• Europe’s conversation has shifted from market access to trade deficits, industrial decline and broad protection against Chinese overcapacity.

• Biomanufacturing will be a tariff battleground. Anti-dumping duties have already spread from steel and solar panels to products like lysine and erythritol.

• Tariffs alone won’t win the next industrial race. They can only be a protective moat while innovation leaps forward.

The EU discussion on China looks more and more like the US – deficits and job losses

The EU industrial complex is hopping mad about China. This is across the industrial spectrum. This blog is mostly about bioindustrials, but let’s start with the VDMA – a 3500-member strong group representing the European machinery and equipment. They recently published an updated position paper on China that called for:

· Better tailored export controls toward China

· More countervailing and anti-dumping tariffs

· Reverse the burden of proof for tariffs – if an industry is seen to be dumping, then it is up to the Chinese company to prove that it is not dumping.

· Strengthen market intelligence to catch Chinese breaches of EU legislation

· Sign free trade agreements with anyone but China (VDMA suggests Thailand and Malaysia)

· Making public procurement conditional on reciprocity – basically if you can’t sell to governments in China. Then Chinese firms should not be able to sell governments in the EU.

VDMA President Bertram Kawlath summed up the entire report pretty succinctly: “We ​must not allow ourselves to become pawns in a game of subsidies, dumping and currency manipulation.”

The VDMA position is the latest in a long line of European industry groups to get a similar position. The have all undergone the following transformation (although the specific timelines vary):

• Pre–2018: “Help us access China’s market. It’ll make us rich”

• 2018–2023: “Help us compete fairly in China’s market.”

• 2024–2026: “Protect us domestically/globally from China’s overcapacity and subsidies. It is making us poor.”

That is at the industry level. At the policy tool level, individuals are arguing for further restrictions.

Sander Tordoir of the Centre for European Reform, together with Brad Setser, has called for a broader, U.S.-style approach to Chinese trade discrimination – high tariffs across a wide range of industries.

The discussion is starting to move more toward trade deficits which sounds exactly like the US in Trump version-1, although the EU is more tightly focused on China right now.

And the graph below show, the trade deficit has been heading in one direction only.

Differing views from Brussels and Beijing

As far as Beijing is concerned, there is nothing to see here. It is not their fault that European products are uncompetitive. And they advocate for what they would call free trade – low tariff barriers and let the best product win.

Of course, anyone in the real world who has tried to sell in China knows that it is much easier to do so when manufacturing in china, because of a suite of sweeteners throughout the entire industrial chain. These do, admittedly, get removed as industries mature.

But, in “emerging” sectors, Beijing is actively encouraging overcapacity. According to China’s macroeconomic planning agency’s (the NDRC) annual report: “In emerging industries, we will allow appropriate surplus capacity and encourage competition and innovation.”

From Europe’s perspective, Chinese company profitability has declined sharply, yet they are selling more than ever which smacks of overcapacity.

There are lot of companies doing huge amounts of cool stuff in developing new technologies in China which will continue regardless – this will be a fundamental challenge for both the EU and US (and probably India, Japan, Korea, ASEAN as they steadily ramp up tariffs on China). But the tariff wall looks to be coming down.

So, what about bio brawls?

All this competition is spilling over into the Bio-space (excl pharma). The traditional EU approach of applying anti-dumping tariffs to specific products is still going on. Until a few years ago, this mainly applied to non-bio products such as solar panels, wind turbines, ceramics, and bicycle components. However, in 2025, the EU applied a roughly 50 percent antidumping tariff on Lysine (an amino acid) for five years. In 2025, the EU also applied anti-dumping tariffs of between 34 and 233 percent (depending on the producer) on Erythritol, a sweetener, for five years.

This is the tip of the iceberg for bio- and chemical-related anti-dumping tariffs. A senior EU official speaking to the Financial Times said, “There is a huge volume of cases … Chemicals now account for almost half of new trade defence cases.” It is possible there will be wide ranging tariffs on bio-based producers exporting to the EU at the same time that China is trying to develop new biomanufactured products.

