Economic 

Research 

Report 

Number 8

United States 

Department 

of Agriculture

Economic 

Research 

Service

Fred Gale, Ping Tang, 

Xianhong Bai, and Huijun Xu

Electronic

Report

Commercialization of 

Food Consumption in 

Rural China
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Commercialization of food consumption in rural China.

 (Economic research report (United States. Dept. of 

 Agriculture. Economic Research Service); no. 8)

 1. Food consumption—China. 

 2. Consumer behavior—China. 

 3. Rural population—China.

 4. Diet—China. 

 5. Grocery shopping—China. 

 I. Gale, Fred.

 II. United States. Dept. of Agriculture. Economic 

 Research Service. 

 III. Title.

TX360.C6
United States

Department

of Agriculture

www.ers.usda.gov

Electronic Report from the Economic Research Service

Economic

Research

Report 

Number 8 Commercialization of Food

Consumption in Rural China

Fred Gale, Ping Tang, Xianhong Bai, and Huijun Xu

July 2005

Abstract

Rural households in China have traditionally consumed food mostly grown on their own

farms. While they continue to rely on self-produced grains, vegetables, meats, and eggs for

a large portion of their diet, rural households are now purchasing more of their food as they

enter the mainstream of the Chinese economy. Cash purchases of food by rural Chinese

households increased 7.4 percent per year from 1994 to 2003. Consumption has shifted

from self-produced to purchased food at a rate faster than can be explained by income

growth or changes in other household characteristics. The move away from self-produced

food is associated with lower consumption of staple grains, the most important selfproduced food in rural Chinese diets. Food consumed away from home is one of the fastest

growing categories of rural household expenditures, doubling in budget share from 1995 to

2001. Commercialization of food consumption is diversifying Chinese diets, broadening

food markets, and creating new opportunities for retailers and product distributors.

Keywords: China, food, consumption, expenditures, rural, commercialization, subsistence agriculture, Engel analysis.

Acknowledgments

This report is a collaborative project between the U.S. Department of Agriculture (USDA)

and China National Bureau of Statistics, funded in part by USDA’s Emerging Markets

Program. The authors wish to acknowledge the guidance and contributions of Zude Xian,

Zhiquan Xu, Laiyun Sheng, Junxiong Yang, and Liquan Peng of China National Bureau of

Statistics and Praveen Dixit and Francis Tuan of USDA’s Economic Research Service

(ERS). Collaborators Wen S. Chern and Wenye Yan of the Ohio State University also made

important contributions to this project. The authors received helpful comments on the

manuscript from Wen Chern, Frank Fuller, Mike Goettl, Bryan Lohmar, Anita Regmi, and

Francis Tuan. Finally, we appreciate the editorial assistance of John Weber and the design

and layout skills of Wynnice Pointer-Napper, both of ERS.
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Chapter 1

Self-Produced Food Minimizes Expenditure . . . . . . . . . . . . . . . . . . . . . .3

Most Grain and Vegetables Consumed Are Self-Produced . . . . . . . . . . . .4

Even High-Income Households Rely on Self-Produced Food . . . . . . . . .5

Eastern Provinces Are Most Commercialized . . . . . . . . . . . . . . . . . . . . . .6

Self-Produced Food Meets Basic Nutritional Needs at Low Cost . . . . . .7

Chapter 2

Commercialization of Rural Food Consumption . . . . . . . . . . . . . . . . . .12

Cash Expenditures Rising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

More Purchased Food, Less Self-Produced Grain . . . . . . . . . . . . . . . . .12

Low-Income Households Commercialized Fastest . . . . . . . . . . . . . . . . .13

Chapter 3

Household Expenditure Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Cash/Noncash Food Expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Cash Expenditure Elasticities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Summary of Household Expenditure Analysis . . . . . . . . . . . . . . . . . . . .24

Chapter 4

Implications of Rural Food Commercialization . . . . . . . . . . . . . . . . . . .26

Emergence of the Rural Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Adjustment in Crop Plantings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

More Food Enters Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Rising Calorie and Fat Intake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Appendix—China Rural Household Survey . . . . . . . . . . . . . . . . . . . . . .32

Appendix Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

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Contents
Many analysts anticipate that China’s changing food consumption patterns

will affect world agricultural trade and create new export opportunities for

farmers in the United States and other countries. Much of the attention is

focused on the emerging consumer class in China’s cities, but a careful

assessment of China’s food and agricultural markets requires an understanding of rural food consumption patterns as well. The rural population—

historically about 80 percent of the total but now just over 60 percent—has

historically been isolated from the urban economy, mostly engaged in semisubsistence farming with relatively little cash income available. 

What Is the Issue?

Much of the food in China is consumed on the farms of households who

produce it. Consumption of self-produced food is a key difference between

rural and urban food consumption and is a factor often ignored in studies of

China’s food markets. Though China’s rural households carry on the tradition

of growing most of their own food, as they enter the mainstream of the

country’s economy, they are purchasing more of their food than ever before.

With its vast size, China’s rural population is thus emerging as a huge viable

market capturing the attention of food and agricultural industries in the United

States and other countries. The addition of tens of millions of consumers into

China’s food system will likely have an effect on world markets. 

What Did the Project Find?

Rural households minimize their expenditure on food by relying on selfproduced grain and other foods to meet most of their basic energy and

protein requirements. The cost of self-produced grain is just a fraction of the

cost of purchased food, so consuming self-produced food frees up limited

cash to spend on nonfood items, such as housing and school fees. China’s

rural households consume an estimated 2,600 calories per day with annual

food expenditures of just $107.

While rural households in China show a persistent reliance on consumption of

self-produced food, trends show a rise of 7.4 percent per year in commercialization, or cash purchases, of food from 1994 to 2003. Over the period,

consumption of self-produced grain and vegetables declined and cash

purchases of food rose at rates faster than can be explained by income growth. 

Commercialization is most advanced among households with relatively high

incomes and households in the more developed eastern provinces. However,

even households with relatively high incomes self-produce most of the grain

and vegetables they consume.

Food’s share of rural household budgets in China is shrinking as rural residents

spend proportionally more on school fees, housing, heath care, transportation,

communications, and household goods. However, expenditures on food

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Summary
consumed away from home in restaurants and cafeterias are one of the fastest

growing items in rural budgets, doubling in share between 1995 and 2001. 

Analysis of household expenditures also reveals that the shift from selfproduced to purchased food cannot be explained by income growth or

changes in other household characteristics. The commercialization of rural

food markets may be attributable to factors that are difficult to measure,

including improved communications, transportation, increased interchange

between rural and urban populations, increased numbers of rural food stores

and restaurants, and a shift from subsistence agriculture to cash crop

production. The commercialization trend is integrating rural areas into larger

regional and national markets, and food retailers and distributors are beginning to include the rural population in their marketing plans.

How Was the Project Conducted?

This study analyzes patterns of food consumption and expenditure using

data from an annual rural household survey conducted by China National

Bureau of Statistics. The analysis uses both published and unpublished data

to provide a glimpse of China’s rural households not previously documented. Trends analyzed include rural food expenditure and consumption

patterns from the early 1990s to 2003, a period of rapid change and development of markets in China’s rural economy. Econometric analysis of

household survey records from three Chinese provinces for the years 1995

and 2001 helped show how expenditures vary across households at different

income levels.

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Many analysts anticipate that changing food consumption patterns in China

will create new export opportunities for U.S. food and agricultural products

(Hsu, Chern, and Gale). Much of the attention is focused on changes stemming from the emerging consumer class in China’s cities, but a careful

assessment of China’s food and agricultural markets requires an understanding of changes in rural food consumption patterns. 

Rural residents make up the majority of China’s population, and their food

consumption patterns differ sharply from those of urban residents. The rural

population—historically about 80 percent of the country’s total but now just

over 60 percent—has historically been isolated from the urban economy,

mostly engaged in semi-subsistence farming. With relatively little cash

income available, rural families traditionally have consumed mostly food

they have grown themselves. Consumption of self-produced food is a

distinctive characteristic of rural food consumption and is often overlooked

in analyses of China’s food markets. Many analyses assume that all households purchase food with cash, when, in fact, much of the food in China is

consumed on the farms by households who produce it. 

Consumption of self-produced food remains prevalent in rural areas, but

rural consumers are now purchasing more of their food. Since the 1980s,

China has liberalized its agricultural economy, promoted interregional trade,

and improved transportation, communication and market infrastructure,

making it easier for rural residents to sell and purchase food (Gale; Gilmour

and Gale). Increased rural-urban migration and income growth associated

with off-farm work have given rural consumers increased purchasing power.

China’s rural population is now emerging as a vast potential market that is

capturing the attention of retail businesses and product distributors. 

This study investigates how food consumption and expenditure patterns of

China’s vast rural population are evolving in response to changes in the

Chinese economy. A focus of the report is analysis of consumption of selfproduced food by rural households, in particular, the degree to which rural

consumers are shifting from reliance on self-produced food to purchased

food as their cash incomes and expenditures rise. The report also examines

rural household expenditure allocations among different food and nonfood

categories and the household characteristics that influence such expenditure patterns. 

This study analyzes patterns of food consumption and expenditure using data

from the annual rural household survey conducted by China’s National

Bureau of Statistics (see appendix). The analysis uses both published and

unpublished data to provide a glimpse of rural households that has not been

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Commercialization of Food

Consumption in Rural China

Introduction
previously available. Rural food expenditure and consumption trends analyzed

in this report cover the early 1990s to 2003, a period of rapid change and

development of markets in the rural Chinese economy. Econometric analysis

of household survey records from three Chinese provinces captures variations

in expenditures across households at different income levels.

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China’s rural population spends remarkably little on food, yet it is reasonably well-fed. Food spending by households in rural China averaged just

886 yuan ($107) per person in 2003, the equivalent of just 2.5 yuan (30

cents) per day. By comparison, per capita food expenditures in urban China

were more than double the rural average, at 2,417 yuan ($292), and U.S. per

capita expenditures were far higher ($5,465 for urban households and

$4,739 for rural households in 2002). 

Such low levels of food expenditure suggest extreme poverty, yet rural

people in China are generally not malnourished. The average caloric intake

for rural Chinese persons was estimated at about 2,600 calories per day in

2003 (China National Bureau of Statistics, 2004b), above the minimum

daily requirement. 

Food expenditures, while low in absolute terms, are still the largest component of household budgets in rural China, accounting for nearly half of

expenditures (fig. 1). The food share of expenditures in rural China is less

than the average in low-income countries, but higher than in urban China

and more than three times the food budget share in the United States.

Clearly, food represents a major expense for households in rural China and

likely influences their spending on other items. 

