Unfortunately, the era of the generous "expat package" is largely over. As China’s rising middle class provides a well-educated labor force, plenty of specialist jobs are filled with local employees.
Younger expats in particular tend to be hired with similar contracts. They often prioritize the opportunity to live and work abroad over their salary or the financial perks of their jobs. Nonetheless, it’s worth driving a hard bargain with your future employer, due to the cost of living in China.
Better living standards for the urban population also mean an increasing cost of living in China. In the 2014 Mercer Study of the most expensive expat destinations, Shanghai and Beijing ranked 10th and 11th, respectively, out of 211 cities worldwide.
Of course, you need to consider that the 2014 Mercer ranking measures the cost of living in China for a foreign assignee in a middle or upper management job and the respective salary. It also calculates the cost of living in China in US dollars, which is why it’s strongly affected by currency fluctuations.
The strengthening of the yuan partly explains last year’s high Mercer ranks of Chinese metropolises. However, the 2014 placement does indicate that expats face a higher cost of living in China.
This article isn’t supposed to provide a detailed list of items for your household budget. Such specifics depend on your personal situation, accustomed living standards, and the place where you’ll live.
Shanghai, Beijing, Shenzhen, and Guangzhou are probably the most expensive destinations for expats. The cost of living in China’s second-tier cities is often a bargain in comparison.
What this article does provide, though, is a brief discussion of the biggest chunks in your budget and where money-savvy expats can pinch a few pennies to keep the cost of living in China low(er).
First of all, you need a place to sleep. Accommodation is a necessary expense, but it can increase your cost of living in China quite sharply.
The good news: China’s real estate market appears to be on the verge of a slump. The government seems keen on cooling down the housing market; construction activity is falling, and housing prices are no longer rising that steeply. The bad news: this doesn’t mean that housing is cheap, especially not accommodation targeted at expatriates.
Basically, you have two options as far as housing is concerned. The first one is rather bad for your general cost of living in China. Not only do most expatriates live in the most expensive coastal cities, but typical expat compounds are often located in central (and pricy) neighborhoods or in the "nicer"” suburbs.
Living in an expat compound has its undeniable advantages. The building management mostly speaks English, and the facilities are equipped with all kinds of amenities, for example, a swimming pool, gym, or playground. Some compounds come with their own restaurants, bus service, or daycare center.
Rents for expat housing aren’t exactly cheap. For example, a fully furnished 70m² apartment in Sanlitun, equipped with one bedroom, one bathroom, and a built-in kitchen, will set you back about 16,500-18,000 CNY per month.
For a large family apartment near the American School of Beijing, you need to pay between 20,000 CNY and 22,000 CNY. For that price, you’ll get about three bedrooms, two bathrooms, and plenty of other expats as your new neighbors.
The examples cited above don’t even cover the upper end of the expat and/or luxury housing market. The sky’s the limit!
If you are willing to live in a regular apartment, you could save a lot on your cost of living in China. For instance, you’ll get a standard one-bedroom accommodation in Shanghai or Beijing for 5,000-6,000 CNY per month. If you spend a bit more, around 7,500 CNY, you can get some good deals, like a relatively spacious two-bedroom apartment in Haidian, the capital’s student neighborhood.
Saving on accommodation has its downsides, too. In cheaper buildings, the landlord or caretaker often doesn’t speak any English, and you might need some language-savvy friends to help you out.
Moreover, facilities in the bathroom and the kitchen are often rather basic. And, unlike expat villas, these Chinese apartments don’t come with any furniture or household appliances. Neither are utility costs included in the rent.
Other expenses related to housing will add to your cost of living in China. In a typical expat home, the rent includes most of or your entire utility bill each month. In Chinese-style dwellings, this is not the case. Heating expenses are the sole exception.
The public central heating system is switched on and off remotely in most municipalities. The heating is normally on from mid-November to mid-March every year.
Please remember that your heating bill isn’t based on the actual energy consumption, but it’s a fixed sum which relates to the size of your home. If you use additional heating (e.g. electrical heaters or gas stoves), you need to pay extra.
If you use gas for cooking only, the gas bill for a two-person household is fairly low, at 50-100 CNY per month. Water is somewhat more expensive, with approximately 80 CNY, but electricity is the largest expense. Since summers can be hot and humid, you’ll need the air-conditioning a lot. For an 80m² apartment, this quickly adds an average 500 CNY a month to your cost of living in China.
In the next part of our guide on cost of living in China, we’ll talk about further household expenses, like furniture, consumer electronics, phone/Internet, and domestic help, as well as other important things to plan for, e.g. education and healthcare.
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