Spatial price differences in China: Estimates and implications

Data published by China's National Bureau of Statistics (NBS) in 1990 are used to construct province-specific prices comparable across localities (for rural areas in each province, urban areas and the province in total). The aggregate price levels across provinces are compared by following three steps. First, a living expenditure basket is defined as a list of products (goods and services) and their quantities purchased in the base year, 1990. Second, this basket is priced in each province for the base year. Third, for time series comparisons, the provincial prices for this basket in other years (1984-2004) are obtained using the provincial Consumer Price Indexes (CPIs). Based on the three baskets (rural, urban and total), five price levels are derived for all years (1984-2004): two for rural areas in each province (one based on the rural basket and one based on the joint basket, in each case pricing the basket at urban prices) and one for each province in total (based on the joint basket and province-wide prices). Overall, the data show that in all likelihood, consistent time series of prices for specific products over two decades do not exist.