How do China’s rural citizens subsist on such low food expenditures? The

price of food in rural China is very low, with many items selling for prices

one-half, one-fourth, or even one-tenth the price of similar food items in

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Chapter 1

Self-Produced Food 

Minimizes Expenditure

Figure 1

Food, beverage, and tobacco share of household expenditures, 

various countries

Percent

Sources: Compiled by USDA's Economic Research Service from China National Bureau 

of Statistics (2004a); Seale et al.; and U.S. Bureau of Labor Statistics.

Note: China data are for 2003. U.S. data are for 2002. Other data are for 1996.

Urban United States

Rural United States

High-income countries

Middle-income countries

Low-income countries

Urban China

Rural China

13

14

17

35

53

37

46
developed countries. Also, the typical diet in rural China consists largely of

inexpensive food grains and vegetables, with relatively little meat, packaged

food, or restaurant meals. 

Household food self-sufficiency is another major strategy for minimizing

rural household food expenditures in China. Nearly all rural Chinese households produce basic food grains, and most also produce vegetables and raise

hogs or poultry, a large portion of which they consume on-farm.1 Consumption of self-produced food frees up limited cash income for nonfood

purchases. In 2003, cash accounted for only 62 percent, or 552 yuan ($67),

of average rural food expenditures. The remaining 38 percent were noncash

“expenditures”: the imputed value of food grown by the farm family itself

plus the value of food obtained through informal exchange or other nonpurchased sources (fig. 2).

The value of noncash expenditures is imputed by China National Bureau of

Statistics statisticians using estimated farm-gate producer prices. These prices

are lower than retail purchase prices, so the noncash share of expenditures may

actually understate the degree of reliance on self-produced food. 

Food self-sufficiency allows China’s rural households to meet their basic

nutritional needs without having to rely on nonexistent or risky markets

(Von Braun). Huang and Rozelle suggest that lack of market development

constrained the consumption choices of Chinese rural households. In remote

rural areas, transportation costs may discourage participation in markets by

driving a wedge between effective purchase prices and sale prices (Yan).

Lack of off-farm cash-generating employment opportunities also can force

households to rely on self-produced food. 

Most Grain and Vegetables Consumed 

Are Self-Produced

ERS estimated the self-produced (noncash) quantity of major food items

consumed by rural households in China using data on per capita consumption and purchases reported by China’s Rural Household Survey. The survey

reports the quantity consumed and the quantity purchased for each major

1 ERS analyzed data from China’s

1996 agricultural census and found

that 93 percent of rural households

produced grain, over 60 percent grew

vegetables, and most also raised hogs

or poultry. Most farms grow vegetables and raise hogs and chickens on a

very small scale. 

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Figure 2

Rural food expenditures, cash and noncash, 2003

Cash–62%

Source: Compiled by USDA's Economic Research Service from China National Bureau 

of Statistics (2004b).

Noncash–38%
food item. Assuming that the quantity consumed is the sum of the quantity

purchased and the quantity self-produced, ERS calculated the self-produced

quantity as:

Self-produced = Consumed – Purchased. (1)

The degree of reliance on self-produced food is estimated by expressing the

quantity of self-produced food as a percentage of the quantity consumed.

The result of this calculation using rural household data for 2003 is shown

in table 1.2

Two food categories make up the bulk of food consumed: grains and vegetables. Over 80 percent of grains, beans, and potatoes consumed were selfproduced; and 70 percent of vegetables consumed were self-produced (table

1). The average rural household member consumed 184.8 kg. of selfproduced grains, beans, and potatoes and just 38.9 kg. of purchased grain.

Consumption of self-produced vegetables averaged 75.3 kg. per person, and

purchased vegetables averaged 32.1 kg. 

Other important food items were also largely self-produced, including milk

(68 percent), beef and mutton (54 percent), poultry and eggs (48 percent),

pork (44 percent), fruit (39 percent), and edible oil (32 percent). In contrast,

sugar, alcohol, tobacco, and fish products were mostly purchased.

Even High-Income Households Rely on

Self-Produced Food

Households at all income levels in rural China rely heavily on self-produced

food. In 2001, the poorest rural households (those in the bottom 10 percent

ranked by total household expenditure per capita) in a sample from Jiangsu,

2 ERS prepared tabulations similar

to those shown in table 1 using an

unpublished rural household survey

conducted in 2000 by academic

researchers from the Universities of

Toronto and California and the China

Academy of Sciences. The 2000 survey findings were comparable to ERS

findings shown in table 1, with about

80 percent of grain and vegetables, 40

percent of pork, and half of edible oil

consumed in rural China self-produced. The 2000 survey also showed

that informal exchange was small.

About 10 percent of households in the

2000 survey obtained rice, flour, or

noodles through informal exchange,

but the amount was equivalent to

about 1 percent of grain consumed by

the sample as a whole.

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Table 1

Source and quantity of food consumed by rural household 

members, 2003

Self-produced

Food item Consumed Purchased Quantity Share

––––––––––– Kilograms ––––––––––– Percent

Grains, beans, and potatoes 223.7 38.9 184.8 83

Vegetables 107.4 32.1 75.3 70

Milk 1.7 0.6 1.2 68

Beef and mutton 1.3 0.6 0.7 54

Poultry and eggs 8.0 4.2 3.9 48

Pork 13.8 7.8 6.0 44

Fruit and nuts 18.3 11.2 7.1 39

Edible oil 6.3 4.3 2.0 32

Fish, shrimp, and mollusks 4.7 3.9 0.8 16

Sugar 1.2 1.2 0.0 0

Alcohol 7.7 7.2 0.5 6

Note: Self-produced quantity is the difference between the quantity consumed and the quantity

purchased. The share self-produced is the quantity self-produced as a percentage of quantity

consumed.

Source: Compiled by USDA’s Economic Research Service from China National Bureau

of Statistics (2004b).
Henan, and Heilongjiang Provinces averaged just 169 yuan ($20) in cash

food expenditures and 206 yuan ($25) in noncash food expenditures (fig. 3).

Wealthier households had high cash and noncash food expenditures, but

cash expenditures were particularly high. The wealthiest rural households

(those in the top 10 percent ranked by total household expenditure per

capita) averaged 778 yuan ($94) in noncash and 1,016 yuan ($123) in cash

food expenditures. Cash accounted for 46 percent of food expenditures for

the poorest rural households and 57 percent for the wealthiest. While there

is a sharp decrease in reliance on noncash food sources as income/expenditure rises, it is noteworthy that even the wealthiest rural households relied

on noncash sources for nearly half of their food expenditures.

Eastern Provinces Are Most

Commercialized

Rural households in western provinces of China rely mostly on selfproduced food, while those in the more developed eastern provinces and

areas near large cities rely mostly on cash purchases of food. In 2003, the

cash share of food expenditures was as high as 95 percent in rural parts of

the Beijing municipality and exceeded 70 percent in other municipalities

and wealthy coastal provinces (fig. 4). Rural households in these regions

have relatively good access to food markets and many receive cash income

from off-farm employment. The cash share of food expenditures was

between 40 and 50 percent for most western provinces and autonomous

regions. Guizhou, one of China’s poorest provinces, had the lowest cash

share of expenditures, at 37 percent. Most central provinces had cash food

expenditures of 55-65 percent. 

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Figure 3

Cash and noncash food expenditures per capita, by level of 

total expenditure, 2001

Source: Compiled by USDA's Economic Research Service from unpublished 

data compiled by China National Bureau of Statistics (1995, 2001).

Note: Households from Jiangsu, Henan, and Heilongjiang Provinces were grouped 

into percentiles based on per capita living expenditures. The 0-10 category includes 

households with the lowest expenditures and 90-100 includes households with the 

highest expenditure. Chart shows average food expenditure for each group. 

Yuan

0-10 10-24 25-49 50-74 75-89 90-100

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

206

169

275

224

345

299

452

415

541

610

778

Cash 1,016

Noncash

Level of total expenditure (percentile)
The regional difference in commercialization is most striking for meats

(table 2). Rural households in eastern provinces purchased 85 percent of the

pork they consumed in 2003, while central households purchased 56 percent

and western households purchased just 29 percent. Eastern households also

purchased a much higher share of their beef, mutton, poultry, and egg

consumption. Consumption of fish products is highly commercialized in

each region.

While rural household consumption of most nonstaple foods is highly

commercialized in the eastern region, consumption of grains and vegetables

is still reliant on self-production. Households in the eastern region

purchased only 19 percent of their grain consumption in 2003, only slightly

higher than the purchased shares in central and western regions. Eastern

households purchased 29 percent of their vegetable consumption, and that

was also higher than the shares in the central (20 percent) and western (18

percent) regions.

Self-Produced Food Meets Basic

Nutritional Needs at Low Cost

ERS estimated rural household energy, protein, and fat intake derived from

purchased and self-produced food items using per kilogram coefficients

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Figure 4

Cash share of food expenditures, by province, 2003

Cash share

(percent)

82 to 95

64 to 75

55 to 61

37 to 50

Sources: Compiled by USDA's Economic Research Service from China National Bureau of Statistics (2004b).

Note: Figure shows cash food expenditures as a percentage of total food expenditures.

Xinjiang

(50)

Tibet

(40)

Qinghai

(40)

Ningxia

(48)

Beijing (95)

Gansu

(47)

Sichuan

(47)

Chong

qing

(45)

Shaanxi

(66)

Shanxi

(64)

Hebei

(67)

Henan

(55)

Hubei (46)

Yunnan

(46)

Guizhou

(37)

Guangxi

(61)

Hunan

(60)

Hainan

(58)

Guangdong (75)

Jiangxi

(56)

Anhui

(60)

Fujian (82)

Zhejiang (84)

Shanghai (86)

Jiangsu (65)

Shandong (67)

Liaoning (65)

Jilin (69)

Inner Mongolia

(58)

Heilongjiang

(74)

Tianjin (89)
obtained from China nutrition experts and per capita consumption and

purchase quantities of various food items. In equation (2), the purchased

quantity of food item i is denoted as Pi

, the self-produced quantity Si and

the energy derived per kilogram from food item i as ki

. The self-produced

share of calories is calculated as:

ERS made similar calculations for fat and protein.3

Based on data for 2003, rural households in China obtained 65 percent of

their calories and 68 percent of protein from self-produced foods. They

obtained just 35 percent of calories and 32 percent of protein from

purchased foods (fig. 5). In contrast, 58 percent of fat comes from

purchased foods. Calories and protein are derived primarily from grains,

which make up the bulk of the diets of rural Chinese households and are

mostly self-produced. Fat intake comes largely from edible oils and pork,

which are mostly purchased rather than self-produced.

Popkin has described a nutrition transition from plant-based diets to more

diverse, higher fat diets taking place in many developing countries. This

transition is reflected in the nutritional content of self-produced and

purchased foods. Traditionally, Chinese households obtained their basic

energy and protein requirements mostly from self-produced grains and

vegetables. As households gain discretionary income, they purchase more

meats, oils, and processed food, which have a higher fat content. This

pattern is also consistent with Popkin’s observation that the traditional

Chinese low-fat diet appears to be a product of poverty rather than healthand nutrition-consciousness. 

