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

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

According to a Reuters report, China’s growing protein exports are helping large producers offset weak domestic demand while intensifying competition for established suppliers in Europe, Southeast Asia, Brazil and Thailand. The shift is also raising concerns about trade tensions, as Western producers question whether Chinese companies benefit from government support that allows them to sell products at lower prices.

China exported $2.6 billion worth of chicken products in 2025, almost 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 on track to reach $600 million in 2026, doubling in three years.

Why China is producing more meat and dairy than it can consume

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

For decades, pork dominated China's meat consumption, supporting a vast livestock industry and driving demand for animal feed. However, that pattern is changing as health-conscious urban consumers move away from fatty pork cuts towards alternatives such as chicken.

Per-capita pork consumption has fallen 13% since peaking in 2023, according to official data and state media cited by Reuters. In contrast, chicken consumption per person increased by more than 50% over the decade through 2024.

The slowdown in domestic demand has not stopped production from expanding. China's government has encouraged investment in large-scale livestock farms and offered subsidies to strengthen food security, rebuild animal herds and reduce dependence on overseas supplies.

According to the Reuters report, subsidies accounted for around 13% of Chinese agricultural producers' gross farm receipts between 2022 and 2024, nearly three times the level recorded in the early 2000s, based on data from the Organisation 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 tonnes of pork in 2025, while poultry output increased 7%. Its dairy sector also exceeded official production targets for 2025 two years ahead of schedule.

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

How Chinese companies are expanding production

Large companies are increasingly relying 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 profits 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 2.5 kg and are slaughtered in less than 42 days, helping the processor increase output and control costs.

Wintop general manager Dang Yangyang told Reuters that Chinese meat can be around $1,000 per 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 seek new sources of growth.

Where is China's surplus meat and dairy heading?

Chinese producers are expanding their presence across Africa, the Middle East, Europe and Southeast Asia, competing on price and seeking customers that 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.

Wintop has been receiving clients from countries including Ghana, Iraq, Jordan, Russia and Senegal, according to Reuters. The company is seeking to convert its cost advantage into greater market share in countries where buyers are looking for cheaper protein.

Chinese poultry products are priced around 10% to 20% below comparable Brazilian products, according to Ezequiel Pires, chairman of international meat trader Branexx, who told Reuters that his company began purchasing Chinese poultry in March after African customers sought less expensive alternatives.

Chinese dairy products are also making inroads. Milk powder from China is competing 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 dairy analyst Yifan Li of StoneX, as cited by Reuters.

2. Europe and the UK

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

According to data from food consultancy Gira cited by Reuters, China's share of the European Union's processed-poultry market has doubled to 10% since 2022. Its share of the UK market has tripled to more than 14% over the same period.

The gains are challenging producers in countries such as Germany. China's share of the Japanese poultry market is also increasing, while Thailand's position as the leading supplier is slipping.

The growing competition has prompted concern among rival exporters. Kukrit Arepagorn, manager at the Thai Broiler Processing Exporters Association, told Reuters that customers were increasingly using cheaper Chinese chicken prices as a benchmark in negotiations.

However, China's expansion in Europe also faces regulatory hurdles.

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

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

3. Southeast Asia

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

Yili, Asia's largest dairy company, plans to begin selling infant formula in the region as soon as next year, according to Reuters. Its competitor Feihe launched its AceKid infant formula in Indonesia in April, after introducing the product in the Philippines a year earlier.

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

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

4. Central Asia

Chinese poultry producers are also looking to Central Asia, where partnerships can help them extend 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 has also begun selling its domestically developed white-feather broiler chickens in Africa and Central Asia.

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

Why China's low-cost exports are worrying global producers

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 provide an alternative at a time when price is a key consideration. For exporters in Brazil, Thailand and Europe, however, the arrival of a large, cost-competitive supplier threatens market share and pricing power.

The shift is particularly significant because agriculture and food remain among the few areas in which China runs a trade deficit. That deficit stood at just over $100 billion in 2025, according to Reuters, although it is narrowing.

China's expanding protein exports also echo developments in sectors such as steel, solar panels and electric vehicles, where its manufacturing scale and low prices have prompted trade disputes with overseas competitors.

The central question for regulators is whether Chinese producers' cost advantages reflect greater efficiency or are being reinforced by government subsidies that could distort competition.