Financial advisor Ed McKnight paid for dinner for a group of ten people while visiting China this month. He couldn’t believe how little it cost.
I was visiting the small (by Chinese standards), rural city of Xinxiang for a friend’s wedding. “Just” 2.7 million people live there.
Before the wedding, we went out for dinner at a beautiful restaurant. We had a private room, huddled around a big round table with a lazy Susan in the middle.
The menu was in Chinese yuan, so we started ordering freely. Since it was a special occasion, we didn’t hold back.
There were dumplings, noodles, lemon chicken, tofu, barbecue pork buns, durian rolls, stewed peanuts, and Peking duck.
For those who wanted to drink, we ordered bottles of baijiu (Chinese whiskey) and toasted the newlyweds.
Traditionally, in this part of China, the couple getting married pays for their overseas guests. But we wanted to pull our weight. So, my wife quietly slipped away with her credit card and paid the bill.
When she came back, her phone buzzed with the notification. This entire meal, for all 10 people, cost just NZ$158.68. We were shocked. Dinner and drinks for ten people for less than $16 per person.
In New Zealand, a meal like that in a private room, full spread, flowing drinks could easily set you back ten times what we paid in China. When I got home, I still had a taste for Chinese food. So, we booked a table at Huami in SkyCity. It’s an upmarket Chinese restaurant.
We definitely held back compared to when we were in China. After all, Peking Duck at Huami costs $98. In China, it’s a quarter of that price.
Here, a dinner for four came to $571.50. Needless to say, we split the bill with the other couple we were with.
Of course, this is all Economics 101. The cost of living in China is different from that in New Zealand. Wages are lower in China. So prices are generally cheaper (at least in rural cities).
The minimum wage in Xinxiang is just NZ$483 per month. In New Zealand, it’s almost eight times that at $3,816 a month.
Admittedly, this part of China is poorer than most. But the cost of living is so low that even these salaries, which seem inconceivable by Kiwi standards, are manageable there.
It’s a vivid reminder that our dollar stretches differently depending on where we are. In some parts of the world $158 Kiwi can buy 10 people a feast. Back here in New Zealand, it might cover a good night out for two.
My experience in China wasn’t just a great meal.
It reminded me. Behind the numbers that us economists talk about (inflation, exchange rates, purchasing power), there are real people. Real lives shaped by what money can (and can’t) buy.
As an economist, you can read about purchasing power in textbooks. You can model it, chart it, and talk about it on podcasts. But sometimes, it doesn’t really hit home – until you live it for yourself.
Ed McKnight is an Auckland-based economist and property investment advisor.
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