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Abstract

The recent rural reforms in China have had great effects on agricultural production and productivity as well as rural household consumption. While much has been written on production and productivity effects of these reforms, very few Chinese studies have attempted to analyze the changes in rural consumption patterns. This paper uses a dynamic AIDS model to estimate various food demand parameters for Chinese rural households using rural household survey data recently released by the China State Statistical Bureau. The results show that all important food commodities including rice, wheat, coarse grains, vegetables, meat, tobacco and alcohol have positive expenditure elasticities. Rice, wheat and coarse grains are necessities, while meat, vegetables, alcohol and tobacco are luxuries. The expenditure elasticities for rice, coarse grains and tobacco are declining, but those for wheat, meat, vegetables and alcohol are increasing. As per capita income rises and population increases, the demand for these items will continue to increase. Therefore, China must continue to increase its food production by a greater rate in the future in order to avoid food shortages.

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