There is a substantial controversy in the economic literature over the
magnitude of the expenditure elasticity for food grain in China that is caused, to a large
extent, by whether time-series or cross-section data are used in the analysis. A set of
reasonable elasticities for a complete demand system is estimated by using a panel of
county level data in Guangdong Province for the last ten years. The results show that
food grain has a small positive income elasticity, implying that food grain is not an
inferior good in China. A 20-year forecast of China's food grain and feed grain
consumption, based on the estimated demand system, demonstrates that the demand
for feed grain will grow faster than for food grain, as expected, and that consumption
will be higher than most other published forecasts.