The New Economist Intelligence Unit (NEIU) located in Beijing urges China to add milk and milk powder to national consumption subsidy programme to cut family costs and boost dairy demand, helping stabilise the dairy supply chain. It calls for pilots using existing digital voucher systems with caps and traceability to prevent abuse.
A Beijing-based policy group, the New Economist Think Unit (NEIU) , has called for milk and milk powder to be included in the next phase of China’s national consumption subsidy programme, arguing it could ease household costs while unlocking demand and supporting an upgrade across the dairy supply chain.
In a newly released public report, the NEIU said expanding the subsidy scope to cover dairy would align with two key policy priorities: boosting consumption and safeguarding livelihoods. The proposal lands as the Central Economic Work Conference reiterated the need to “deeply implement” a special action plan to stimulate consumption, and as “15th Five-Year Plan” proposals position a higher household consumption rate and stronger domestic demand as major development goals.
Over the past two years, China has already used a mix of policy tools—such as trade-in schemes for consumer goods, purchase subsidies for digital products, and interest subsidies for consumer loans—to help pull demand forward, the report noted.
The New Economist Intelligence Unit (NEIU)’s head told AgriPost that a closed-door seminar planned for late January 2026 will discuss how the 2026 subsidy scope could be optimised and expanded, whether the overall subsidy envelope and intensity can be further increased, and whether everyday and service consumption should also be brought into the programme. Leaders and experts, including a former vice minister of the Ministry of Agriculture and Rural Affairs, are expected to attend, with policy recommendations to follow.
Why dairy is being framed as “strategic”
The NEIU argued that milk and milk powder are not ordinary consumer goods, but carry three strategic attributes: baseline nutrition security, rigid household spending, and broad industrial linkages.
It highlighted the dairy chain’s role in connecting “millions” of dairy farmers and vast rural areas upstream, while feeding into a large retail network downstream—positioning the sector as a stabiliser for jobs and a conduit for smoother urban–rural economic circulation.
Putting milk and milk powder into the subsidy basket, the report said, would deliver direct financial support to target households, reduce the cost burden on “the elderly and the young,” and—crucially—use demand-side leverage to inject certainty into a pressured dairy sector and stabilise the industry’s fundamentals.
That pressure was underscored by Pro.Li Shengli, chief scientist with the National Dairy Cattle Industry Technology System, who said in mid-2025 that China’s dairy farming sector suffered cumulative revenue losses of CNY 70.00 billion (USD 9.75 billion) from 2023–2025, while losses linked to turning fresh milk into powder totalled CNY 20.00 billion (USD 2.79 billion). He argued that government support and project subsidies alone are unlikely to solve the problem at its root, and that capacity reduction is currently the most effective way to rebalance supply and demand and stabilise milk prices.
The New Economist Intelligence Unit (NEIU), however, pointed to what it described as a sizeable consumption gap: China’s per-capita dairy consumption is only 37% of the world average, and remains well below recommendations in the Chinese Dietary Guidelines—with the largest shortfalls in counties, rural areas, and low- to middle-income households. Direct subsidies at the point of purchase, it said, could lift market demand and feed more stable expectations and cash flow back through the chain.
In its view, stronger end-market demand would help:
- Upstream: support farm incomes, prevent sector slippage, safeguard national “milk bottle” security, and protect the livelihoods of millions of farmers and herders;
- Midstream: raise utilisation at processors, encourage R&D, improve product mix, and accelerate the development of functional and more affordable products suited to Chinese consumers;
- Employment and rural development: keep jobs across the chain and support rural areas in consolidating poverty alleviation gains and advancing rural revitalisation.
Feasibility, funding, and guardrails
The report argued the policy direction is clear and can be connected to existing frameworks. It cited the Outline of the Strategic Plan for Expanding Domestic Demand (2022–2035) issued by the CPC Central Committee and the State Council, which calls for promoting healthier dietary structures and increasing the supply of healthy and nutritious agricultural products and foods.
It also noted that in July 2025, the General Office of the Ministry of Agriculture and Rural Affairs proposed expanding “welfare-oriented” dairy consumption and encouraging the issuance of milk consumption vouchers to specific groups. Adding milk and milk powder to the national subsidy programme, it said, would dovetail with broader national strategies including domestic demand expansion, support for childbirth, and the development of the “silver economy.”
On the fiscal side, the NEIU described the scale as manageable and suggested funding could come from restructuring existing consumption-boosting funds—such as integrating or replacing expiring subsidy items—or from earmarking proceeds via special government bonds, to avoid crowding out essential livelihood spending.
Operationally, it said the delivery mechanism is already mature: China has built digital systems across areas such as consumption vouchers, childcare subsidies, and appliance trade-ins, covering eligibility checks, fund disbursement, purchase verification, and process supervision. A dairy subsidy could be plugged into these platforms with minimal friction.
For risk control, the NEIU proposed setting annual purchase limits per person and per household, as well as per-product subsidy caps. It also suggested using tools such as product traceability codes and blockchain to curb stockpiling and arbitrage, and to improve oversight.
The NEIU called for pilot programmes to start as soon as possible, describing the proposal as a policy with both “livelihood warmth” and “economic depth,” and arguing it could benefit hundreds of millions of households while supporting a more durable economic recovery and longer-term demographic balance.
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