| It has been well documented that food consumers in China have undergone major dietary changes recently. Specifically, elements of western diet have been incorporated into the traditional Chinese food diet with the former known to be more reliant on animal products for protein, and fine grains as a replacement for coarse grains. While most research effort has been devoted to the analysis of quantity response to the changing economic environment, the quality aspect of food consumption has received relatively scant attention. This study modifies an existing analytical framework to empirically examine consumer demand for food quality in light of the improving economic conditions in China. It builds upon a theory-consistent demand model, namely the Linear Approximate Exact Affine Stone Index system. This improves upon previous demand models by accounting for unobserved consumer heterogeneity and allowing for arbitrary Engel curves. Importantly, the analysis is conducted at a disaggregate level to account for the effects of observed and unobserved regional heterogeneity on demand for food quality. Evaluating possible structural changes in consumer food expenditures in China is of paramount importance, given the ever-increasing global role of China and the implications of the structural food preference changes for the global food system. The major findings emerging from this study indicate that income is an important determinant of the structure of food expenditures, and the relatively more affluent provinces have a higher affinity for food quality. |
