In the 1990s, prior to its accession to the WTO, China dramatically reduced market distortions in its agriculture. We use panel data of 10,488 households from 1989 to 2000 and ask whether these reforms improved the welfare of rural Chinese households measured by the share of calories from non-staples (SCNS). We identify the effect of market liberalization by calculating the degree to which local markets reflect world prices. We find that market liberalization enhances both undernourished and nourished farmers' nutrition by increasing their value of agricultural production and off-farm income. Market liberalization is particularly beneficial for horticulture producers and remote, inland provinces.