Want to live here? Too bad, you can't afford it. By Florin dr via Wikimedia Commons
Not only are foreigners leaving China; those Chinese who are rich enough are emigrating out of their motherland as well. Recently, Charlie Custer, founder and editor of the wonderful Chinageeks.org, announced he was leaving China, but he is by no means unique. Reasons for leaving almost always include food safety and air quality, among many others, and in a recent popular infographic, the stark difference in the purchasing power of USD and RMB was also illustrated. It’s simply cheaper and easier to live in the United States than in China, they say.
Some people beg to differ, however, particularly Chinese who were raised and educated in China but now work in the U.S. They think some of the claims about living standards in the U.S. are exaggerated and that life isn’t easy anywhere—the grass is just always greener on the other side.
Recently, a blogger calling himself “Stock Investor Tang Tang” wrote a post on the Sina forum with an ungainly title reading in part: “A Warning To Chinese In The U.S.: Chinese People Have Too Much Blind Faith In The U.S.”{{Chinese}}[[Chinese]]美国华人警告：中国人过度迷信美国，就是祸害子孙(外国的月亮也有阴晴圆缺）[[Chinese]] Our dear readers may not agree with everything written, but it’s a voice worth hearing. Tea Leaf Nation translates in part:
First we have to admit that the United States is indeed better than China in terms of economics, rule of law, social stability, social security, infrastructure, and medical care. The name of “international number one” isn’t just hype, but the United States isn’t all that perfect as the name suggests; it is not a paradise as described in many articles. Too many Chinese buy into those stories and it’s not good for our offspring! I’ll use a few famous examples to illustrate my point:
Misunderstanding No. 1: Income
America’s average annual income is US$35,000. But hear this: the average annual income at Goldman Sachs in 2009 was $7,750,000, but the crew I know from the auditing department only earned $100,000 a year, and that included their bonus already. The average is always elevated [by the wealthy few]. Level of income at law firms, investment banks, hedge funds, and among doctors is far higher than in other industries. The situation in big cities is also better than in smaller cities and rural areas.
In a big city like New York, an ordinary white-collar worker can earn $45,000-$90,000 a year, but can only get 50%-60% of that amount due to taxation, and end up getting a disposable income of $2,500-$4,500 per month. If you have a wife with bunch of kids, you can get a lot tax returned, of course, but even with that you can only strive to make your ends meet. I will talk more when we talk about education.
The annual income at the tertiary sector in big cities is $35,000-$60,000, but most people in small cities work in places like Walmart and only earn $30,000-$40,000 a year, or $20,000-$30,000 minus tax and insurance. If we count in living expenses, they can save up $10,000-$20,000 every year; it takes ten years to be able to buy a [country] house that’s worth $150,000. Needless to say, this is the Chinese way of calculating, since the Americans can’t even save half as much [in the given circumstances].
We can see that if you have a disposable monthly income of $40,000-$50,000, you can be fairly rich already. If you’re not in those few special industries I mentioned above, it is hard to earn this much in New York unless you’re a senior manager already; I don’t know how much longer it takes to get there in smaller cities. Besides, many Chinese experience the “glass ceiling” problem, and can’t ever get there. I know many Chinese whose annual income is still stuck between $80,000 and $120,000 when they are in their forties or fifties. It’s not easy to maintain a household with such an income.
40%-50% of bonus income is taxed in the United States. Salaries are taxed by the federal government, the state, and the city, which is roughly 25%-40% of the total amount. So for those who claim that the average monthly salary is $4,000-$5,000 in the U.S., feel free to come to the U.S. and try working on a job like this.
Misunderstanding No. 2: Housing
Don’t compare houses in Beijing and Shanghai with houses in the U.S. in places where nobody can be seen within fifty miles. If you claim that houses in the city center of Shanghai cost 40,000 RMB per square meter, should I tell you the price of housing near Central Park in Manhattan? Houses there are easily worth seven, eight million dollars. Is there any comparability?
200,000 dollars can indeed land you a house with a swimming pool, but it only happens in the Midwest where you have to drive for more than an hour to the nearest supermarket. A house like this costs at least $300,000 in a big city where everything is two hours of drive away. We working class have no need to talk about stand-alone houses, an apartment with two bedrooms and a sitting room around New York (excluding Manhattan, where housing is way too expensive) costs $400,000-$1,000,000. Of course you need to pay attention to the enclaves as well. There is $300,000 housing in the black enclaves too.
