Core Viewpoint - The Ministry of Commerce of China has announced a preliminary ruling on anti-subsidy measures against imported dairy products from the EU, indicating that these products have received subsidies that harm the domestic dairy industry, with temporary anti-subsidy measures set to take effect from December 23, 2025 [1][2]. Group 1: Background and Rationale - The anti-subsidy investigation was initiated in August 2024 at the request of the China Dairy Industry Association and the China Dairy Products Industry Association [2]. - The preliminary ruling report, spanning 108 pages, details the existence of subsidies, the amount of subsidies, and the causal relationship between these subsidies and the damage to the domestic industry [2]. Group 2: Market Impact - The EU's subsidized dairy products, particularly cheese and cream, accounted for 23.6% to 34.6% of China's total dairy imports from 2020 to the first three months of 2024, making the EU a major source of these imports [4]. - The domestic dairy industry is currently facing challenges, including overproduction of raw milk and a lack of self-sufficiency in high-value processed products like cheese and butter [4]. Group 3: Industry Response and Future Outlook - There is a growing call for increased protection within the industry as raw milk prices decline, leading to widespread losses across the sector [5]. - The anti-subsidy measures are seen as a way to restore fair competition, allowing both domestic farmers and enterprises to compete under more equitable conditions [5]. - Industry experts suggest that domestic processing companies should leverage the current policy window to enhance product lines and processing capabilities, which will help them better compete against imports in the future [6]. - Companies like Feihe and Mengniu are already investing in high-value and deep-processing product projects, indicating a proactive approach to enhancing competitiveness [7].

Core Viewpoint - The Chinese dairy industry is entering a critical period for transformation and development, supported by government measures to counteract foreign subsidies that have negatively impacted domestic producers [1][5]. Group 1: Background and Context - The Ministry of Commerce initiated an anti-subsidy investigation into dairy products imported from the EU, responding to requests from the China Dairy Industry Association and the China Dairy Products Industry Association [2]. - The preliminary ruling found that EU dairy products received subsidies that caused substantial harm to the domestic industry, leading to the decision to implement temporary anti-subsidy measures starting December 23, 2025 [1][2]. Group 2: Market Impact - The EU accounted for 23.6% to 34.6% of China's total dairy product imports from 2020 to early 2024, indicating its significant role in the Chinese dairy market [4]. - The domestic dairy industry is currently facing challenges such as overproduction of raw milk and underdevelopment in high-value dairy products like cheese and butter, necessitating continued imports [4][5]. Group 3: Industry Challenges - The industry is experiencing widespread losses due to falling raw milk prices, high costs, and external pressures from imported dairy products, which have been exacerbated by EU subsidies [5]. - The China Dairy Products Industry Association highlighted that EU dairy products have entered the Chinese market at unreasonably low prices, harming domestic producers and reducing their capacity utilization [5]. Group 4: Future Opportunities - The anti-subsidy measures are seen as a way to create a fairer competitive environment, allowing domestic producers to strengthen their market position [5][6]. - Companies are encouraged to leverage the current policy window to enhance product lines and processing capabilities, which will help them better compete against imports in the future [6][7]. - The low prices of raw milk currently present an opportunity for processing companies to upgrade and innovate, particularly in high-value and deep-processing dairy products [7].