A few weeks ago a friend of mine living in Shanghai went to Singapore for work and came back with two suitcases of new clothes and shoes. As soon as she got onto the phone with me, she started to rave about how cheap shopping is in Singapore and compared with Shanghai, Shanghai is super expensive! For instance, 4 people's decent breakfast in Singapore only cost 7 Singapore dollar; while in Shanghai similar composition would cost 200RMB; a skirt in Singapore is only about 50 Singapore dollar, while similar skirt in Shanghai is about 1000RMB.
I tried to find out the reason behind the high prices for some food and clothing in Shanghai. Firstly, my friend is actually one of those snobs who like western food and imported stuff more than local food and clothing. So we are talking about prices for western style food and imported clothing in China here.
Those western food restaurants or coffee shops are obviously all overpriced. For example, a normal coffee in Starbucks is about 25RMB; some normal ice cream in Haggen Daz is about 40RMB.
Western style food and drinks are always positioned for high market in China where people believe western style food is something rather luxurious than just common everyday food(like Chinese food) . This is like the discussion between chicken and eggs, who comes first no one knows. Is that because Chinese believe western style food should be more expensive somehow, so when they priced the food accordingly or is that because western food is priced high first so that Chinese people get used to it? I can't answer the question.
The thing is in Singapore, having coffee, orange juice and toast for breakfast can't be more normal. There is no reason to charge a skyhigh price for those everyday local food. While in China, a couple vegetable buns won't cost you more than 2RMB because that is local Chinese food.
For imported clothing, I think one of the reasons is the same as food - overpriced. The other reason might have something to do with the tariff for imported textile items and luxurious items. As far as I remember, China always charge a higher rate of tariff for imported luxurious items. But how to define luxurious items in China is another thing. A normal pair of shoes in Singapore or Australia might be classified as luxurious item in China. Consequently those pretty clothing and shoes that my pretty friend likes are all unfortunately classified as luxurious goods, therefore, they are charged a higher rate of tariff.
Another side of the story about how expensive living in Shanghai is that another friend of mine living in Shanghai went to HongKong not long ago for a holiday. She only paid about 1200RMB for a guided tour which included return tickets from Shanghai, 5 days accommodation in 5 star hotel (normally 1000RMB a day for a twin share room in that hotel), 5 days guided tour in HK and 5 day's meals. I couldn't believe it - it is dirt cheap! She told me that the government is actually compensating the tourist operators in order to encourage tourists to travel and do shopping in HK.
As Shanghai is welcoming more westerners everyday, there will be more "westernly" priced goods and services appearing. No matter who you are, if you eat Chinese local food and shop for local goods, it will be always cheaper than maintaining a western style of life in China. I am sure about it!