Income Growth, Urbanization, and Food Demand in China

A complete demand system is estimated separately for urban and rural residents using a two-stage AIDS-QUAIDS model and pooled provincial and time-series data from 2000 to 2010. The estimated models are then used to project China’s rural and urban food demand in the future. Results suggest that with the continued rise in per capita income and urbanization rate, the budget shares of food grains and vegetables are expected to decrease while the shares of foods with animal origin and other high-valued foods are expected to rise. Moreover, urban residents will dominate the food demand in China