At least back in 2006, Beijing was more polluted than most other Chinese cities (a notable exception be Lanzhou, which is ridiculous). This is in part due to the huge population, but also due to the geography (there are mountains nearby that trap a lot of pollutants, like LA -- and the Gobi desert is close enough to blow a lot of stuff in as well).
I lived pretty well there on about $700 / month (going out and with a 2 bedroom apartment).
"The best way to understand Beijing's size is to visualize what Manhattan might be like without the Hudson and East Rivers. Beijing just keeps going. Manhattan is almost 23 square miles. Beijing is more than 150!... Given the size, you can probably imagine the traffic. It's like Los Angeles without interstates, at rush hour, in the rain. It's impossible to get anywhere quickly. I was warned before my trip that traffic would be worse than anything I'd ever seen, and it was. One evening, it took our crew nearly two hours to go about eight miles... Had the Olympics been held last August, the air quality in Beijing would have been in violation of the World Health Organization standard every single day..."
I lived pretty well there on about $700 / month (going out and with a 2 bedroom apartment).