China has been rapidly increasing its consumption and imports of dairy products in recent years. A two-stage demand system was estimated for livestock
product consumption in urban China over the 1990s. Total expenditure elasticities for the livestock commodity group and expenditure elasticities for dairy
products within the livestock commodity group were calculated. The results suggest that dairy products, even in urban areas, remain luxury goods because of a
high expenditure elasticity (1.14). Due to rapidly increasing consumption and the likelihood of inadequate supply growth, China will continue to increase its
imports of dairy products to meet its domestic demand. Projections imply that China?s imports of dairy products may range between 13-30 percent of its total
domestic consumption by 2006. Due to differences in regional income and population growth rates, increases in dairy products consumption may occur
especially in the Coastal, South and North areas, where potential trade opportunities may exist.