With China's admission into the WTO, there is the potential for dramatic increases in U.S. agricultural exports to China. As China's economy continues to develop, there is general consensus that there will be an associated change in the population's diet. Currently, dairy products account for a small proportion of total food consumed, but that has been increasing in importance over the last two decades. As Chinese markets become more open to U.S. food products, it is important that U.S. manufacturers and traders obtain a better understanding of the determinants of food expenditures in China. This paper addresses the question of how changes in household income may impact food demand in general and dairy products in particular.