The reliance on self-produced grain is likely motivated by the low cost of

achieving basic nutritional intake from this food source. ERS estimates that

the cost of producing enough self-produced grain to provide the average

daily intake of 2,600 calories was just 335 yuan ($40) in 2001 (table 3). The

cash outlays to purchase inputs (such as fertilizer, pesticides, and machinery 

3 The amounts of various foods

consumed away from home in restaurants and cafeterias are not reported by

the survey. Only total spending on

food away from home is available. The

calculations included food consumed

away from home by assuming that

expenditures were allocated to food

away from home in the same shares as

for food at home. ERS did not have

information on the composition of

food-away-from-home expenditures. A

sample survey by Ma et al. showed

that urban households tend to eat a

higher proportion of meat in meals

away from home.

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Table 2

Share of rural household consumption that was purchased,

by commodity and region, 2003

Commodity East Central West

Percent

Beef and mutton 87 46 33

Pork 85 56 29

Fish, shrimp, and mollusks 85 83 80

Fruit 75 64 44

Eggs 70 44 33

Poultry 57 40 32

Vegetables 29 20 18

Grain 19 18 15

Source: Compiled by USDA’s Economic Research Service from China National Bureau

of Statistics (2004b).

 (2) ∑ ( + )

∑ =

i

i

ki Si Pi

kiSi

s
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Figure 5

Source of energy, protein, and fat intake, 

rural Chinese households, 2003

Source: Estimated by USDA's Economic Research Service from China National Bureau 

of Statistics (2004b) and unpublished data.

Note: Estimated by multiplying coefficients developed by China nutrition experts 

by per capita quantities of purchased and self-produced foods.

Percent

Self-produced food

Purchased food

Calories Protein Fat

0

20

40

60

80

100

Table 3

Estimated cost of caloric intake from different food sources, 2001

Annual cost of

Price per Energy 2,600 calories

Food item kilogram1 yield2 per day3

Yuan Calories per kg. Yuan

Self-produced grain 0.89 2,540 335

Cash outlays4 .53 2,540 200

Labor cost

5 .36 2,540 135

Purchased:

Grain 1.60 2,540 600

Pork 9.30 3,950 2,230

Poultry 7.70 2,240 3,260

Eggs 4.30 1,300 3,140

Fish 5.70 660 8,200

1Average calculated using 2001 rural household survey data from Jiangsu, Henan, and

Heilongjiang Provinces. 2 China nutrition department unpublished estimates. 3 Cost = (Price ÷ Energy yield) x 2,600 x 365. 4 Input costs and taxes per kilogram of output of grain calculated from National Development

and Reform Commission data. 5 Labor cost per kilogram of grain output calculated from National Development and Reform

Commission data.

Sources: Estimated by USDA’s Economic Research Service from unpublished data compiled

by China National Bureau of Statistics (2001); National Development and Reform Commission;

and unpublished data.
services) and pay taxes constituted just 200 yuan ($24), while the labor cost

was another 135 yuan ($16). However, most labor requires little or no cash

outlay since it is provided mainly by family members. Family labor has

little opportunity cost since off-farm work opportunities are limited and

work occurs for only a few days at planting and harvest. Thus, rural households may consider only the cash costs of 200 yuan ($24) as the cost of

producing grain for their own consumption. 

An intake of 2,600 calories obtained entirely from purchased grain would cost

600 yuan ($73), three times the cost of obtaining the same number of calories

from self-produced grain. Calories from purchased pork cost over 10 times as

much as those from self-produced grain, and the cost of calories from poultry,

eggs, and fish is even higher. Thus, rural families can obtain their basic caloric

intake from self-produced grain with minimal cash expenditure and a modest

labor input. The scarcity of cash income and the abundance of underemployed

rural labor probably encourage this cash-saving strategy.

ERS estimates average per capita consumption of self-produced grains in

rural China of 185 kg. (see table 1), equivalent to about 1,300 calories per

day, about half of the average caloric intake of rural Chinese people.

Production of 185 kg. of grain requires 89 yuan ($11) in cash outlays for

inputs, 6 days of labor, and just 0.5 mu of cropland (mu equals about onesixth acre). The minimal labor requirements of grain production leave plenty

of labor free for off-farm work or other activities. The average household

cropland holding of 2 mu per person is also adequate to provide household

food grain needs with 1.5 mu available for cash crop, livestock feed production, or other uses (see box, “Household Economics in Rural China”).

Because rural households meet most of their basic nutrition requirements by

consuming self-produced grain, they are able to devote most of their scarce

cash income to expenditures on housing, schooling, transportation, and

other nonfood goods and services. Even households with members

employed off-farm and those with small land holdings can grow grain for

their own consumption. 

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China’s more than 200 million rural households have, on average, four

persons who must be fed, clothed, housed, educated, treated for medical

problems, and provided with other goods and services. A rural household

has limited labor, land, livestock, machinery, and other resources that can

be used to grow food for consumption or to generate cash income by

growing cash crops or working for wages. 

In 2003, rural households averaged three able-bodied laborers and two mu

(one-third acre) of cropland per person. (Under China’s collective land

ownership system, village authorities allocate land to each rural household

based on various criteria, including the number of household members that

must be fed and the number of available farm laborers.) Grain production

requires only 11 days of labor per mu (National Reform and Development

Commission), but off-farm earning opportunities for rural Chinese workers

are limited due to geographic isolation of many villages and a surplus of

rural laborers. Workers are mainly employed in agriculture, but most rural

households have at least one member working off-farm at wages that are

frequently 10 yuan ($1.20) per day. Many households have one or more

members who are able to perform farm labor but do not work off-farm due

to age or child-care responsibilities.

In 2003, the average net income per rural household member was 2,622

yuan ($317), most of which was derived from farming. Average cash

income from wages was 917 yuan ($111). Given limited cash income

availability, the array of household expenditures, and the minimal labor

requirements of grain production, most rural Chinese households rely

heavily on self-produced grain for their diets. 

Household Economics in Rural China

Rural Chinese households at a glance, 2003

Item Unit Average value

Persons per household Number 4

Laborers per household Number 3

Cropland per person Mu 2

Grain yield1 Kg. per mu 350

Grain consumed per year Kg. 224

Self-produced grain consumed per year Kg. 185

Living expenditures per capita Dollars 235

Food expenditures per capita Dollars 107

1 Source: National Development and Reform Commission.

Source: Compiled by USDA’s Economic Research Service from China National Bureau of

Statistics (2004b), except where noted.
While the rate of food self-sufficiency remains high in rural China, it is

falling rapidly as rural consumers gain more income and become integrated into the larger economy. Expanding off-farm employment, ruralurban migration, and the geographic spread of cities are giving rural

people access to cash income and food markets. The share of rural

income received in cash rose from 49 percent in 1980 to 82 percent in

2003, and rural retail sales per capita rose from 127 yuan ($44) in 1980

to 1,400 yuan ($170) in 2003.1 Refrigerator ownership per 100 households rose from just 1.2 to 16 over the period, an indicator of growing

affluence and a sign that rural households are diversifying their diets to

include perishable food.

Cash Expenditures Rising

In 1980, China’s rural households made just 30 percent of their food expenditures in cash. Strong growth in the rural economy during the 1980s led to

an early period of commercialization of rural food expenditures (Huang and

Rozelle; Wu). The cash share of food expenditures was about 45 percent

during the early 1990s and grew to over 60 percent in 2003.

Since the mid-1990s, rural food consumption has been in the midst of a

decade-long period of commercialization. After adjusting food expenditures

for inflation using the retail food price index, ERS finds that cash food

expenditures in rural China grew at an annual average rate of 7.4 percent

from 1994 to 2003 (fig. 6). In contrast, inflation-adjusted noncash food

expenditures declined during the same period. These data suggest that rural

consumers are purchasing more food with cash while consuming less selfproduced food.

More Purchased Food,

Less Self-Produced Grain

Between 1995 and 2003, per capita purchases by China’s rural households

increased for all food items except staple grains (table 4). Increases in

purchases ranged from 30 percent for pork to nearly 300 percent for milk.

Decreases in grain purchases are probably attributed to the general decline

in grain consumption in China. Households also reduced their consumption

of self-produced grain, vegetables, edible oil, and fish products. Households

increased their consumption of self-produced pork, beef, mutton, poultry,

eggs, milk, fruit, and nuts, a trend that likely reflects the increased overall

consumption of these items. Overall, consumption of each of these items

grew 17 percent or more.

1 Retail sales below county level

divided by rural population, not

adjusted for inflation. Values converted

to dollars using official exchange rates

for corresponding years.

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Chapter 2

Commercialization of 

Rural Food Consumption
Low-Income Households

Commercialized Fastest

Between 1995 and 2001, the cash share of food expenditures rose for rural

households at all income levels, but the increase was especially fast for lowincome rural households. The cash share of food expenditures made by the

poorest households (those in the lowest 10 percent of households ranked by

total per capita household expenditure) rose from 30 percent in 1995 to 46

percent in 2001, a gain of 16 percentage points (fig. 7). Over the same

period, the average cash share for the wealthiest households rose just 4

percentage points, to 57 percent. The difference in cash share of food expenditures between households at different total expenditure levels clearly

diminished by 2001. The rising cash share of food expenditures results from

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Figure 6

Real food expenditures: cash and noncash, rural China, 1990-2003

Source: Compiled by USDA's Economic Research Service from China National Bureau 

of Statistics (2004b).

Note: Noncash expenditures calculated by subtracting cash expenditures from total 

living expenditures. Deflated using retail food price index.

Yuan

Cash

Noncash

1990 92 94 96 98 2000 02

0

100

200

300

400

500

600

Table 4

Change in per capita consumption, purchases, and self-production of

food by rural China households, 1995-2003

Change in:

Food item Consumption Purchased Self-produced

Percent

Grains, beans, potatoes -14 -2 -17

Vegetables 2 71 -13

Edible oil 8 74 -40

Pork 30 30 31

Beef and mutton 77 38 134

Poultry and eggs 50 84 25

Milk 167 293 132

Fish and shellfish products 17 57 -25

Fruit and nuts 39 47 27

Note: Based on average quantities consumed and purchased in 1995 and 2003.

Source: Calculated by USDA’s Economic Research Service from China National Bureau of

Statistics, (2004b).
both an absolute decline in per capita noncash expenditures and an increase

in cash expenditures. The decrease in noncash expenditures reflects the

decline in self-produced grain and vegetable production observed in table 4

and a decline in grain prices between 1995 and 2001 (see box, “Volatile

Prices Had Little Effect on Food Consumption”). Rising cash expenditures

reflect increased purchases of most commodities.

