The Buying Power of One Dollar, Pound, or Renminbi

When comparing product prices Chinese-Americans generally like to convert USD to RMB before comparing prices to those in China. By calculating prices in this manner some products seem to be overpriced and some under priced. In the United States most families have a yearly income of $45,000. China which is steadily growing will have average families receiving income at this level very soon. If both countries have families with an average income of $45,000 then when it comes to comparing prices there should not be a conversion. The incomes can be compared with a one to one ratio and so should the prices.

Interesting enough the product prices in America are the same in Europe. Even with the conversion from USD to English pounds or other European currencies the prices show one USD has the same buying power as one English pound, although incomes in Europe are not higher than ones in the US, their prices top prices in the US.