Why China is producing more meat and dairy products than it can eat - Where does the surplus go?

China produces more meat and dairy products than its domestic market can absorb, forcing producers to push overseas markets for competitively priced chicken, processed meat and dairy products. A combination of changing consumer preferences, government subsidies and expanding production capacity has created a surplus that Chinese companies are increasingly trying to export.

Rising protein exports from China are helping major producers offset weak domestic demand while intensifying competition for established suppliers in Europe, Southeast Asia, Brazil and Thailand, according to a Reuters report. The shift also raises concerns about trade tensions, as Western manufacturers question whether Chinese companies are benefiting from government support that allows them to sell products at lower prices.

China exported chicken products worth $2.6 billion in 2025, nearly double the value in 2020, according to customs data cited by Reuters. The country also became a net exporter of chicken last year, while dairy exports are expected to reach $600 million in 2026, doubling in three years.

Why China produces more meat and dairy products than it can consume

China’s growing surplus reflects a mismatch between production capacity and changing domestic consumption patterns.

China’s meat consumption has been dominated by pork for decades, supporting a large-scale livestock industry and increasing demand for animal feed. However, this pattern is changing as health-conscious urban consumers shift away from fatty cuts of pork to alternatives such as chicken.

Per capita consumption of pork has fallen 13% from its peak in 2023, according to official data and state media cited by Reuters. In contrast, per capita consumption of chicken has increased by more than 50% over the decade to 2024.

The slowdown in domestic demand has not stopped production expansion. The Chinese government has encouraged investment in large-scale livestock farming and offered subsidies to strengthen food security, rebuild animal herds and reduce dependence on overseas supplies.

According to a Reuters report, between 2022 and 2024, subsidies accounted for about 13% of the gross agricultural income of Chinese agricultural producers, nearly triple the level seen at the beginning of the 2000s, based on data from the Organization for Economic Co-operation and Development (OECD).

The expansion has helped push output to record levels even as China’s economy slows and its population shrinks. China produced a record 59 million metric tons of pork in 2025, while poultry production rose 7%. Its dairy sector also exceeded official production targets for 2025 two years ahead of schedule.

The resulting oversupply put pressure on prices in the meat and dairy industries, leaving producers with a strong incentive to find buyers abroad.

How Chinese companies expand production

Large companies increasingly rely on scale, technology and cost advantages to compete in international markets.

Shandong-based Wintop Food, which processes 60 million chickens annually, exports products including chicken breasts, nuggets, meatballs and dumplings to more than 20 countries. International sales accounted for half of the company’s profit last year, Reuters reported.

The company has expanded the number of chickens housed in each shed from 20,000 to 120,000 over a decade. Its birds weigh an average of 2.5kg and are slaughtered in less than 42 days, helping the processor increase performance and control costs.

Wintop general manager Dang Yangyang told Reuters that Chinese meat can be about $1,000 a tonne cheaper than products from Brazilian and Thai competitors.

Other companies are pursuing higher value products and overseas partnerships. Poultry processor Sunner, for example, is expanding sales of marinated chicken and ready meals while working with countries such as Uzbekistan to develop local production capacity.

Dairy companies are also targeting international markets as they look for new sources of growth.

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Where is China’s meat and dairy surplus going?

Chinese manufacturers are expanding their presence in Africa, the Middle East, Europe and Southeast Asia, competing on price and seeking out customers who want alternatives to established suppliers.

1. Africa and the Middle East

Africa and the Middle East have emerged as important destinations for Chinese poultry exporters.

According to Reuters, Wintop gets clients from countries including Ghana, Iraq, Jordan, Russia and Senegal. The company is trying to turn its cost advantage into more market share in countries where buyers are looking for cheaper protein.

Chinese poultry products are priced about 10% to 20% lower than comparable Brazilian products, according to Ezequiel Pires, chairman of international meat trader Branexx, who told Reuters his company began buying Chinese poultry in March after African customers sought cheaper alternatives.

Chinese dairy products are also gaining ground. Milk powder from China competes with supplies from New Zealand and Europe in markets such as Nigeria and Bangladesh. In the Middle East, Chinese products are also gaining ground against Indian and Iranian suppliers, according to StoneX milk analyst Yifan Li, quoted by Reuters.

Chinese poultry exporters are gaining ground in European markets, putting pressure on established producers.

China’s share of the European Union’s processed poultry market will double to 10% by 2022, according to data from food consultancy Gira cited by Reuters. Its UK market share tripled to more than 14% over the same period.

Profits are a challenge for manufacturers in countries such as Germany. China’s share of the Japanese poultry market is also increasing, while Thailand’s position as a leading supplier is declining.

The growing competition has raised concerns among rival exporters. Kukrit Arepagorn, manager of the Thai Broiler Processing Exporters Association, told Reuters that customers were increasingly using cheaper Chinese chicken prices as a bargaining chip.

However, Chinese expansion in Europe also faces regulatory obstacles.

The European Commission opened an anti-dumping investigation into imports of Peking duck from China in July after European producers claimed Chinese subsidies created unfair competition. The commission also last month imposed anti-dumping duties of between 41% and 67% on Chinese pea protein, Reuters reported.

Chicken has so far avoided such action, although European authorities are monitoring the market.

Southeast Asia is a key target for Chinese dairy companies looking to expand beyond their home market.

Yili, Asia’s largest dairy company, plans to start selling infant formula in the region as early as next year, according to Reuters. Its competitor Feihe launched its AceKid infant formula in Indonesia in April after it was introduced in the Philippines a year earlier.

The expansion marks an important step for Chinese dairy brands, which have faced lingering food safety concerns following the 2008 melamine contamination scandal. The episode disgusted thousands of babies and damaged consumer confidence in domestic dairy products.

Chinese companies are now trying to build international brands and compete with established suppliers, including Nestlé and Mead Johnson.

Chinese poultry producers are also looking to Central Asia, where partnerships can help them expand their reach while building local production capacity.

Sunner is working with countries including Uzbekistan to develop the presence of its poultry breeds and expand its international business. The company also started selling its domestic broiler chickens with white feathers in Africa and Central Asia.

Such arrangements offer Chinese companies another route to overseas growth beyond the direct supply of finished meat products.

Why China’s low-cost exports worry global manufacturers

The rapid expansion of Chinese protein exports is reshaping competition in markets that have traditionally relied on suppliers from Europe and the Americas.

For buyers, cheaper Chinese products represent an alternative at a time when price is a key consideration. But for exporters in Brazil, Thailand and Europe, the arrival of a large, price-competitive supplier threatens market share and pricing power.

This shift is particularly significant as agriculture and food remain among the few areas in which China has a trade deficit. That deficit stood at just over $100 billion in 2025, according to Reuters, though it is shrinking.

China’s growing protein exports also reflect developments in sectors such as steel, solar panels and electric vehicles, where its production scale and low prices have fueled trade disputes with overseas rivals.

A central question for regulators is whether Chinese manufacturers’ cost advantages reflect greater efficiency or are bolstered by government subsidies that could distort competition.

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