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Figure 7

Cash share of food expenditures by household expenditure level, 

1995 and 2001

Source: Estimated by USDA's Economic Research Service using unpublished data 

compiled by China National Bureau of Statistics, Rural Survey Organization (1995, 2001).

Note: Households from Jiangsu, Henan, and Heilongjiang Provinces were grouped 

into percentiles based on per capita living expenditures for each of the 2 years. 

The 0-10 category includes households with the lowest expenditures and 90-100 

includes households with the highest expenditures. Chart shows average cash share 

of food expenditures for each group. 

Percent

1995

2001

 0-10 10-24 25-49 50-74 75-89 90-100

0

10

20

30

40

50

60

70

Level of total expenditure (percentile)
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Chinese food prices went through a decade-long cycle of inflation and

deflation during 1993-2003. The years 1993-96 were a period of general

inflation in the Chinese economy, but food prices rose faster than other

prices. Retail grain prices tripled and meat prices more than doubled

during this period. From 1997 to 2000, food prices generally fell, with the

decline sharpest for grains. Prices were generally stagnant from 2000 to

2003. Prices began rising sharply again in late 2003 and early 2004, with

grain prices surging by 30-40 percent.

The effect of price changes on rural consumers is complex since they are

consumers and producers of food (see Singh et al.; Tong et al.; and Yan).

High prices for farm products reinforce the usual substitution effect of a

price increase by encouraging farm households to sell food products to the

market instead of consuming them onfarm. However, higher food prices also

enrich farmers by increasing their potential income from farm sales. This

income effect potentially increases farmers’ demand for food, offsetting the

substitution effect. Consequently, the effect of higher food prices on food

consumption by rural households could be either positive or negative,

depending on whether the substitution effect or income effect is larger. 

The offsetting income and substitution effects suggest that rural household

food consumption is less sensitive to price changes than is urban consumption. Recent trends in rural grain consumption in China have not been

strongly influenced by prices. Per capita grain consumption fell steadily

during 1993-2003, through periods of both rising and falling prices.

Volatile Prices Had Little Effect on Food Consumption

China price trends, 1990-2004

Note: Indexes calculated based on indexes published by China National Bureau of 

Statistics. Indexes reporting year-on-year changes were converted to indices with 

a base year of 1990.

Index (1990=100)

Rural consumer prices

Grain

Meat and eggs

Source: Calculated by USDA's Economic Research Service from 

China National Bureau of Statistics, 2004a.

1990 92 94 96 98 2000 02 04

100

150

200

250

300

350
Food’s share of household spending typically falls as income and expenditures increase, a relationship known as “Engel’s law.” In rural China, the

share of household expenditures attributable to cash food purchases actually

increased slightly from 26 percent in the early 1990s to 28 percent in 2003,

which means that spending on cash food purchases kept up with the 70-

percent real increase in all household expenditures over the past decade (fig.

8). On the other hand, the noncash food share of rural household expenditures fell sharply from over 30 percent in 1993 to under 20 percent in 2003.

The trend in the nonfood share of household budgets was the mirror image

of the decline in noncash food share, rising from around 40 percent in 1993

to over 50 percent in 2003. Thus, rural household spending shifted from

noncash food to cash food and nonfood expenditures. 

To gain a better understanding of these trends, ERS analyzed changing

expenditure patterns of a large sample of rural households for 1995 and

2001 (see appendix). The cross-sectional relationship between various

expenditure categories was estimated for each year to ascertain changes in

relationships. Household-level data enable researchers to identify changes in

different categories of food expenditures as incomes rise and the relationships between household characteristics and expenditure patterns change.

ERS also investigated the effects of household characteristics such as landholdings, family size, presence of children, educational attainment, and

refrigerator ownership on food expenditure patterns.

Finally, ERS investigated patterns of change in different categories of cash

expenditure. Do some food items attract proportionately more expenditures

than others as expenditures rise? Which nonfood categories consume the

most expenditure?

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Chapter 3

Household Expenditure Analysis

Figure 8

Chinese rural household budget shares, 1990-2003

Source: Compiled by ERS from China National Bureau of Statistics, 2004b.

Percent

Cash food

Nonfood

1990 92 94 96 98 2000 02

0

10

20

30

40

50

60

Noncash food
Model

ERS employed the Working-Leser model, a simple model with desirable

properties which expresses the household’s budget share of each item, j, as a

linear function of the logarithm of household expenditures (Wu; Seale et

al.). The model provides information on the tendency of households at

different income levels and with different characteristics to allocate expenditures among different budget categories. Demographic characteristics were

added to the model. We did not include prices as explanatory variables.1

ERS estimated the following regression model:

wij = aj + bjLn(Yi) + Σk cjkXik + ei (3)

where wij is the share of expenditures made on category j by household i

(pj

qij/Yi),

Yi is per capita total living expenditure made by household i,

Xik are household characteristics,

ei is a random error term,

aj

, bj, cjk, are parameters to be estimated for each expenditure item j. 

When bj

=0, the item’s budget share remains constant as expenditures

increase. If bj

<0, the item’s budget share falls as expenditures rise and bj>0

indicates that the item’s budget share increases. Since the budget shares

always sum to 1, an increase in one item’s budget share must be offset by a

decreasing share for other items. 

According to this model, the expenditure elasticity for item j, nj

, is

expressed as:

nj = 1 + (bj

/wj). (4)

The falling budget share for noncash food expenditures observed in figure 8

suggests that this expenditure category has a low (possibly negative) expenditure elasticity, while the stable cash food expenditure share suggests an

expenditure elasticity of approximately 1.0 for cash food purchases. The

rising budget share for nonfood expenditures suggests an elasticity

exceeding 1.0 for the nonfood category.

The model also includes household demographic characteristics, Xik, that

may affect food expenditures. These characteristics include the area of land

cultivated by the household, the area of the household’s family plot, refrigerator ownership, number of family members residing in the household, the

number of small children (under age 6), the number of school-age children

(ages 6-15), and the education level of laborers in the household. 

First, ERS estimated the model using three expenditure categories—cash

food, noncash food, and nonfood—to compare the expenditure elasticities.2

The model used total household living expenditures as an explanatory variable. It was expected that cash food spending would have a larger expenditure

elasticity than noncash food spending. The time series analysis in the previous

1 The effect of prices on food consumption is complex because rural

households are both consumers and producers of food (Singh et al.; Yan). See

box, “Volatile Prices Had Little Effect

on Food Consumption,” for details.

2 ERS did not separate nonfood

expenditures into cash and noncash

spending since our interest is mainly

in food expenditures and noncash

spending for nonfood items was small.

Noncash expenditures on nonfood

items averaged 57 yuan ($7) per person in 2001, most of which was

devoted to housing.

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section suggests that noncash food spending may have a negative expenditure

elasticity. ERS also investigated changes in elasticities over time. 

Second, ERS investigated allocations of cash expenditures among different

food and nonfood categories. Engel functions were estimated for cash food

expenditure items using total cash expenditure by the household as the independent variable. This analysis provided insight on the types of food that are

purchased most frequently as China’s rural households increase their participation in cash markets. Food expenditure elasticities were compared with

nonfood elasticities to provide perspective on the role of food expenditures

in households’ cash budgets. Finally, ERS examined the association between

various expenditures and household characteristics. 

Cash/Noncash Food Expenditure

The analysis compared expenditure allocations among cash food, noncash

food, and nonfood items by rural households at different income levels.

Results from the 2 years studied show how expenditure relationships may

have changed during the period of rapid commercialization of food

consumption identified earlier in this report. 

The model used household data from Heilongjiang, Henan, and Jiangsu

Provinces for 1995 and 2001. Data for over 9,000 households in the three

provinces were available for each year to estimate budget share equations

for cash food, noncash food, and nonfood expenditures, a total of six equations. F-statistics indicated that the independent variables added significant

explanatory power to the models, and t-statistics indicated that most regression coefficients were significantly different from zero. R2 values were

about .20 for the cash food equations and .35 for the noncash food and

nonfood equations.3

The trends in mean expenditure shares in the sample of households are

consistent with the national data shown in figure 8. The cash food share rose

slightly, the noncash food share fell sharply, and the nonfood expenditure

share rose sharply between 1995 and 2001 (table 5). However, the expenditure coefficients and elasticities estimated from the cross-section data appear

to be inconsistent with the trends in budget shares over time. Between 1995

and 2001, the mean cash food share rose, but the estimate of the cash food

expenditure elasticity is less than 1, suggesting that the budget share devoted

to cash food expenditures should fall as total expenditure rises. The estimated cash food expenditure elasticity was .85 for 1995 and was even

lower, at .77, in 2001. 

Not surprisingly, the noncash food expenditure elasticity is even lower, at

.52. While this elasticity is clearly less than 1 (implying a sharply declining

budget share), it is also significantly greater than 0, suggesting that noncash

food expenditure increases as income rises, as observed in figure 3.

However, the aggregate data for 1996-2003 showed that inflation-adjusted

noncash food expenditures decreased not only as a share of household

budgets, but also in absolute terms (see fig. 6), suggesting that the noncash

food expenditure elasticity would be negative. The nonfood expenditure

elasticity is significantly greater than 1, as expected.

3 Descriptions of variables and

expenditure categories are provided in

appendix table 1. Full results of the

regression estimates are reported in

appendix tables 2 and 3.

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The elasticities obtained from the cross-section analysis under-predict the

growth in household expenditures on cash food and nonfood purchases. For

example, actual cash food expenditures grew 19 percent from 2000 to 2003,

about the same rate as growth in total household expenditures. However, the

cash food expenditure elasticity of .77 estimated from 2001 data suggests

that cash food expenditures would have grown less than 15 percent. Similarly, the model also fails to predict the absolute decline in noncash food

expenditures. The model predicts a falling budget share for noncash food

expenditure, but it does not predict the absolute decline in noncash food

expenditures that actually occurred.

Inconsistency between positive cross-sectional grain expenditure elasticities

and secular decline in grain consumption over time was noted by Huang and

David. The apparent inconsistency can be resolved if changes in other factors

offset the effects of rising expenditures over time. For example, Huang and

David attributed declining grain consumption in Asia to rising urbanization. 

It is likely that the switch from self-produced to purchased food was driven

by structural changes in the rural economy over the past decade—a

phenomenon referred to as “market development” by Huang and Rozelle.

Better access to food markets as a result of better transportation and

communications, greater mobility of the rural population, expansion of food

retail outlets into rural areas, and the rising ownership of home refrigerators

and other factors enabled rural households at a given income level to

consume a larger share of purchased food in 2001 than in 1995.4

Factors representing ease of access to food markets are difficult to observe

and could not be captured well in the model. Between 1995 and 2001, rural

markets and retail establishments increased in number, rural retail sales per

capita rose, rural households received more income in cash, and they

obtained more complementary items, such as electricity, refrigerators, and

other appliances.

