Data suggests that some commodities, such as Heinz ketchup or Coca-Cola in China is still relatively cheap, but most commodity prices and the U.S. almost, this does not reflect the income levels between the two countries and the huge gap between purchasing power. The Chinese workers is the production of wholesale products, to buy retail goods, which means that even though the income of ordinary workers in China much lower than the United States, but had to suffer the same as American workers and high consumption.
A few years ago, “The Economist” had a well-known research to compare the real exchange rate countries. McDonald’s Big Mac hamburger they price as the standard to measure the difference between the exchange rate countries. According to a recent study shows that the yuan is undervalued by 48%. A Big Mac price in China is 1.95 U.S. dollars, while in the United States is 3.73 U.S. dollars, Renminbi seem underestimated a lot.
However, these data can only show part of the problem, China’s average wage of employees of U.S. workers 1 / 15, an average of nine minutes an American can buy a McDonald’s Big Mac hamburger, but for the Chinese employees, you need 40 minutes, 9 times the U.S. employees, which have to be good in the treatment unit. According to this contrast to conversion, then a Big Mac prices in China should be 40 cents, meaning that the renminbi-dollar exchange rate should be 32.5:1. But the yuan-dollar exchange rate can not be so low, the fact that on the contrary, the RMB exchange rate will be even higher than the current 678 strong. Upward pressure on the yuan mainly from the 2 trillion of foreign exchange reserves and trade surplus with the United States, precisely because the real value of the yuan rise, which leads to the retail price of many Chinese goods (replaced U.S. dollars) is even higher than the U.S. .