China Central Television, a Chinese state-run medium, claimed that the price of Starbucks coffee in China is higher than other countries’ prices. It is true that the prices are higher for Chinese citizens compared to that of other countries. This is not, however, a good reason for mass media to criticize a company just because of its goods’ market prices. Some people might think that China’s government wanted to take advantage of this issue and use state-run media to compel a foreign company to lose its status in China in order to intervene in the market. It might be a probability. However, we may be able to infer more than that from the critics.

According to reports by CCTV and CNN, the price of a cup of medium-size latte is 27 Renminbi, the official currency of China, which is equal to $4.40 in Beijing. The same-size latte is equivalent to $4 in London and $3.20 in Chicago. It seems that there is not a large price difference in those places. However, when we analyze the average income of the middle class between the Chinese and Americans, the price gap between the countries’ Starbucks is more alarming.

The average household income of the middle class in China is equivalent to $9,000 per year compared with America’s average of $46,828 according to CNN and TheRichest.com. This difference in the middle classes in China and America explains why CCTV criticized Starbucks. China’s GDP is the second largest in the world, but its GDP does not transfer to the average income of the Chinese people. It is obvious that the government is wealthy instead of the citizens.

Many people treat Starbucks as a symbol of luxury in China. People go to Starbucks to not only buy a cup of coffee but also to demonstrate their economic strength and social status. Starbucks highlights the gap between the Chinese and Americans as well. The things Americans treat as necessities, the Chinese people treat as luxury goods.

The essence of the free market is that the market determines the commodities’ prices. In other words, supply and demand determines the prices of goods. Starbucks has chains in China without any support from America’s government or China’s government. If no one wants to buy coffee from Starbucks, Starbucks can decrease its prices or even get out of the Chinese market. CCTV still used incorrect explanations, such as cost determines the value of commodities, to explain the free market. Many people still use these incorrect explanations to explain the free market and even judge this economic phenomenon by moralities.

Chinese people and CCTV still lack knowledge about capitalism and therefore do not understand the free market. Traditional thinking and Marxist economics restrict them. Western countries have developed capitalism for more than 400 years. It is still a new concept for China’s government and the Chinese people. If the Chinese government, Chinese media and Chinese people cannot understand capitalism fully, China’s economic achievement will disappear, and China will not become a modern nation-state.