"Although the Chinese government has allowed the renminbi to appreciate steadily against the US dollar and food and oil prices in China have been rising, Beijing's jump up the ranking is largely due to Japanese locations becoming so much cheaper because of the weaker yen," said Lee Quane, ECA's regional director for Asia. The dollar is currently trading at around 102 yen from 80 yen levels last year.
"Nevertheless, living costs in Chinese locations have increased in recent years, making China a more expensive location than some of its neighbours for companies looking to set up operations in the region," Quane added in a statement.
In the current ranking of the 10 costliest cities in Asia, Tokyo and Beijing are followed by Nagoya, Shanghai, Yokohama, Seoul, Osaka, Hong Kong, Singapore and Guangzhou.
Hong Kong overtook Singapore for the first time since 2010 due to the recent weakening of the Singapore dollar. Globally, Singapore is ranked at 30th position, two notches below Hong Kong.
Caracas was named the most expensive city in the world for expatriates owing to a sharp jump in living costs amid economic turmoil in Venezuela, ECA said.
"However, this may be short-lived, as pressure is building on the (Venezuelan) currency, which could well be devalued in the near future," ECA International said.