China's Dairy Industry Overview

China stands as a major force in the global dairy industry, producing approximately 36 million tons of milk annually. With a processing capacity of about 60.18 million tons per year, the country focuses on delivering high-quality dairy products to meet growing consumer demands. Regulatory measures ensure that dairy products adhere to both domestic and international quality and safety standards.

Dairy Cattle Management

China has embraced advanced genetic technology to revolutionize dairy cattle management. The use of sophisticated genetic chips has significantly improved milk production and enhanced disease resistance, leading to higher productivity and health standards in cattle management.

Milk Production and Processing

China's expanding infrastructure and stringent regulatory measures ensure that dairy products meet high quality and safety standards. The prohibition of dried milk powder in drinking milk further reflects the country's commitment to maintaining these standards.

Cheese and Milk Powder Production

The cheese sector is rapidly expanding due to growing consumer interest. While whole milk powder production is on the rise, there has been an 11% decline in skimmed milk powder exports. However, high-protein whey exports from the U.S. to China have surged by 225%, indicating a growing demand for specific dairy components.

Key Enterprises

Dominated by major players such as Junlebao Dairy Group Co., Ltd., Bright Dairy Holdings, Yili Group, and Mengniu Dairy, the Chinese dairy industry is witnessing significant developments. Junlebao's IPO, Bright Dairy's investments in Synlait, and Mengniu Dairy's recognition as a "Lighthouse Factory" by the World Economic Forum highlight the dynamic nature of the sector.

Export and Import Dynamics

China's import dynamics remain robust, with projections reaching up to 17.18 million tons. The average import price per ton has increased by 10%, reaching $4,428. Dairy imports have grown by 6% in volume, with high-fat products such as butter and cheese showing significant demand increases.

Market Dynamics and Challenges

The industry faces challenges like overproduction and shifting consumer preferences. Strategic responses include forming alliances and boosting imports to address demographic changes. Emerging trends feature alternative dairy sources, such as sheep milk.

Regulatory Developments

New regulatory changes are anticipated from September 19, 2025, with the introduction of 50 new national standards impacting dairy exports from countries like Vietnam.

International Trade Relations

Trade disputes affect Canadian farmers due to tariffs, while Arla Foods Ingredients expands its presence in China through collaboration with Zhongbai Xingye Food Technology. Additionally, agreements with Hong Kong have been finalized to facilitate the export of dairy and meat products.

Innovation in China's Dairy Sector

Innovation is a key driver of growth, with collaborations fostering global market expansion. The development of genetic chips is transforming dairy cattle breeding, enhancing milk production and disease resistance.

Significant Market Events

Notable market events include Junlebao Dairy's stock offering, Bright Dairy's strategic alliance with Synlait, and the expected valuation of the UHT milk market at USD 15.2 billion by 2034.

Inner Mongolia's Contribution

Inner Mongolia's dairy output exceeded 7.76 million tonnes in 2024, accounting for 19% of China's total production. The region combines tradition with modern innovations, significantly contributing to China's dairy production.

Potential for Russian Dairy Producers

The Chinese market holds significant potential for Russian dairy producers, with growing demand for complex dairy products like yogurts and cheeses. However, imports of Russian ice cream have decreased, with July deliveries totaling $194,300, marking the lowest volume in three months.

Regional Growth

The Asia-Pacific region, driven by countries such as China, is experiencing rapid growth due to increasing population and rising disposable incomes.

Enhancing China's Standing in Global Dairy Innovation

The National Center of Technology Innovation for Dairy, led by Yili Group, made a prominent entrance at the 2025 IDF World Dairy Summit in Santiago, Chile, highlighting China's growing influence in the global dairy industry.

Key Market for Irish Dairy Products

China is a key target market for Irish dairy products, with exports valued at €385.3 million in 2024. Despite economic challenges, China is set to achieve record imports of cheese and butter in 2025.

Increased Demand for Key Dairy Products

The USDA predicts increased demand for key dairy products like whole milk powder and cheese.

Market Trends and Consumer Preferences

China's dairy industry is grappling with a milk surplus of 42 million tonnes due to increased production aimed at food self-sufficiency. The demand for dairy products has dropped due to a declining birth rate and an aging population. Among consumers, 56% regard yogurt as beneficial for gut health, while cheese is popular as a premium snack option for mood enhancement.

Fonterra's Investment in China

Fonterra's crucial market generates 30% of its income, and the company is investing $1 billion in China's dairy sector, aiming to capitalize on the growing demand for fats and proteins. Fonterra operates six application centers across major Chinese cities.

A2 Milk Company's Investment

A2 Milk Company is investing NZ$500 million in China, focusing on life-stage nutrition and market share expansion, despite a decrease in birth rates.

Australian Dairy Exports

Australian dairy exports to China increased by 5%. The shift in trade dynamics resulted in Australian cheese exports to China increasing by 23%.