An important expense after you buy the house is often ignored (which makes sense, because those are Chinese tourists in America, who walk away feeling envious without knowing enough about the actual situation), and that is the property tax. It depends on the worth of your housing, the quality of schools in your area, and ranges from $6,000 to $20,000 every year. Better communities might have various maintenance fees. Think about it, the property tax you pay living in a place for thirty years is enough for you to buy another house. So don’t forget property tax when you compare prices of housing.
Even if you have a good job with an annual income of $100,000, tax and insurance take up a third of that, and you end up getting $60,000 to $70,000. Lead a frugal life and by the end of the year you save up $30,000 to $40,000, then you need about twenty years to be able to own a house near New York with two bedrooms and a sitting room.
Let’s now talk about renting houses. I can’t afford Manhattan though those Americans who love going to bars often choose to live in Manhattan, because it’s convenient when they go home in the early morning. In Manhattan, it’s often the case that three people live in a suite with two bedrooms and a living room where the living room is segregated. This way each person pays $1,200-$1,600 a month. Housing surrounding New York is cheaper and each person has to pay $800-$1,100. You’ll realize that one to two thirds of your monthly income easily gets spent on your rent.
As mentioned above, housing in smaller cities is slightly less pricy, but the problem is, job opportunities in those places are far fewer as well. Except for working as laborers, it’s hard for foreigners to survive there. Most first-generation immigrants choose to live around big cities. Luckily Americans don’t have the custom of buying housing before marriage, so most people only have enough for a down payment in their thirties or forties, and many people live in rented housing all their lives. It’s not a bad option to buy a house in a small place after retirement.
Misunderstanding No. 3: Cars and Transportation
Yep, American cars are cheap, but when I see online “A car is at most $30,000—a BMW” or “BMW Z4, priced $29,888,” I don’t know whether I should cry or laugh. Go ahead and ask. See if you can get the worst BMW with $36,000. Well, possible if it’s second-hand.
This costs oodles of money, even in the United States
Imported cars are taxed 100% in China, so luxury cars in China are naturally more expensive than in America. But cars like a Honda Accord cost $28,000-$30,000 in America—not so different in China. Most importantly, the part you can save isn’t really when you buy the car, but when you maintain it.
Insurance and reparation fees matter the most. Full-coverage insurance costs between $2,500 and $3,500 every year. Reparation costs even more. Changing four brake rubbers costs $200-$350. You pay the workers $80 an hour to get a Japanese or an American car fixed. European cars have more ridiculous rates.
Examples: A friend of mine had the AC of his Benz broken, and it cost him 3,000 bucks to get it fixed. Another friend spent $2,000 changing the roof of his convertible. Finally, switching a front bumper of an AUDI A4 cost my third friend $2,000.
As for fees on the road, I can only say you have never approached big cities if you never ran into tollbooths in America. It’s eight bucks entering into NYC, and other highways have tollbooths too, only not so expensive. Highways in America are of the same quality as their Chinese counterparts—pretty bad for the cars. It’s hard to see tollbooths on bridges in China, but I’ve seen several in America.
Taxies: Starts off with more than two bucks in New York, though I don’t know how exactly the fees are calculated. I know it takes twenty minutes to get home by taxi and it costs thirty bucks excluding 20% tips. So unless I go to the airport, which means a reimbursable taxi drive, I never call a cab.
Misunderstanding No. 4: Telecommunication
An iPhone is indeed $299, but why is it priced seven, eight hundred dollars on eBay? Because you can only get one for $299 with a two-year contract! Every month you get 450 minutes in the day, 500 at night and on weekends, and 2G of data. All kinds of taxes included, you’ll have to pay 80-110 bucks every month. See what that amounts to by the end of two years.
Similarly, many phones are on the house, but the cheapest plan still costs 50 bucks a month. Retailers will earn more than the phone’s worth by the end of two years. Phones on eBay are all bought by illegal immigrants who cheated on their contracts, but since they have no credit record they don’t need to worry about the rate when they buy cars or housing.