The model did include several household characteristics, including refrigerator ownership, migration, land holdings, and family composition, that

4 The sharp decline in grain prices

from their peak in 1996 reduced the

imputed value of noncash grain expenditure (since expenditure equals price

times quantity). However, the fall in

grain prices does not explain the

decline in quantity of self-produced

grain consumed. The fall in grain

prices should have encouraged households to consume larger quantities of

grain, but our analysis indicates that

the quantity consumed—both selfproduced and purchased—decreased

during this period.

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Table 5

Summary of estimated expenditure elasticities for rural households,

1995 and 2001

Expenditure category

Item Year Cash food Noncash food Nonfood

Mean share of household 

expenditure 1995 .254 .377 .369

2001 .284 .239 .477

Expenditure coefficient* 1995 -.037 -.181 .218

2001 -.065 -.115 .180

Expenditure elasticity 1995 .85 .52 1.59

2001 .77 .52 1.38

* = Effect of a one-unit change in Ln (total expenditure) on the expenditure share. All coefficients are statistically significantly different from zero, with 95 percent confidence.

Note: Data are from Jiangsu, Henan, and Heilongjiang Provinces.

Source: Estimated by USDA’s Economic Research Service from unpublished data compiled by

China National Bureau of Statistics (1995, 2001).
provide additional insights about rural household expenditure decisions

(table 6). Households that own refrigerators tend to allocate more of their

budgets to cash food and less to noncash food expenditure. The rise in

refrigerator ownership may be one factor that contributed to rising food

purchases. The number of migrants working outside their home town

increased sharply from 11 to 36 per 100 households between 1995 and

2001. Migrants are associated with a small shift of expenditures from cash

food to nonfood expenditure. Other household characteristics affected cash

and noncash food expenditures in 2001, but changes in these factors do not

explain the shift from noncash to cash food expenditures. Larger households

spend more on nonfood items, households with larger farms tend to

consume more self-produced food, families with school-age children shift

expenditures from cash food to nonfood items, and households with more

educated members tend to spend slightly less on noncash food. 

Cash Expenditure Elasticities

Estimates of cash expenditure shares show shifts in cash food expenditures

among different categories of food and nonfood items as cash expenditures

grow. Patterns of cash expenditures are particularly important since they

determine the growth in market demand for various types of food and

nonfood items.

Food was the largest single use of cash for China’s rural households,

accounting for 45.7 percent of cash expenditures in the sample during 1995

(table 7). Food remained the largest single cash expenditure item in 2001,

but its share of household budgets fell by 4.8 percentage points to 40.9

percent. Clothing had the second-largest share of budgets, 14.1 percent, in

1995, but its share fell by nearly 5 percentage points by 2001. In 2001,

education and recreation (primarily school fees and education-related

expenses)5 accounted for the second-largest share of budgets, at 11.7

percent. Spending on durable goods was low, on average, at 2.5 percent of

budgets. Other expenditures were distributed relatively evenly across other

5 For this study, we made some

changes to the usual categorization of

household expenditures used by China

National Bureau of Statistics (see app.

table 1). A “durable goods” category

was created, which includes electrical

and mechanical devices (usually

included in the education and recreation category) and household appliances and furniture (usually

categorized with household items).

This study’s “education and recreation” category includes primarily

education-related services and goods,

while the “durable goods” category

includes primarily consumer goods.

Utilities and housing were categorized

separately. Nondurable household

items were included in the “other nonfood” category.

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Table 6

Changes in household characteristics and estimated effects on cash and noncash food expenditures

Sample mean Effect on household budget share (2001):

Characteristic Unit 1995 2001 Cash food Noncash food Nonfood

Log of household expenditure Logarithm 7.42 7.57 -.0650 -.1150 .1800

Refrigerator owned Number .04 .12 .0400 -.0310 -.0100

Migrants working outside hometown Number .11 .36 -.0070 -.0020 .0100

Size of household Persons 4.30 4.00 -.0150 -.0090 .0240

Cultivated land area Mu 10.80 12.10 -.0006 .0010 -.0003

Family plot size Mu .70 .30 .0001 .0018 -.0020

Children under age 6 Number .21 .19 -.0040 -.0020 .0060

Children age 6-15 Number .74 .72 -.0200 -.0060 .0260

Persons with senior high school education 

or higher Number .32 .34 .0076 -.0144 .0068

Note: Coefficients were estimated from 2001 data using ordinary least squares. Coefficients in bold type are significantly different from 

zero with 95 percent confidence. Effects for the three budget shares sum to 0 for each characteristic. Data are from Jiangsu, Henan, and

Heilongjiang Provinces.

Source: Estimated by USDA’s Economic Research Service from unpublished data compiled by China National Bureau

of Statistics (1995, 2001).
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Table 7

Estimated effects of rural household characteristics on cash budget shares for food 

and nonfood items, 2001

Cash expenditure category1

Transpor- Other

Health tation and Education goods

Durable and communi- and and

Item Food Clothing Utilities goods Housing medical cation recreation services

Share

Mean budget share:

1995 .457 .141 .045 .0350 .0710 .0560 .0290 .0870 .080

2001 .408 .093 .061 .0250 .0610 .0740 .0760 .1170 .085

Expenditure elasticity .690 .830 .670 1.810 2.370 1.260 1.270 1.250 .930

---------------------------Effects on household budget shares-----------------------------

Regression explanatory variables:

Log cash expenditures -.125 -.016 -.020 .012 .064 .019 .021 .032 -.006

Refrigerator ownership .036 .006 .021 .002 -.015 -.015 .023 -.037 -.001

Persons w/ high school education .0045 .0052 -.00230 -.00110 -.0005 -.0106 .0072 .0125 -.0006

Cultivated land area -.0003 .0001 -.00027 .00005 -.0001 -.0001 .0002 .0001 .0000

Family plot size .0007 -.0009 .00002 .00060 .0028 -.0014 -.0012 -.0024 .0017

Migrants working elsewhere -.011 .000 -.0032 .0028 .007 -.004 .014 -.008 -.001

Children age 7-16 -.034 .008 -.0034 -.0011 -.007 -.007 -.002 .049 -.006

Children age 0-6 -.003 .005 .0014 -.0001 .001 .023 .003 -.027 -.001

Household size (persons) -.025 -.005 -.005 .0015 .013 .002 .003 .011 .000

Cash food expenditure category1

Edible Meats Other Tobacco/ Food away 

Item Grains Vegetables oils and eggs Fish foods alcohol from home

Share

Mean budget share:

1995 .068 .039 .034 .105 .020 .088 .085 .018

2001 .056 .034 .026 .093 .018 .069 .073 .038

Expenditure elasticity .600 .540 .320 .660 .670 .600 .660 1.540

---------------------------Effects on household budget shares-----------------------------

Regression explanatory variables:

Log cash expenditures -.023 -.016 -.018 -.032 -.006 -.028 -.025 .020

Refrigerator ownership -.002 .005 .000 .018 .007 .013 .007 -.012

Persons w/ high school education -.0022 .0001 -.0011 -.0011 .0004 .0017 .0005 .0062

Cultivated land area -.0004 .0000 -.0001 -.0001 .0000 .0000 .0002 .0001

Family plot size .0006 -.0003 .0000 -.0003 -.0001 .0003 .0010 -.0006

Migrants working elsewhere -.003 -.005 -.002 -.004 -.001 -.003 -.005 .011

Children age 7-16 -.003 -.003 .000 -.009 -.002 -.003 -.012 -.002

Children age 0-6 -.004 .000 -.001 .000 .000 .014 -.005 -.006

Household size (persons) -.004 -.003 -.003 -.009 -.001 -.008 -.002 .005

1See appendix table 1 for description of expenditure categories.

Note: Table shows coefficients from Engel regressions. Coefficients in bold type were significantly different from zero with 95 percent confidence.

Data are from Jiangsu, Henan, and Heilongjiang Provinces, 2001. The elasticities for “other food at home” and “other services and nonfood

items” were calculated using the Engel aggregation condition that the elasticities of all items weighted by their budget shares sum to 1. Data are

from Jiangsu, Henan, and Heilongjiang Provinces.

Source: Estimated by USDA’s Economic Research Service from unpublished data compiled by China National Bureau of Statistics (1995, 2001).
categories. Housing accounted for only 6.1 percent of expenditures in 2001.

Most rural Chinese households build or refurbish their own houses, often

with unpaid help from neighbors and friends, on land allocated by their

village. Few rural Chinese families pay rent or mortgages. Housing

expenses may be unusually high in a year when construction takes place and

minimal in other years. 

Engel regressions for various cash expenditure categories indicate that rural

households tend to spend additional cash disproportionately on nonfood

items, such as housing, education and recreation, health care, transportation

and communications, and durable goods.6 Food, clothing, and utilities (electricity, fuel, and water) are “necessities” for which the budget share declines

as expenditures rise. The food cash expenditure elasticity was .69, significantly less than 1. All nonfood items except clothing and utilities had cash

expenditure elasticities of 1 or higher. Housing had the largest cash expenditure elasticity of any major item, at 2.37, followed by durable goods, at

1.81. The elasticities for health, transportation and communications, and

education and recreation were in a narrow range of 1.25 to 1.27. The elasticity for other goods (mainly household goods and services, jewelry,

cosmetics, and funerals and other services) was .93. 

The changes in mean budget shares between 1995 and 2001 are not entirely

consistent with the expenditure elasticities. The mean per capita cash living

expenditure in the sample rose more than 50 percent between 1995 and

2001. The budget shares devoted to food and clothing fell sharply, consistent with their low expenditure elasticities, but the budget shares for housing

and durable goods—the categories with the highest elasticities—also fell.

Price changes and cyclical factors may have influenced the budget shares

for the 2 years. China’s rural economy was growing rapidly during 1995,

but it was in a period of retrenchment in 2001. Rural housing construction

and purchases of “big ticket” durable goods, such as home appliances, televisions, and furniture, may have been unusually low during 2001 due to

slow income growth that year.7 Declining food and clothing prices may have

exaggerated the decline in food and clothing budget shares. Wider availability of electricity, water, and fuels in rural areas and increased fees for

utilities may have boosted the utilities budget share. Transportation and

communication’s share of budgets rose sharply as the rural population

became more mobile, thus paying more bus and rail fares and purchasing

bicycles and scooters. Telephones and other communications systems also

became more widely available in rural China by 2001. 

Food away from home clearly stands out as the one food expenditure item

that is taking a larger share of household budgets as expenditures rise (see

box, “Rapid Growth in Away-From-Home Food Spending”). Between 1995

and 2001, all at-home food items had decreasing cash budget shares and

cash expenditure elasticities mostly in the range of .6 to .8, significantly less

than 1. Food away from home’s share doubled from just 1.8 percent of

expenditures in 1995 to 3.7 percent in 2001. Food away from home’s cash

expenditure elasticity was one of the largest of any category, food or

nonfood. Food away from home’s expenditure elasticity was about equal to

that of durable goods, but the food away from home share of rural budgets

exceeded that of durable goods in 2001. 

