China underwent tremendous agricultural market reforms in the 1990s prior to its accession to the WTO, drastically decreasing domestic market distortions. We ask whether these reforms have led to agricultural commercialization and have improved the welfare of rural Chinese households measured by household average share of calories from non-staples. We identify the effect of local market liberalization by calculating the degree to which local markets reflect world prices. We find that farmers have commercialized in response to market liberalization and that particularly for food insecure households, commercialization has increased household nutrition. The commercialization of field crops and horticulture increases nutrition while the commercialization of livestock does not.