Beijing Index:

In 2019, a McDonald’s Big Mac cost 21RMB in China and 5.74USD in the United States. The implied exchange rate for this price differential is 3.66. The difference between this and the actual exchange rate between the RMB and the USD in 2019, 6.88, suggests the Chinese yuan is 46.9% undervalued.¹The Big Mac Index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a hamburger) in any two countries.