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6 Results estimated from data for

1995, but not reported here, were

mostly similar to the estimates for 2001.

7 Data on fixed asset investment

show that rural household investment

increased sharply in 1995 and fell in

2001 (China National Bureau of

Statistics, Rural Survey Organization,

2003).
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The fastest growing component of rural food consumption is food

consumed away from home. During the 1990s, the number of restaurants,

cafeterias, and other food vendors grew rapidly, even in rural areas. It

became easier to travel to towns and cities for restaurant meals, and rural

people ate more meals at factory canteens and other work sites.

In 1995, just 3.2 percent of rural food spending was on food away from

home, but the away-from-home share more than tripled to 11.2 percent in

2003. Away-from-home food was the only component of food spending to

capture a larger share of total household living expenditures during the

period. By 2003, away-from-home-food spending accounted for 5 percent of

all rural household expenditures and 18 percent of rural cash expenditures.

ERS estimates indicate that food away from home has one of the largest cash

expenditure elasticities of any budget item and is associated with migration.

China National Bureau of Statistics household surveys report only total

expenditures on food consumed away from home; no information is

collected about what foods are purchased. The only information about

away-from-home food purchases is available from a survey of urban

consumers conducted by China’s Academy of Sciences (Ma et al.) in 1998,

which showed that away-from-home meals included a higher proportion of

meat (38 percent of away-from-home expenditures) and “other foods” (24

percent) than did at-home meals (28 percent meat and 15 percent “other

foods”). At-home meals include a higher proportion of staple food grains.

Similar consumption patterns likely hold for rural households’ away-fromhome spending.1 Thus, the rising consumption of food away from home

tends to raise demand for meat and other high-value foods and probably

increases intake of fat and protein. 

Rapid Growth in Away-From-Home Food Spending

Rural per capita expenditures on food away from home, 1990-2002

Share of Share of

food cash food Share of all

Year Amount expenditures expenditures expenditures

Yuan –––––––––––––– Percent –––––––––––––– 

1990 8.29 2.4 5.3 1.4

1995 24.88 3.2 7.0 1.9

2000 63.97 7.8 13.8 3.8

2002 89.61 10.6 17.5 4.9

2003 99.28 11.2 18.0 5.1

Source: Compiled by USDA’s Economic Research Service from China National Bureau

of Statistics (2004b).

1 While there is no statistical evidence, casual observation suggests that much food away

from home consumed by rural persons is at worksites as well as restaurants. Rural meals

away from home may include a smaller proportion of meat and high-value foods than do

urban meals away from home.
All at-home food items had decreasing shares of cash budgets between 1995

and 2001, and their cash expenditure elasticities were all .67 or lower.

Among specific at-home food items, meat and eggs accounted for the

largest share of cash expenditures, followed by tobacco and alcohol. While

grain and vegetables accounted for the largest part of the rural Chinese diet,

their share of cash expenditures was relatively low because these commodities were largely self-produced, not purchased. Edible oils (.32) and vegetables (.54) had the smallest cash expenditure elasticities. Other cash

expenditure elasticities of at-home food items ranged from .60 to .67. 

The cash expenditure models also estimated the effects of household characteristics. As in the earlier analysis, refrigerator ownership tends to be associated with greater cash food expenditures. The expenditure equations for

specific food categories show that refrigerator ownership is most strongly

associated with meat expenditures, followed by “other foods” (including milk

and processed foods) and fish. This pattern suggests, not surprisingly, that

households owning refrigerators tend to spend more on perishable foods.

Households with larger cultivated land area tended to make slightly lower

cash expenditures on food, especially on grain, but family plots were not

significantly associated with food expenditures. Households with migrant

members working elsewhere tended to spend more on food away from home

and transportation/communications and less on at-home food items. Households with high school-educated members (most rural people have a junior

middle school or primary school education) tended to spend slightly more

on food away from home and “other food” (dairy, fruit, and processed

foods) and less on health care. Lower health care spending may reflect

access to subsidized health care for more educated persons who are more

likely to be employed by government organizations.

Family composition affects how households allocate their spending. The

presence of school-age children is associated with larger cash expenditures

on education and less on food and most other categories. This reflects rising

school fees in rural areas, which apparently has induced families with

school-age children to divert cash away from other items to pay for education. The negative effect associated with school-age children is strongest for

tobacco and alcohol. The presence of children under age 7 is associated with

greater spending on “other food” (probably reflecting greater spending on

dairy products) and health care. Larger family size is associated with greater

budget shares devoted to housing and education and less devoted to at-home

food and most nonfood items.

Summary of Household 

Expenditure Analysis

This analysis confirms that rural households in China tend to spend a

disproportionate amount of their incremental income on nonfood goods and

services, especially housing and education. The shift in food expenditures

from noncash (self-produced) to cash (purchased) food occurred faster than

can be explained by growth in expenditure. The shift might be explained in

part by rising refrigerator ownership (which boosts spending on perishable

foods) and migration (which shifts spending to food away from home and

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transportation and communications), but most of the change was due to

factors not included in the model, which may have included the spread of

markets and retail stores to rural areas, better transportation, and more information about markets and food products. Spending on food away from

home is one of the fastest rising expenditure items in rural China. In 2001,

expenditures on food away from home exceeded expenditures on durable

goods. Changes in China’s rural economy over time seem to have resulted

in shifting of expenditures to education, transportation, communications,

electricity, water, and fuel. 

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China’s rural population, numbering 700 to 800 million, is beginning to

attract the attention of food retailers. Changing rural food consumption

patterns will also have an effect on cropping patterns. As commercialization

increases, more food will pass through markets instead of being consumed

on the farms where it is grown. Increased consumption of purchased food is

also altering the character of rural diets.

Emergence of the Rural Market

China’s rural population has long been ignored by food retailers but is now

emerging as a viable market. Cash food expenditures by rural households in

2003 totaled over $50 billion. The rural market is beginning to attract the attention of retailers and product distributors who are encountering intense competition for urban Chinese markets. As rural food consumption continues to

commercialize, more food will pass through markets, more food will be

processed, and more value will be added to food products through distribution

and marketing. This, in turn, will create many new market opportunities in

food processing, marketing, and retail. In recent years, supermarket chains

have opened outlets in rural areas, and the Chinese government is actively

encouraging the development of rural retail networks, including the transformation of rural market fairs into modern supermarkets. 

Food consumed away from home is one of the fastest growing segments of

rural household expenditures. Estimated expenditure elasticity of 1.5

suggests that 10-percent annual growth in rural household expenditures

would increase away-from-home food expenditures by 15 percent annually. This suggests double-digit growth in restaurants, cafeterias, street

vendors, and other food service establishments serving the rural population. Per capita expenditures suggest that rural households spend $9

billion per year on food away from home, and a 15-percent growth rate

would generate more than $1 billion in annual growth for the rural food

service sector.

Rural household expenditures on food consumed at home have grown more

slowly than expenditures on other items, but income growth of 10 percent

should lead to at-home cash food expenditure growth of about 7 percent, or

more than $2 billion annually. Sales in rural supermarkets and convenience

stores may grow in double digits as rural households shift their expenditures

away from wet markets, roadside vendors, and informal exchange to modern

food stores. 

While China’s rural market is large, it is widely dispersed over 31

provinces, more than 2,000 counties, and 700,000 villages. Commercialization of food is advanced in the rural areas of China’s east coast, but has

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Chapter 4

Implications of Rural 

Food Commercialization
been slower in many poorer provinces of China’s hinterland. However,

these regional differences are diminishing due to an array of factors,

including construction of new roads, availability of automobile and bus

transportation, dissemination of mobile phones, television, the Internet and

other communications to rural areas, reduced barriers to interprovincial

trade, the emergence of national retail chains, and government policy that

encourages investment and economic development in central and western

provinces.

Adjustment in Crop Plantings

As consumption of self-produced food declines in rural China, farms will

devote less cropland to small-scale rice, wheat, and vegetable production for

family subsistence. The freed-up cropland used for rice and wheat in coastal

areas of China will likely be diverted to produce high-value commercial

crops, such as vegetables, fruits, specialty crops, and concentrated livestock

production. Grain production will likely become more concentrated on

larger farms in central and northeastern regions of China that have a

comparative advantage in producing grain. Greater consumption of livestock

products will require either more land devoted to feed grains and oilseeds or

greater imports of feed grains and livestock products.

Such adjustments are constrained by China’s land tenure system that

features communal village ownership of agricultural land. Village authorities allocate small plots on an egalitarian basis to village members, who

hold long-term leases on the land. Sub-leasing arrangements are possible in

many villages, but land can only be sold by village authorities. The land

tenure system ensures that nearly all rural households have enough land to

grow their own food, but lack of land markets prevents structural adjustments from taking place. 

More Food Enters Markets

Historically, the high rate of food self-sufficiency in rural China meant that

most food never left the farms where it was grown. Rural household

surveys indicate that only 25 percent of grain produced in 1985 was sold to

markets, while 75 percent was consumed by farm families, used as feed or

seed, or stored on farms. Most other food commodities were also primarily

used on farms.

With rising productivity and declining consumption of self-produced

commodities, a larger proportion of agricultural products are entering

market channels. For example, rural household surveys indicate that the

amount of grain sold per rural household member rose from 180 kg. in 1995

to 300 kg. in 2003, an increase of 120 kg., or 66 percent (fig. 9). In 1995,

rural households consumed significantly more grain than they sold. In 2003,

the proportions were reversed, as sales exceeded consumption. Marketings

of other agricultural commodities also increased during this period. The

rising proportion of commodities sold means that farmers are producing

more for markets than for their own consumption. 

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Rising Calorie and Fat Intake

Many studies have suggested that a shift from small-scale subsistence farming

to larger scale cash crop production in developing countries has a detrimental

impact on the nutritional status of rural households by reducing their access to

basic foods. However, the commercialization of Chinese agriculture has coincided with an improvement in calorie and protein intake (Lohmar), consistent

with evidence from other developing countries presented by Von Braun. Food

insecurity is now relatively rare in rural China. 

Commercialization of food consumption may be a leading factor in the

rapid increase in fat intake occurring in China and other developing countries (Guo et al.). The transition from food self-sufficiency to commercialization in rural China appears to be an important factor that shifts diets

away from grain and vegetables to purchased foods including meats and

restaurant meals that have a higher fat content. Obesity-related health problems are becoming more common in China, but they concentrated among

the urban population. The fat content in the rural diet, while increasing, is

still relatively low.

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Figure 9

Rural household per capita grain uses, 1990-2003

Source: Compiled by USDA's Economic Research Service from China National Bureau 

of Statistics (2004b).

Kg.

