Combining policy relief and transformation and upgrading, China's dairy industry enters a window period of breakthrough
The dairy industry is an important sector for the deep integration of the primary, secondary, and tertiary industries. Recently, a notice from the Ministry of Commerce has drawn attention from the outside world to the development situation of this industry.
On the 22nd, the Ministry of Commerce issued a preliminary ruling on the investigation of anti subsidy for imported dairy products originating from the European Union. It was preliminarily determined that there were subsidies for imported dairy products originating from the European Union, which caused substantial damage to China's domestic dairy industry. Moreover, there was a causal relationship between subsidies and substantial damage. Therefore, it was decided to implement temporary anti subsidy measures on imported dairy products originating from the European Union from December 23, 2025.
Industry insiders believe that the implementation of this anti subsidy measure sends a clear signal that the country will use multilateral rules to safeguard industrial interests, which will help stabilize industry expectations and win a window period for domestic industrial transformation and development, and strive for market space.
Why did anti subsidy measures arise?
In August 2024, at the request of the China Dairy Industry Association and the China Dairy Products Industry Association, the Ministry of Commerce launched a countervailing investigation into imported dairy products originating from the European Union.
The Ministry of Commerce has publicly released a preliminary ruling report that is 108 pages long and over 50000 words long, providing detailed information on whether the investigating agency has provided subsidies and the amount of subsidies for the investigated product, whether the investigated product has caused damage to the domestic industry and the degree of damage, as well as the causal relationship between subsidies and damage.
The reporter noticed that this anti subsidy measure specifically targets specific deep processed dairy products such as cheese and cream.
This is a considerable market.
According to survey data from the Ministry of Commerce, from 2020 to the first three months of 2024, the import volume of dairy products such as fresh cheese subsidized by the European Union accounted for 23.6% to 34.6% of China's total imports of related dairy products. The European Union is the main source of China's imports of related dairy products.
On one hand, there is overproduction of raw milk, while on the other hand, high value-added products such as cheese, butter, whey, and deep processed products are still in the development stage. The domestic dairy industry is not yet self-sufficient and still needs to import related dairy products, "said Liu Meiju, Vice Chairman of the China Dairy Industry Association.
Liu Changquan, a researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences and director of the Industrial Economics Research Office, said that the relevant industries in China are in the cultivation period, and the European Union has directly suppressed the formation and development of the domestic processing industry chain by subsidizing its deep processing of dairy products to gain price advantages.
Currently, the development of China's dairy industry is pressing forward, and there is a growing call for increased protection efforts.
In recent times, the price of raw milk in China has continued to decline, and the entire industry is facing widespread losses against the backdrop of high costs and low milk prices. Industry insiders believe that this is due to internal factors such as slowing domestic consumption growth, temporary overcapacity, and imbalanced industrial structure, as well as external import shocks.
The China Dairy Industry Association stated in a statement that in recent years, some EU dairy products have entered the Chinese market in large quantities at unreasonable prices, relying on its domestic subsidy support. This has had a sustained impact on key sub sectors such as cream and cheese in China, resulting in a decrease in production capacity utilization and increased operational pressure for relevant domestic enterprises, seriously damaging the fair competition environment.
China's adoption of corresponding anti subsidy measures is essentially a reversal of the distorted competitive relationship caused by the other party's subsidies, with the aim of allowing dairy farmers and enterprises from both sides to compete under relatively fair rules, "said Liu Changquan.
The interviewee stated that the anti subsidy measures will buy time and space for the development of enterprises.
Liu Changquan said that domestic processing enterprises should seize the current policy window period, enrich product lines, deepen processing levels, and improve comprehensive utilization efficiency, which can not only reduce costs and increase efficiency but also meet the demand for high-quality dairy products. On this basis, even in the face of competition from imported products in the future, they will be better equipped to cope.
Liu Meiju believes that the current low price of raw milk has created certain conditions for the transformation and upgrading of processing enterprises. In the long run, with the higher pursuit of nutrition and health by domestic consumers, the development of deep processed dairy products in China has great potential. With the help of policy relief, the dairy industry will usher in adjustment opportunities.
A group of forward-looking domestic dairy companies have been working hard to enhance their competitiveness through internal training. In recent years, Feihe and Mengniu have both laid out high value-added and deep processing product projects in multiple places. Yili has successfully applied zero lactose milk powder preparation technology, and Chuanqi Dairy's deep processing products have basically achieved the goal of "drying and squeezing" the raw milk ingredients.
It is reported that the final ruling on the anti subsidy investigation of imported dairy products originating from the European Union will soon be announced. It is a common voice in the industry to hope to further enhance protection measures, but the boosting effect of relevant measures still depends on whether enterprises can seize the window period and achieve breakthroughs in high value-added products and deep processing fields.