Research and Development

Nanjing Agricultural University is advancing studies on dairy calves' gut microbiota, contributing to the research and development landscape in China.

Industry Stabilization

The a2 Milk Company is securing State Administration for Market Regulation registration for its infant formula products in China, ensuring compliance with updated national food safety standards. China's dairy industry is stabilizing with mega-farms dominating production.

Tariffs on EU Dairy Products

China introduced tariffs on certain EU dairy products, citing protection of domestic sectors. The Ministry of Commerce announced the imposition of tariffs on European Union dairy products after an investigation suggested subsidies were harming Chinese producers.

Vermont's Agricultural Exports

Vermont's agricultural exports to China experienced significant growth of nearly 80% in the first eight months of 2025, largely attributed to dairy products, particularly whey.

Import Trends

In 2025, China's dairy imports increased by 2.8% year-on-year, marking a significant recovery in value due to changing consumption patterns and domestic production challenges.

Trade Discussions with Ireland

China is involved in trade discussions with Ireland regarding dairy and beef exports. The country has introduced import quotas and additional tariffs on beef imports, affecting global suppliers.

Export Challenges

Exports to China have weakened significantly, with imports dropping from 1.66 million metric tons in 2022 to about 560,000 metric tons in 2025, due to softer dairy markets and trade tensions.

China's Economic Strategies and Consumer Trends

China's demand for imported dairy products saw significant growth in 2025. The total volume of dairy imports rose by 2%, while the overall value surged by 13%, largely attributed to elevated prices in the international dairy market.

Support for Dairy and Cattle Sectors

The Ministry of Agriculture in China has announced plans to enhance policies and provide financial support for the country's dairy and cattle industries. Wuzhong is enhancing its dairy processing capabilities with a new mega-processing cluster, set to process 6,400 tons of dairy products daily. China's National Health Commission has approved 3’-Sialyllactose as a new food nutrition enhancer, marking a significant milestone for the global dairy ingredients and infant nutrition sectors. In collaboration with Uruguay, China signed a bilateral agreement to enhance research, innovation, and development of technologies in dairy and agricultural sectors.

Regulatory Actions on Safety

China's market regulator has mandated infant formula manufacturers to test for the toxin cereulide. On February 12, 2026, China's State Administration for Market Regulation issued a directive requiring infant formula producers to test for cereulide, a toxin that has prompted worldwide recalls.

Future Prospects

The a2 Milk Company plans to launch paediatric nutritional supplements in China by 2026, expanding into the nutrition market with four paediatric nutritional supplements under the a2 Zhi Yi brand. This expansion is part of a broader strategy to diversify beyond infant formula. The 32nd China International Exhibition on Packaging Machinery and Materials (Sino-Pack 2026) and the China (Guangzhou) International Exhibition on Packaging Products (PACKINNO 2026) will be held in Guangzhou. Sino-Pack/PACKINNO is one of the largest professional packaging exhibitions in the industry, presenting a wide range of solutions addressing current challenges in food and beverage packaging production.

China's Tech Bond Program

China's tech bond program seeks to integrate advanced technologies into traditional industries, including the dairy sector. Slowing supply growth in China is expected. Part of the Big 7 exporters with forecasted output changes. China is a target market for Pakistan's fodder exports. Despite having good relations with China, Pakistan has yet to register its product for export there, which could open a significant market. China remains the largest dairy import market globally.

Market Dynamics and Innovations

China's demand for dairy products has surged, leading to a potential deficit of up to 26 million tonnes. China's increasing demand for cream is reshaping global dairy trade. China's consumption patterns are driving changes in the dairy industry, with a particular focus on cream. This demand is influencing global dairy trade patterns and causing New Zealand to adjust its production strategies.

Structural Changes and Southeast Asian Expansion

The Chinese dairy industry is experiencing structural changes and entering the Southeast Asian market. Chinese companies like New Hope Dairy, Yili, and Mengniu are expanding into Southeast Asia due to domestic market challenges and low raw milk prices. The closure of the Chinese market contributed to a decline in U.S. exports of dairy genetics. U.S. companies experienced a decrease in exports of dairy genetics largely due to the closure of the Chinese market. Fonterra is enhancing its presence in China by increasing the supply of dairy ingredients to high-value food and nutrition sectors. Fonterra aims to strengthen its market ties in China by expanding the supply of dairy ingredients to high-value food and nutrition sectors, tapping into China's growing demand for premium dairy products.

Dairy Alternatives

China is a significant growth driver for dairy alternatives in Asia-Pacific. In Asia-Pacific, rapid urbanization and changing dietary preferences in China are key growth drivers, with increasing awareness of lactose intolerance and expanding retail infrastructure contributing to demand. China is increasing its demand for premium dairy products and imports. China's dairy imports have increased at a compound annual growth rate of over 12 percent. The collaboration with Pakistan aims to enhance dairy technology transfer and investment facilitation.

Modified: 2026/03/27