Used as feed and seed onfarm

Sold

Consumed onfarm

1990 92 94 96 98 2000 02

0

50

100

150

200

250

300

350
Chinese rural households are able to meet most of their basic nutritional

requirements at minimal expense by consuming self-produced food, mostly

grains and vegetables. This self-sufficiency strategy frees up scarce cash for

expenditures on housing, school fees, and other nonfood expenditure items.

Even well-off rural households self-supply a large portion of their food.

Self-sufficiency may be a rational response to the lack of cash income and

limited access to retail food markets in rural China. 

Now that rural households are entering the mainstream of the Chinese

economy, they are becoming less reliant on subsistence food production.

This study finds that households reduced consumption of self-produced food

and increased purchases of food at a rate faster than can be explained by

income growth or changes in other household characteristics during the late

1990s and early 21st century. 

The reasons for the shift away from self-produced food consumption are not

clear. The development of markets cited by Huang and Rozelle, including

improved transportation infrastructure and the opening of rural supermarkets

and restaurants, could be contributing to the shift. The increased migration

and travel of rural persons probably also promotes cash food expenditures,

especially consumption of food at work sites and cafeterias. Increasing

ownership of refrigerators, other kitchen appliances, and availability of electricity are also hastening the shift away from subsistence. Declining

consumption of self-produced grain could partly reflect farmers’ shift away

from grain production toward cash crops as rural households have been

given greater freedom in choosing what to plant. 

China’s transition to commercialized food consumption may have been

especially fast due to its unprecedented rapid economic growth (8-10

percent annual GDP growth since 1978), market liberalization, infrastructure development, and increasing integration between the rural and urban

economies. In contrast, it is interesting to note that self-sufficiency in food

production increased in some Eastern European countries following their

transition from central planning to market economies in the 1990s (Kostov

and Linguard). This may have been a rational response to deteriorating

economic security (high unemployment and inflation) and distribution of

land from large state farms to individuals during this period. 

In the 21st century, it is likely that self-production of food will diminish and

commercialization of rural food markets in China will continue. This will

bring tens of millions of consumers into the global food system and put

more agricultural commodities into formal market channels. While the

impact of each farm household’s increased cash food expenditure is small,

the vast size of the rural population means that commercialization will have

a significant impact on world food markets. 

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Conclusions
China National Bureau of Statistics. China Statistical Yearbook 2004,

Beijing: China Statistics Press, 2004a.

China National Bureau of Statistics, Rural Survey Organization. China

Rural Household Survey Yearbook 2004, Beijing: China Statistics Press,

2004b.

China National Bureau of Statistics, Urban Survey Organization. China

Price and Urban Household Expenditure Survey Statistical Yearbook

2003, Beijing: China Statistics Press, 2003a.

China National Bureau of Statistics, Rural Survey Organization. Research

on Investment in Rural Area of China, Beijing: China Statistics Press,

2003b.

China National Bureau of Statistics, Rural Survey Organization. China

Rural Household Survey, unpublished micro data for Heilongjiang,

Henan, and Jiangsu Provinces, various years.

Gale, H. Frederick. “China’s Growing Affluence: How Food Markets Are

Responding,” Amber Waves, Vol. 1, Issue 3, June 2003, pp. 14-21.

Gilmour, Brad, and Fred Gale. “A Maturing Retail Sector: Wider Channels

for Food Imports?” in China’s Food and Agriculture: Issues for the 21st

Century, Fred Gale (ed.), Agriculture Information Bulletin 775, U.S.

Department of Agriculture, Economic Research Service, April 2002, pp.

14-16.

Guo, X., T.A. Mroz, B.M. Popkin, and F. Zhai. “Structural Change in the

Impact of Income on Food Consumption in China, 1989-1993.”

Economic Development and Cultural Change, Vol. 48, No. 4, July 2000,

pp. 737-760.

Hsu, Hsin-Hui, Wen S. Chern, and Fred Gale. “How Will Rising Income

Affect the Structure of Food Demand?” in China’s Food and Agriculture:

Issues for the 21st Century, Fred Gale (ed.), Agriculture Information

Bulletin 775, U.S. Department of Agriculture, Economic Research

Service, April 2002, pp. 10-13.

Huang, Jikun, and Cristina C. David. “Demand for Cereal Grains in Asia: The

Effect of Urbanization,” Agricultural Economics 8(1993), pp. 107-124.

Huang, Jikun, and Scott Rozelle. “Market Development and Food Demand

in Rural China,” China Economic Review, Vol. 9, No. 1, 1998, pp. 25-45.

Kostov, P., and J. Lingard. “Subsistence Farming in Transitional Economies:

Lessons From Bulgaria,” Journal of Rural Studies, Vol. 18, No. 1, 2002,

pp. 83-94.

Lohmar, B. “Market Reforms and Policy Initiatives: Rapid Growth and

Food Security in China,” Food Security Assessment, Outlook Report No.

GFA13, U.S. Department of Agriculture, Economic Research Service,

April 2002, pp. 22-30.

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References
Ma, Hengyun, Jikun Huang, Scott Rozelle, and Frank Fuller. “Getting Rich

and Eating Out: Consumption of Food Away From Home in Urban

China,” Working Paper 02-E11, Chinese Center for Agricultural Policy,

2002.

National Development and Reform Commission. National Agricultural

Products Production Cost and Profit Data, Beijing: China Statistics

Press, 2004.

Popkin, B.M. “Nutrition in Transition: The Changing Global Nutrition

Challenge,” Asia Pacific J. Clin. Nutrition, Vol. 10 (suppl), 2001,

S13-S18.

Seale, J., A. Regmi, and J. Bernstein. International Evidence on Food

Consumption Patterns, Technical Bulletin 1904, U.S. Department of

Agriculture, Economic Research Service, October 2003.

Singh, I.J., L. Squire, and J. Strauss (eds.). Agricultural Household Models:

Extension, Applications and Policy, Baltimore: The Johns Hopkins

University Press, 1986.

Tong, Han, T.I. Wahl, and R.C. Mittelhammer. “The Effect of Self-Sufficiency

on Fruit and Vegetable Consumption of China’s Rural Households,” Review

of Agricultural Economics, Vol. 23, No. 1, pp. 176-184.

U.S. Bureau of Labor Statistics. The Consumer Expenditure Survey, online

database, accessed January 2005. http://www.bls.gov/cex/home.htm

Von Braun, Joachim. “Introduction and Overview,” in Joachim Von Braun

and Eileen Kennedy (eds.), Agricultural Commercialization, Economic

Development and Nutrition, Baltimore: The Johns Hopkins University

Press, 1994.

Wu, YanRui. China’s Consumer Revolution, Northhampton, MA: Edward

Elgar, 1999.

Yan, Wenye. Food Demand in Rural China: An Application of Agricultural

Household Models, PhD dissertation, Ohio State University, 2005.

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China’s rural household survey (RHS), conducted annually by China

National Bureau of Statistics, Rural Survey Organization (RSO), is a rich

source of information on household consumption patterns. Unlike many

surveys that record food purchases over a few weeks or rely on respondent

recall, the RHS collects consumption, purchase, and expenditure data using

diaries kept over the course of an entire year. 

The survey is designed to monitor growth in income and living standards

and evaluate progress in China’s efforts to alleviate poverty by collecting

detailed information on the production, exchange, consumption, asset accumulation, and social activities of a national sample of rural residents. Data

are used for rural policymaking at all levels of government and for

compiling national economic accounts. 

The survey collects data from 68,000 households in about 9,000 villages of

857 counties selected from the 31 provinces, autonomous regions, and

municipalities using a complex multistage stratified sampling method. A

representative sample of counties is chosen from each province, and sample

villages are selected from the counties. A stratified sample of households is

chosen from each of the sample villages. Stratification is based on per capita

net income, supplemented by population. The sample is representative at the

national and provincial levels. The sample of households is systematically

rotated over a 5-year cycle. 

The RHS collects information on 1,000 items, including (1) village-level

characteristics, (2) basic household information, (3) production and sales,

(4) total income, expenditure, and net income, (5) total cash income and

cash expenditure, (6) grain balance, and (7) food consumption. Expenditure

categories are shown in appendix table 1.

Respondents record all economic activities (production, purchases, sales,

consumption) in a diary over the course of the entire year. Respondent

households record both cash and in-kind transactions. Local assistant

enumerators periodically visit households to record, check, and organize the

diary book and to assist illiterate respondents. County interviewers often go

to villages to supervise the recording, to provide guidance or help, and to

collect the diary books periodically. At the end of each calendar year, interviews are arranged to collect community information, data on individuals,

and some additional household information such as fixed asset ownership.

After the diary records are coded, the data are entered into a computer and

checked in the county survey branch. County survey branches send data

diskettes to provincial organizations and then to RSO in Beijing. RSO and

provincial organizations check, aggregate, and tabulate the data. Tabulations

of the data are published in annual and quarterly statistical reports and in

research papers. 

Information about consumption and expenditures are collected in detail

through recording the quantity and purchase price, family consumption, and

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Appendix—China Rural Household Survey
durable goods owned at year-end. Average selling prices are used to impute

the value of in-kind consumption. Consumption information is classified

into eight aspects: food; clothing; residence; household facilities, articles

and services; medicines and medical services; transport and post-telecommunication services; cultural, educational, recreational articles and services;

and other commodities and services. Consumption expenditure refers to the

outlay during the survey period. The survey records actual expenditure for

purchasing houses, housing material, and durable consumer goods rather

than imputed rent.

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Appendix table 1

Rural household survey expenditure categories used in this report

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Food category Description

Grain Rice, wheat, potatoes, corn, sorghum, and other cereals and their

processed products, such as dry noodles and cakes. Grain processed into

soybean oil, bean curd, vermicelli, and wine are not included. Grain

consumption is calculated in rough grain weight.

Vegetables Fresh, dried, and processed vegetables; roots; tubers; stems; flowers; tofu,

and other bean products.

Edible oils Vegetable oils and animal fats.

Meat and poultry products Live, fresh, frozen, and cooked products. Egg products are converted to

the equivalent weight of fresh eggs.

Aquatic products Fish, shrimps, crabs, cowry, and algae from fresh water or marine, counted

at their fresh weight.

Tobacco and alcohol Cigarettes, other tobacco products, tobacco, wine, beer, and liquor.

Other food at home Tea, soft drinks, dry and fresh fruit, melons, nuts, candies, cakes, flavorings, sugar and sweets, milk, and milk products. Fresh milk, milk power,

yogurt, and related milk products are converted into fresh-milk equivalents.

Food away from home Meals at restaurants, snack bars, tea houses, and food stalls, and purchases

of tea, cold drinks, and other food. Includes expenses for food at meetings

and hospital stays. 

Clothing Cloth, garments, hats, footwear, laundry, and patching.

Utilities Electricity fees, water, gas, coal, and firewood.

Durable goods Furniture, household appliances, and electrical and mechanical items for

entertainment or education.

Housing Construction materials, repair and decoration of houses, and rent.

