The real story behind China's high food spending isn't poverty — it's purchasing power

When The Economist recently highlighted that Chinese households spend 17.2 percent of their consumption on food — more than double the American rate of under 8 percent — the reflexive interpretation leaned on 19th-century economics. Engel's Law, formulated in 1857, states that the poorer a family is, the larger the share of its budget must be devoted to food. By that logic, China's numbers paint a gloomy picture of citizen's living standards.

But this analysis misses something fundamental: what that 17.2 percent actually buys.

By focusing on nominal percentages while ignoring purchasing power parity (PPP), we risk resurrecting the very misconceptions that PPP was designed to correct. When your rent, healthcare, and subway fare are dramatically cheaper, spending a fifth of your income on exceptional food isn't a sign of subsistence — it's a sign of surplus.

Let's start with the raw numbers. Recent cross-border comparisons paint a stark picture of structural cost differences. In China, monthly rent for a one-bedroom apartment outside the city center typically ranges from 1,000 to 4,000 yuan ($140–$560). In the United States, that same apartment runs $1,000 to $3,200 — roughly five to six times higher.

Public transport? A metro ride in China costs 2-5 yuan ($0.30-$0.70). In the US, it's $2.50-$4.00, but the real killer is car dependency transportation accounts for 16 percent of US household disposable income. Utilities in China average around $52 monthly; in America, it's $210 .

Healthcare is perhaps the most consequential divergence. Americans spend approximately 8.5 percent of their disposable income on healthcare — a figure that doesn't fully capture the anxiety of deductibles and surprise billing. China's universal healthcare system removes this sword of Damocles from household budgets.

Even broadband — a modern necessity — costs $11 in China versus $72 in the US.

When take all of these differences into account, a Chinese household's fixed costs — the non-negotiable expenses of simply existing — are a fraction of what an American family must cover before buying their first meal.

This brings us to the concept of "disposable income" that actually matters: money left after necessities. An American earning $4,276 per month might seem wealthy next to a Chinese earner's $1,007, but after rent, healthcare premiums, transportation, and utilities, the American's remaining "food and fun" budget shrinks dramatically.

The Chinese worker, having spent perhaps $600 on total fixed costs, has roughly $400 left for discretionary spending, including food. The American, after $2,500 in fixed costs, might have $1,776, but that money must cover not just food, but also childcare, student loans, and saving for retirement without robust social safety nets.

This is why the simple percentage comparison fails. The question isn't "what share of your total spending goes to food?" It's "after you've secured shelter and survival, how much freedom do you have to enjoy your meals?"

Here's the paradox the Engel's Law purists miss: food in China is not only culturally cherished — it's objectively cheap. China's extensive public infrastructure and efficient supply chains keep grocery costs manageable. The country's high-speed rail network — 45,000 kilometers versus America's 735 — doesn't just move people; it moves perishables with stunning efficiency.

The result? A set meal at a mid-range Chinese restaurant costs $2-$7. In America, that same experience runs $12-$37 — five to six times higher. Street food in Xi'an might cost 30 percent more than home cooking, however, a comparable McDonald's meal in Massachusetts runs 150 percent above homemade.

When eating out costs $5 instead of $25, spending 17 percent of your budget on food doesn't signal poverty — it signals that you're eating very, very well without breaking the bank.

Think about what this means. Americans spend less of their budget on food, yet are forty times more likely to lack reliable access to it. Their food is "cheaper" as a percentage of income, but the system underlying that percentage — market-driven healthcare, privatized transportation, and minimal social housing — creates precariousness that Chinese households, despite lower nominal incomes, largely avoid.

This is the triumph of infrastructure over income. China's model emphasizes "large-scale public infrastructure and broadly accessible services", while America "relies more heavily on market mechanisms and private household spending". The latter produces higher headline incomes; the former produces stability.

In China, it is consumption as culture, not consumption as survival. When food spending remains high despite rising incomes, it may indicate not that people can't afford better, but that they've chosen to make eating well a priority and the structure of their economy allows them to do so without risking homelessness or medical bankruptcy.

The 17.2 percent figure that sparked this discussion actually represents progress, not stagnation. When you strip out dining out — which represents purchased services, not just calories — the country isn't violating Engel's Law; it's fulfilling it, just with Chinese characteristics.

The lesson here extends beyond China. As global economic comparisons proliferate, we must resist the temptation to treat percentages as universal truths. A number is meaningless without context. Seventeen percent of a stable, low-cost existence may represent far more genuine prosperity than 8 percent of a precarious, high-cost one.

America's high earners may outspend China's middle class in absolute terms, but for millions of Chinese families, the ability to spend generously on food — the ultimate daily pleasure —reflects not how much they lack, but how little they fear.

That's not a violation of 19th-century economics. It's a 21st-century upgrade.

Maya Majueran is the founding director of the Belt and Road Initiative Sri Lanka (BRISL), a pioneering organization dedicated to research, dialogue, and engagement on China's Belt and Road Initiative (BRI).

The views don't necessarily reflect those of China Daily.

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