Decoding the Growth-Nutrition Nexus in China: Inequality, Uncertainty and Food Insecurity

Chinese households have experienced significant income growth, while their nutrition intake has not increased pari passu. This paper uses household data in both rural and urban China over the period 1989-2009 to explain the paradox of higher income but lower nutrition. In addition to traditional inputs into nutrition intake, we emphasise different sources of income, the heterogeneous income effects across households, and the price effects under rising and volatile food prices. The instrumental variable estimation shows that, although nutrition is not responsive to aggregate income, pro-agriculture income growth in terms of proportionally more crop income raises rural households' nutrient intake, while business and wage income improves urban households' nutrition. The estimation of a quantile instrumental variable fixed-effects panel model further documents a nutrition-improving effect of income for the least nourished and only the better-nourished are able to benefit from widely believed contributors of nutrition intake such as dietary knowledge, local off-farm employment and out-migration. Uncertainties attached to prices of meat, eggs and oil and fat accentuate nutrition poverty and can off-set the positive income effect, raising the risk of food insecurity despite growing income.