“The whole chemical industry is bleeding,” said Rudy Miller, vice president of Belgian chemicals business Vynova. “It’s industrial suicide.”

Chemicals lobby Cefic estimates that the European industry has shed nearly 10 percent of its capacity and 20,000 jobs over the past three years.

This leads to two lines of thinking. One, that tariffs will be needed to protect traditional biomanufacturing and chemical manufacturing. But I think more critically, there is a need to use tariffs to buy time to win on the next set of industrial transformations. This includes biomanufacturing.

As Janka Oertel and Nina Schmelzer argue, Europe must “look beyond protecting the incumbents” and instead “build the conditions for new industries to thrive.” They contend that policymakers should not view biomanufacturing simply as another industrial sector, but as “a strategic foundational technology layer” capable of reshaping industrial competitiveness, warning that Europe risks once again “inventing the future only to surrender its strategic power” if it fails to act.

• Industrial profitability stats tell us much more about China’s economic wellbeing than GDP stats

• Industrial profits have been declining – hard – for four years.

• There have been some small green shoots this year for Chinese industrial profitaility this year

• It remains government policy to produce too much, despite claims to the contrary.
  

Intro

This is a change of pace for this publication – usually it is about new bio-builds in China. But China’s biomanufacturing revolution occurs within the bigger frame of the Chinese economy.

If you are an investor, importer, government official working on economic security or competitor with Chinese manufacturing, there is much Chinese data out there. Much of it not helpful.

Industrial profits are more useful than GDP

China’s Q2 economic data was recently released. Its YoY GDP growth was 4.3% which by China’s past few decades is pretty slow growth.

But, in my view, it no longer tells us anything meaningful.

1)For the average person, China does not feel like an economy growing at 4.3%. For all of China's continued export prowess, the domestic economy remains under strain. China's largest fiscal revenue sources—tax revenue, non-tax revenue and land-sale revenue—have declined substantially from their 2021 peak (see Figure 5 in the link). House prices have fallen for roughly four years (although in many parts of the world housing has become unaffordable, so lower prices are not entirely negative). Wage growth for many ordinary workers has slowed to the low single digits, although scarce, highly specialised AI and semiconductor talent can still command rapidly rising salaries. China's major stock market indices, despite a recent rebound, remain below their previous peaks. It also remains difficult to move money out of the country.

Thus, it is challenging for the average person to build wealth. This is not typical of an economy growing at 4+%. The counter would be that Chinese public amenity has dramatically improved which is fair. This means, an average Chinese person, while unable to rapidly build wealth, enjoys a decent standard of living. But it has become harder for them to afford to go abroad. It is an amenity cage of sorts.

2) 4.3% is not slow growth for an economy of China’s wealth and size. The media focuses on “China’s economy is slowing”. That’s true. But if China is able to maintain 4% growth (even 3.5% growth), its total economic size will continue to grow more quickly than the rest of Asia because it is already the biggest economy by a long way (4% growth on 20 trillion is a lot more the 7% growth on 4 trillion – India’s GDP). So, we have strong economic growth and weak economic conditions.

3) The figures might be massaged. There are lots of alternate estimates that suggest China’s growth is slower than official figures. I’m not sure. It is entirely possible that China is still building enough factories and infrastructure (not real estate anymore) that GDP is close to its real figure – even if that has little bearing on individual well-being. China’s exports just keep growing and growing and growing. We (analysts) end up throwing around all sorts of numbers based on partial evidence from outside the government.

So, if GDP is either unreliable or unrepresentative, where do we look?

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Industrial profits have been a blood bath

The place I look for the real story of China’s economy is industrial profits. This tells an observer whether all of China’s industrial output has translated into actual wealth. It avoids the question of non-representative GDP data and tells us whether all this extra production is making money.

