month to their respective parents – a common practice in China. They also pay a small amount of income tax, since they earn more than the individual threshold of 3,500 yuan a month before taxes kick in.

Xie said the couple expends little on food because they get a lot of meals at work, paid for by their companies. They spend about $80 a month eating out and nearly $100 each on transportation to and from work. They do not own a car, but Xie wants one.

“That is my dream,” he said, his face lighting up. “My house doesn’t need to be so big but I have to have a car. I’ll probably need a long time before I can get it.”

Xie is also a self-described rock ‘n’ roll fan and occasionally shells out as much as 1,000 yuan ($160) to attend a top-notch concert when big acts come to town.

Together the couple save 2,000 yuan ($320) a month and have managed to accumulate more than $5,000 in their bank account. They do not plan to touch it unless absolutely necessary.

“We don’t want to spend the money that’s in the bank,” Xie said. “If I want to buy a cellphone, I won’t raid the bank account.”

He also said he’s thought about getting a credit card – now readily available to Chinese consumers – but he worries about accumulating debt. “We also know that it can make life easier,” he said.

That in part is a reference to the convenience of charging items online, a practice adopted with growing fervor in China. Taobao.com, a Chinese version of eBay and Amazon.com combined, is doing huge business, with most young people expressing a clear preference for online shopping over regular stores.

Kong, who will get a bonus from her company after working there for a year, also likes buying things online.

“I have more choices and the price is cheaper than in stores,” she said. “I often buy clothes and shoes online.”

Like Xie, she doesn’t trust herself with a credit card.

“If I have a credit card I will buy more things; then I can’t save money,” she said. “I think most Chinese people don’t like to spend their future money. That makes us feel very worried. I prefer to save money and then buy something.”

Kong, who was born in the Shandong province city of Qufu, traces her family lineage back 72 generations, to Confucius, China’s great ancient sage who was born and lived most of his life in the city. Kong feels the tug of loyalty to her parents – the concept of filial piety as put forth by Confucius – and she spends as much time as she can with her family. She often buys them gifts.

“In China before the children get married, we are a whole family and we give the money to our parents,” she said. “I go home every two weeks to see my parents and friends. My home is in Gaomi, which is about 80 kilometers from Qingdao. I sometimes buy some snacks for my little sister (17 years old), some clothes for my parents. They also buy some things for me such as clothes, cosmetics or an electric cooker. Our relationship is very close. I’m a little girl in my parents’ eyes.”

Like other young people in China, Kong appreciates what she has and sees a bright future.

“I feel very happy I can live in today’s China because I have more opportunities and a more colorful life,” she said. “When my parents were young, they did not have enough food and clothes, and most people couldn’t choose the husband or wife themselves. Their parents decided it for them. Now I can live in a big house and drive a car. They couldn’t have imagined it when they were young. The physical world and mental world are all more abundant and colorful. People can develop as they like.”

“I think my economic situation will be better and better,” she continued. “I have the ability to earn money and find a better job, and my boyfriend has a good family background and is capable. . . . So I am very optimistic for my future.”

Melnicoe is a McClatchy special correspondent.

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