Health Medicines, medical and health services, and repair of medical appliances.

Transportation and communications Purchase and repair of vehicles and communications devices; train, bus,

and airplane fare; freight; postal and communications fees; and fuel for

vehicles.

Education and recreation Tuition, school, training, and recreation fees; books; newspapers; magazines; paper; stationery; and cultural items.

Other nonfood goods and services Jewelry, cosmetics, household items, bedding, small hardware, repairs of

small items, funerals, and other goods and services.

Source: Compiled by USDA’s Economic Research Service from China National Bureau of Statistics (2004b) and classification by authors.
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Appendix table 2

Expenditure regressions, 1995 and 2001

Year

Cash 

expenditure 

item Intercept

Ln (total 

household 

expenditure)

Own 

refrigerator

Persons with 

senior high 

school 

education

Cultivated 

land area

Family plot 

area

Size of 

household Migrants

Children age 

7-15

Children 

under age 6

Jiangsu 

Province

Henan 

Province R-square

1995 Cash food .7400 -0.03716 0.06046 0.0122 -0.0013 -0.0045 -0.01813 0.0013 -0.0108 0.0017 -0.1227 -0.17998 0.216N=9070 (36.1) (-14.2) (11.2) (6.0) (-10.1) (-5.9) (-16.5) (0.4) (-7.59) (0.6) (-24.6) (-37.6)

Noncash food 1.5276 -0.18088 -0.05661 -0.0129 0.0018 0.0052 -0.00601 -0.009 -0.0036 -0.0063 0.2106 0.14356 0.382

(61.4) (-57.1) (-8.6) (-5.2) (11.3) (5.6) (-4.5) (-2.3) (-2.09) (-1.9) (34.8) (24.7)

Nonfood -1.2671 0.21804 -0.00385 0.0008 -0.0005 -0.0007 0.02414 0.0077 0.0144 0.0046 -0.0879 0.03642 0.382

(-53.9) (72.9) (-0.6) (0.3) (-3.2) (-0.7) (19.2) (2.1) (8.8) (1.4) (-15.4) (6.6)

2001 Cash food 0.8896 -0.0646 0.0398 0.0076 -0.0007 0.0001 -0.0157 -0.0075 -0.0193 -0.0039 -0.0362 -0.0999 0.178

N=9664 (49.2) (-29.0) (11.1) (3.8) (-7.3) (0.1) (-12.0) (-3.8) (-11.1) (-1.3) (-8.3) (-24.1)

Noncash food 1.001 -0.1151 -0.0305 -0.0144 0.001 0.0019 -0.0083 -0.009 -0.0071 -0.0027 0.1336 0.1532 0.338

(53.6) (-50.0) (-8.2) (-6.9) (10.6) (1.5) (-6.1) (-1.0) (-4.0) (-0.8) (29.7) (35.7)

Nonfood -0.8906 0.1796 -0.0093 0.0068 -0.0003 -0.002 0.0239 0.009 0.0264 0.0066 -0.0975 -0.0533 0.369

(-43.5) (71.2) (-2.3) (3.0) (-3.3) (-1.5) (16.2) (4.2) (13.4) (1.9) (-19.8) (-11.3)

Dependent variable is the expenditure item’s share of household expenditures. Estimated with ordinary least squares using household data from Jiangsu, Henan, and Heilongjiang Provinces. Values in parentheses are t-values.Source: Estimated by USDA’s Economic Research Service from unpublished data compiled by China National Bureau of Statistics (1995, 2001).
36

Commercialization of Food Consumption in Rural China / ERR-8

Economic Research Service/USDA

Appendix table 3

Cash expenditure regressions by expenditure category, 2001

Cash expenditure item Intercept

Ln (total 

household 

expenditure)

Own 

refrigerator

Persons with 

senior high 

school 

education

Cultivated 

land area

Family plot 

area

Size of 

household Migrants

Children age 

7-15

Children 

under age 6

Jiangsu 

Province

Henan 

Province R-square

Grain 0.305583 -0.02264 -0.00151 -0.00216 -0.00036 0.000629 -0.00375 -0.00254 -0.00315 -0.00431 -0.08799 -0.09105 0.234

(36.6) (-22.13) (-0.72) (-1.84) (-6.73) (0.9) (-4.98) (-2.19) (-3.11) (-2.38) (-35.08) (-37.52)

Vegetables 0.15427 -0.01577 0.00481 0.000017 -0.00002 -0.00034 -0.00268 -0.00471 -0.00333 0.000051 0.001653 0.00725 0.145

(39.9) (-33.29) (4.96) (0.03) (-0.76) (-1.05) (-7.69) (-8.8) (-7.11) (0.06) (1.42) (6.45)

Edible oils 0.171418 -0.0176 0.000483 -0.00105 -0.0001 0.000045 -0.00281 -0.00181 0.000362 -0.00149 -0.01008 -0.016 0.172

(47.7) (-39.95) (0.54) (-2.07) (-4.47) (0.15) (-8.68) (-3.64) (0.83) (-1.91) (-9.34) (-15.32)

Meat and poultry products 0.330193 -0.03173 0.017541 -0.00107 -0.00006 -0.00029 -0.0094 -0.00388 -0.00882 -0.0001 0.041489 0.02775 0.154

(41.4) (-32.43) (8.75) (-0.95) (-1.14) (-0.43) (-13.05) (-3.51) (-9.11) (0) (17.3) (11.96)

Aquatic products 0.064863 -0.00589 0.007274 0.000361 0.000041 -0.0001 -0.00149 -0.0009 -0.00226 -0.0003 0.015209 -0.01113 0.255

(26.4) (-19.54) (11.77) (1.04) (2.59) (-0.5) (-6.71) (-2.65) (-7.58) (-0.56) (20.57) (-15.55)

Tobacco and alcohol 0.250218 -0.02474 0.006857 0.000491 0.000169 0.000965 -0.00229 -0.00511 -0.01191 -0.00509 0.022421 0.008956 0.092

(33.7) (-27.16) (3.67) (0.47) (3.57) (1.55) (-3.42) (-4.97) (-13.21) (-3.16) (10.04) (4.14)

Other food at home 0.296262 -0.02762 0.012794 0.001748 -0.000007 0.000303 -0.00787 -0.00252 -0.00299 0.014248 -0.00338 -0.0129 0.2

(56.6) (-43.03) (9.73) (2.37) (-0.21) (0.69) (-16.65) (-3.47) (-4.71) (12.54) (-2.14) (-8.47)

Food away from home -0.14083 0.020617 -0.0121 0.006154 0.000059 -0.00058 0.005038 0.010799 -0.00138 -0.0059 0.014167 0.019108 0.06

(-15.3) (18.21) (-5.22) (4.73) (1.01) (-0.75) (6.05) (8.45) (-1.23) (-2.95) (5.11) (7.12)

Cash food 1.431974 -0.12537 0.036142 0.004494 -0.00028 0.000635 -0.02525 -0.01066 -0.03349 -0.00279 -0.00651 -0.06801 0.289

(80.9) (-57.75) (8.12) (1.8) (-2.44) (0.43) (-15.8) (-4.35) (-15.59) (-0.73) (-1.22) (-13.21)

Clothing 0.2165 -0.0164 0.0061 0.0052 0.0001 -0.0009 -0.0049 -0.0005 0.0081 0.0049 -0.011 0.0081 0.061

(24.77) (-15.24) (2.79) (4.22) (1.46) (-1.23) (-6.23) (-0.39) (7.63) (2.57) (-4.19) (3.19)

Utilities 0.2334 -0.0202 0.021 -0.0023 -0.0003 0.00002 -0.0048 -0.0032 -0.0034 0.0014 -0.0138 -0.0097 0.081

(33.71) (-23.75) (12.02) (-2.36) (-6.01) (0.03) (-7.68) (-3.37) (-4.00) (0.92) (-6.65) (-4.83)

Durable goods -0.1364 0.02 0.0009 -0.0011 0.00016 0.00034 0.0032 0.0047 -0.0017 -0.0012 0.009 0.0137 0.04

(-15.00) (17.85) (0.39) (-0.88) (2.69) (0.44) (3.89) (3.77) (-1.49) (-0.61) (3.29) (5.18)

Housing -0.595 0.0836 -0.0357 -0.0147 0.0002 0.0028 0.0187 0.011 -0.0047 -0.0009 -0.0071 0.0261 0.155

(-35.74) -40.96 (-8.54) (-6.27) (1.64) (2.03) (12.47) (4.79) (-2.43) (-0.24) (-1.41) (5.37)

Continued--
37

Commercialization of Food Consumption in Rural China / ERR-8

Economic Research Service/USDA

Appendix table 3

Cash expenditure regressions by expenditure category, 2001—Continued

Cash expenditure item Intercept

Ln (total 

household 

expenditure)

Own 

refrigerator

Persons with 

senior high 

school 

education

Cultivated 

land area

Family plot 

area

Size of 

household Migrants

Children age 

7-15

Children 

under age 6

Jiangsu 

Province

Henan 

Province R-square

Health and medical

(-3.47) (11.29) (-4.24) (-5.38) (-1.15) (-1.16) (2.12) (-1.95) (-4.39) (7.37) (-4.93) (-3.21)

Transportation and communications

(-7.16) (14.27) (7.66) (4.33) (2.57) (-1.23) (2.31) (8.35) (-1.32) (1.21) (-0.87) (-1.87)

Education and recreation -0.192 0.0327 -0.0362 0.0125 0.0001 -0.0024 0.01 -0.0086 0.0497 -0.0267 0.04 0.0263 0.14

(-11.34) (15.74) (-8.5) (5.25) (1.15) (-1.66) (6.53) (-3.66) (24.19) (-7.27) (7.87) (5.35)

Other nonfood goods and services -0.0338 0.0086 -0.0024 -0.0008 0.0000 0.0014 0.003 0.0011 -0.0045 -0.0029 0.0027 0.0148 0.012

(-3.71) (7.71) (-1.06) (-0.64) (-0.33) (1.86) (3.61) (0.86) (-4.06) (-1.49) (1.00) (5.59)

-0.0488 0.0195 -0.015 -0.0107 -0.0001 -0.0014 0.0027 -0.0038 -0.0075 0.0225 -0.0209 -0.0132 0.029-0.0844 0.0206 0.0227 0.0072 0.0002 -0.0012 0.0025 0.0136 -0.0019

Note: Dependent variable is the expenditure item’s share of cash expenditures. Estimated with ordinary least squares using household data from Jiangsu, Henan, and Heilongjiang 

Source: Estimated by USDA’s Economic Research Service from unpublished data compiled by China National Bureau of Statistics (1995, 2001).

Provinces. N = 9,664. Values in parentheses are t-values. Note: Data are from Jiangsu, Henan and Heilongjiang Provinces. 

0.0031 -0.0031 -0.0064 0.053