Why is the purchasing power of the RMB so strong? A key reason is that the cost of local labor is super cheap. In Shenzhen, a 20 RMB taxi ride can take you really far. In Hong Kong, just stepping out and grabbing a cab costs several hundred HKD. Driving for ride-hailing services in Shenzhen barely earns you 5,000 RMB a month. In Hong Kong, driving Uber can make you around 40,000 HKD a month. If you work the same crazy overtime hours as in mainland China, driving 16 hours a day, it’s not even an exaggeration to say you could make 80-100k HKD a month. That’s why now over 1 million Hong Kongers head to Shenzhen every week. They’re going there to spend money. Earning Hong Kong wages and spending in Shenzhen is basically geographic arbitrage. They’re paid in “USD-equivalent” salaries, but they’re using “RMB-powered” labor.