Don’t listen to news reporting which often focuses on single months. Look for long term series trends. I find these in two ways. 1) CEIC collates all Chinese economic data in a single easy-to-manage place (it is paywalled). The two series I read are “Total Profit: Industrial Enterprise” and “CN: No of Loss Making Ind Enterp: Total” 2) The same series are publicly available through China’s National Bureau of Statistics (NBS), titled “Profits of Industrial Enterprises Above Designated Size (规模以上工业企业利润总额)”. But the data is cut and presented in ways that are intended to make the economy look good. You have dig into the bowels of the NBS data to collate it in the same way as the CEIC data which is very annoying, even using an AI agent.

After extracting the aforementioned data, a clear trend emerges. China industrial profit (This covers firms with annual revenues of at least 20 million yuan from their ​main operations) has been declining for four years, despite sustained export growth.

This tells us that companies, despite producing more, are making less money. That sounds like overproduction (or overcapacity), and it makes the claims of dumping on international markets understandable. It also explains the GDP-growth vs average Chinese person outcomes. GDP growth occurs because factories are built and stuff is produced. But the average person does poorly because of lack of profit.

This translates into the percentage of unprofitable industrial companies steadily rising since 2017. (I used ChatGPT to create the graph below based on several CEIC datasets).

Overall, Chinese industrial firms are making less money, and 25% of the time losing money. So, it’s no wonder the average person feels poorer.

Why is this happening?

China views manufacturing prowess as a source of security in a volatile world. And it views technology – including manufacturing of technology – as the solution to economic malaise. This is topped by hyper intense regional competition in China that props up unprofitable companies longer than would happen elsewhere. This drives down wages and domestic consumption because money is being put into unprofitable factories rather than household wealth.

In theory, China is prioritising high-tech manufacturing over mature technologies (something we write about all the time in this blog). But as Yasheng Huang writes: “The puzzle is not why China exports cars, but why it is still exporting t-shirts.” Once manufacturing goes into to China. It rarely comes out.

There are two Chinese government quotes that capture this essence.

Xi Jinping 2020: “We must tighten international production chains’ dependence on China, forming a powerful countermeasure and deterrent capability against foreigners who would artificially cut off supply [to China]”

The NDRC’s (China’s government macroeconomic planning agency) most recent annual report: “In emerging industries, we will allow appropriate surplus capacity and encourage competition and innovation.”

So, it is government policy to produce too much, despite claims to the contrary, even if it is trying very hard to direct that overcapacity into new areas.

To be very clear, Chinese firms are taking up the task. There are fantastic new technologies both at scale and in the lab in China (again, the whole purpose of this entire Substack). It is incredible. But it still sits within a broader framework that for quite some time there has been an increasing number of unprofitable companies accross the whole economy.

The bet is that leading in new technology will get China out of these doldrums.

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The changes this year: A concentrated number of firms are making more money. But the number of unprofitable firms remains the same.

There is, however, an important caveat. Over the past few months, headlines such as “China industrial profits stay resilient as economy leans on factories, exports” have become increasingly common. They are not wrong. Since around March, China’s industrial profits have staged a recovery compared to last year. Though they remain below 2021 levels.

Yet, the % of unprofitable companies remain the same. What that tells us is that – over a very short time period compared to the extended decline – is that a group of companies are doing well while the rest of the economy is still stuck in the same muck.

And as the next section shows, even the sectors making money have razor thin margins.

What sectors have done well?

The NBS publishes sector-wide profitability numbers. The data suggest that, among the biggest industries, there are three areas experience growing profitability in this calendar year: computing equipment (incl. chips); metal refining and smelting (like aluminium and copper); raw chemical materials (see table at end). The rest are doing terribly still.

All of these are inputs into China’s manufacturing machine. Prices for these types of products have grown, that explains some of the margin gain. But not all of it. It suggest there must be some cost reduction by the manufacturers themselves. Perhaps they shutted excess capacity.

