China has one of the lowest levels of per capita milk consumption in the world, averaging just 5.6 kilograms (kg) per year in 2003. Consumption varies greatly by region, income level, and household location (rural or urban). Throughout the mid-1980s and early 1990s, milk consumption in urban China was stagnant, at about 4.8 kg per person, and rural consumption hovered at just 0.6 kg per person. While rural per capita consumption of dairy products grew weakly in the late 1990s, urban consumption of fresh dairy products has grown an average of 25 percent annually since 1997, reaching 15.7 kg per person in 2002. Household purchases of fluid milk, yogurt, milk powder, and ice cream are growing rapidly, and away-from-home consumption of cheese has risen with the tide of investment by western-style restaurant chains. The spectacular expansion of China’s urban market for dairy products is driven by a combination of technology adoption, changes in retail supply chains, consumer trends, income growth, and government policies. This article summarizes findings on Chinese urban dairy markets emanating from a large CARD research project that analyzes Asian dairy markets.