China’s Dairy Exports Accelerate as Domestic Supply Outruns Demand
China’s dairy industry is turning to international markets as production growth outpaces domestic demand. Investment in large farms, processing plants and production technology has expanded capacity, while slower economic growth, changing consumer preferences and a shrinking population have limited the domestic market’s ability to absorb the additional supply.
The sector exceeded its official production targets for 2025 two years ahead of schedule, according to a Reuters report published by Mint. The increase has contributed to excess supply and pressure on dairy prices. Producers are therefore seeking overseas sales and higher-value products, including milk powder, infant formula and specialised nutritional goods.
Government support has accompanied the expansion. OECD data cited by Reuters show that subsidies represented about 13% of Chinese agricultural producers’ gross farm receipts from 2022 to 2024, almost three times the level recorded in the early 2000s. The support has enabled agricultural businesses to invest in production capacity. Its role in the international competitiveness of Chinese dairy companies remains a subject of concern among overseas competitors.
China’s dairy exports are expected to total $600 million in 2026, according to figures cited in the Reuters report. That would be roughly twice their value three years earlier. The figures reflect the growing role of foreign sales for producers managing excess domestic output and seeking to diversify revenues.
Southeast Asia has become a key destination for Chinese dairy brands. Yili, described by Reuters as Asia’s largest dairy company, plans to start selling infant formula in the region as early as 2027. Feihe introduced its AceKid infant formula in Indonesia in April 2026, after previously launching it in the Philippines. The companies are moving beyond bulk commodities towards branded products that require consumer recognition and distribution networks.
Food safety and regulatory compliance remain relevant to the expansion of Chinese dairy brands. Perceptions in some markets continue to be affected by the 2008 melamine contamination scandal, which sickened thousands of babies. Companies seeking international customers must meet import rules, certification requirements and food-safety standards in each market.
Chinese milk powder is increasingly competing with established suppliers in markets such as Nigeria and Bangladesh. Chinese manufacturers are also seeking customers in the Middle East and across Southeast Asia, adding to competition involving exporters from New Zealand, Europe, India and Iran. Importing countries may gain additional sourcing options, while established suppliers face stronger competition over prices, product development, branding and distribution. The expansion has also raised questions about the relative contributions of operating efficiency, economies of scale, technology and state support to Chinese producers’ costs.