Finally, the profit margin for all these industries is exceptionally low. It is so hard to make money in manufacturing these days anywhere in the world. Because China is the world’s factory and its companies aren’t making margins. So global competitors end up in the same boat.

If we see this profitability continuing to rise and going into a wider range of companies then that would be fair play to China - they would have found a way to turn massive production into profits. I’m not conviced it will happen economy-wide (although China has a habit of proving people wrong). I believe we will see hugely innovative new companies come out of China at a rapid rate.

But every time you see the headlines one way or another on China, just go check industrial profitability year-on-year for the last decade. It will tell you the true story.

Table: Profits of Industrial Enterprises in Major Industries

Source: National Bureau of Statistics of China (2026), 2026年1—5月份全国规模以上工业企业利润增长18.8% (“Profits of Industrial Enterprises above Designated Size from January to May 2026”), Table 3: Key Financial Indicators of Industrial Enterprises above the Designated Size from January to May 2026 (By Industry). The aggregate utilities sector is taken from Table 1. Profit margins are calculated by the author as Total Profit ÷ Business Revenue.

• A wide variety of facilities are being built NOW from small scale pilot up to commercial

• There is a big emphasis on lab to scale pathways.

• Industrial biotech produces so many more products than batteries, EVs and solar combined. It will be a pipeline of products for decades.

Xinhong Biomanufacturing Industrial Park groundbreaking ceremony

The context

Over the last month, multiple new Chinese “synthetic biology” manufacturing facilities and pilot platforms have come across my desk. Some are being constructed now. Some are agreements to construct.

This is political will turning into projects on the ground.

It feels like other technology booms we have seen where political will turns into huge capacity, knife-fight competition between companies, and significant new commercially viable products at the end of it. This is assessment based on gut feel – I am not comparing current synthetic biology construction with previous levels of construction in China, nor am I comparing with global construction.

Synthetic biology (or biomanufacturing) is somewhat different with previous Chinese technology disruptions. China has a much deeper startup ecosystem now. So, there will be a wide range of scientific innovations working in lock-step with scale and engineering innovation.

Secondly, biotechnology can produce an extraordinarily wide range of products. New products will be added for decades. The pipeline is extremely long. This will look different to EV, batteries and solar cells which is a much narrower group of products that get iterated.

Finally, we could see overcapacity in new industrial bio-based production which given the funding environment in the rest of the world had seemed very unlikely. As the Chinese government says “In emerging industries, we will allow appropriate surplus capacity and encourage competition and innovation.”

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What type of facilities are being built?

• A wide variety of facilities being built. It is the full stack from high throughput early stage pilot to full commercial for a target molecule.

• A lot of end-to-end industrial bases that connect research to scale

• Many molecule-agnostic “bases”, “platforms” , “ pilots” etc.

• The molecule agnosticism is probably due to local governments and maybe some companies still working out what they want from SynBio. I suspect it is case of start moving and solve problems along the way.

• As always (and in many countries), there is a political rebranding of not particularly advanced facilities. The Ruifen facility below appears to producing products (erythritol and allulose) which have long been produced by biomanufacturing.

• Gut feel – these facilities look relatively inexpensive for their size

Example facilities

Xinhong Biomanufacturing Industrial Park （信虹生物制造产业园）(Construction commenced in April 2026)

o Total investment of RMB 750 million (~USD 110 million)

o Being led by Jiangsu Jiangshan Pharmaceutical and JLand Biotech – two big traditional biomanufacturers

o End-to-end (research to scale up) of product development

o Wide range of potential applications (probably will be pared down in future): “The project focuses on the research and development and production of high-value-added precision nutrition products, cosmetics and medical devices, pharmaceutical intermediates, and Class II and III medical devices, aiming to build an advanced biomanufacturing industrial base”