Still some people say the rate is actually cheap in America because it only costs a few cents per minute to call China from the States. You’re right but don’t play any tricks here. It’s cheap to call China, but I dare you to live in America and only call China without ever calling anyone in America.
Misunderstanding No. 5: Education
There is indeed the public school system in which education from elementary to high schools is free, but the problem is whether you dare to send your kids there. I was a volunteer this year teaching financial basics at a Manhattan public school. The school is close to Chinatown but I didn’t see any Chinese kids there, because the graduation rate of this school is only 33%. Well there are good public schools but first you need to pass the tests to get in, and second of all, it depends on whether you live in that particular district or not. As I mentioned above, houses in good districts cost a lot more, with higher taxes, do you remember?
I don’t know how much it costs to go to a private school, but I hear it’s just as expensive as college education. Speaking of colleges, the ones that are ranked top twenty cost $200,000-$250,000 in total, a sum that most ordinary Americans cannot afford. It’s extremely hard to get scholarships or to get loans from banks. But only graduates from these schools or brand name MBAs can go on to work in lucrative industries as I mentioned. So this is the vicious cycle: Only rich kids get to go to good schools, then work for good companies and keep being rich. Surely there are poor kids who change their lives through hard work and intelligence, but generally speaking, education in America is so expensive that it’s fairly good if poor kids get to work as medium-level managers.
Now you know how hard it is for a family with a $100,000 annual income to get their kids into good schools or good companies.
Misunderstanding No. 6: Cheap food
A huge difference between America and Europe/China is you get taxed everywhere. So is the necessity to give out tips. Tips at restaurants are usually 16%-20% of the bills, though you don’t need to tip anyone at a place like McDonald’s. But when you come here and see what adults feeding on junk food look like, you’ll immediately kill your idea of going for fast food. Anything healthy for a lunch costs $8-10, and if you go to a restaurant, it’s $18-40. This is why many Americans bring their own lunch to work, two pieces of bread with a piece of ham, a piece of cheese, a piece of tomatoes and two lettuce leaves—that’s their lunch.
Chinese food delivery is everywhere in America and is the cheapest way to get full, costing about $5-7 per meal. But they add too much MSG to the dishes, and their ingredients aren’t very fresh either. It’s a lot cheaper if you cook yourselves, but the pace of life is fast in big cities and the time spent on transportation is also a lot, so most people still choose to buy their meals.
Misunderstanding No. 7: Electronic devices and other appliances are cheap
They are indeed dirt cheap in America, but how much money do you have left for them when you settle the bill for housing, cars, telecommunication, and food? Yes, you can buy a pair of Levis jeans for thirty dollars, but how many pairs do you need each year anyway? There are just too many places where you need to spend money in America.
Some say, “Panasonic 54 Plasma TV is only $1499.99 in the States and a month’s income can get you two to three of those.” Well, if your monthly income is that decent, you’d go for LCD or LED already, not Plasma TV. But not many people actually earn that much every month… Cable TV is really expensive, costing about 40 bucks per month post-tax. Some say there are also ten-dollar plans—well, do you know you can actually attach a metal cod to the heating radiator and still receive signals for the same channels, plus quite a lot of Spanish HD ones?
…
All right, now something many people don’t notice about living in America:
1. It’s expensive to go see the dentist in America. Taking a tooth out or fixing a tooth is okay, but dental implants or dental braces can’t be done without two to three thousand dollars—they’re not covered by health insurance. A lot of my American friends go to the dentists abroad, and it’s still cheaper including their plane tickets…
2. It’s expensive to have glasses in the States, with each pair costing between $300 and $700. I always come back to Beijing to get mine.
3. A big American routine expense: Drinks at bars. It costs $20-60 each time and you gotta go there at least once every week.
4. Travelling is also another huge expense in life. A lot of people save up for months only to be able to go to the beach in the summer.
5. Hotels are expensive. It’s $160 to $200 dollars a night in big cities, and 100 dollars in small ones.
Okay. I’ve written so much not to prove how bad the United States is, but I just want to say, please don’t hear the rumors and slight ourselves. America is indeed slightly better than China, but really not so much. If China were that bad, why are there still so many people who choose to go back every year? I went to Europe once, and I found out that the living standard in many places were really not as good as in big Chinese cities.
Pingback: Hao Hao Report