As their incomes rise, Chinese consumers are changing their diets and demanding
greater quality, convenience, and safety in food. Food expenditures grow faster than
quantities purchased as income rises, suggesting that consumers with higher incomes
purchase more expensive foods. The top-earning Chinese households appear to have
reached a point where the income elasticity of demand for quantity of most foods is
near zero. China’s food market is becoming segmented. The demand for quality by
high-income households has fueled recent growth in modern food retail and sales of
premium-priced food and beverage products. Food expenditures and incomes have
grown much more slowly for rural and low-income urban households.