The Ruifen Biosynthetic Bio-Industrial Base (瑞芬生物合成生物产业基地项目) in Inner Mongolia (project approved in April 2026 – construction timeline unclear)

o Annual production capacity of 25,000 metric tons of erythritol and 5,000 metric tons of allulose (赤藓糖醇25000吨、阿洛酮糖5000吨)

o The total investment for the project is 300 million yuan (~USD 45 million)

o Allulose used to produced in small amount but has grown due to more widespread use as low-calorie sweetener (so same product, new application). I suspect a lot of allulose plants are going up in China.

o Erythritol – another food sweetener - has faced overcapacity but not so bad now. I suspect yearly production between the products will vary based on price.

Changde Economic and Technological Development Zone Synthetic Biology Manufacturing Pilot Base常德经开区合成生物制造中试平台 (opening in June 2026)

o Two 5-ton fermentation lines, two 20-ton fermentation lines, and one post-processing line with a daily capacity of 20 tons already built

o A 1-ton food-grade pilot line and a 5-ton non-GMP standard pilot line to be constructed.

o Focused on four major sectors: biomedical and cosmetic ingredients, bio-chemicals, bio-agriculture and food, and new biomaterials. (which is a huge part of the economy, so they have not worked out areas of focus yet)

Hangzhou Synthetic Biology Pilot (Validation) Center and Commercialization Base杭州合成生物产业中试（验证）中心及产业化基地

o Equipped (or to be equipped) with multi-stage fermentation, catalysis, and separation equipment ranging from 0.1-liter small-scale tests to 1000-liter pilot-scale tests, it can achieve full-process development and verification from strain design, fermentation scale-up, enzyme-catalyzed conversion to product purification.

o The timeline is a little unclear. I read it as already having some facilities. But I also found a call out for tenders in April 2026 to build a large facility in the same location, so I guess that it will be an expansion of what is already there,

Jiande Synthetic Biology Innovation Industrial Park (Phase II) 建德合成生物创新产业园（二期）(Expected to be completed in October this year)

o No products listed in the announcement, so I assume this is designed to attract a range of potential companies to R&D + manufacture in this location.

o Total estimated investment of over 290 million yuan (~USD 43 million) and a total construction area of ​​approximately 38,000 square meters.

Blue Light Key Synthetic Biology Pilot Production (蓝色光钥合成生物中试生产基地) (Deal signed to build, but no completion date yet)

o 7,000 square meters. It will be supported by “synthetic biology technology + pilot-scale amplification + industrial transformation,” which mean the scale up to industrialisation will be focus.

o Many potential application listed in these announcements: “application of marine functional molecules, further serving the development of the blue ocean economy, non-grain biomanufacturing, precision nutrition and future health industries”

Angel Yeast Phase II of Baiyang Biotechnology Park Project(白洋生物科技园项目二期) (To be operational sequentially in 2027 to 2028)

o 797 Million Yuan (~USD 118 million)

o ~30,000 tonnes of yeast protein annually

o Angel Yeast has existing facilities that are struggling to keep up with demand

More Meat Mycoprotein facility in Guangzhou (to be operational soon)

o Large scale manufacturing of Mycoprotein

o JV between a novel food startup and a traditional big biomanufacturer in China (this will become a very common model – high tech science meets engineering and scale)

o The text above only shows the announcement. But I visited More Meat in April and they said the facility was getting close to production runs.

• China wants to develop seed companies that can provide for Chinese farmers and the world

• China has achieved self-sufficiency in seeds for staple crops, but progress is needed for more diverse produce

• The next battle will be over who supplies seeds to the rest of the world

• China is particularly interested in ensuring the international exporters of food to China use Chinese seeds

China wants to own seeds and breeds

China has a long history of worrying about food security, since well before Communist Party came to power in 1949. This history has tended to involve growing a significant amount itself and ensuring that China has broad access to global imports.

The comfort with imports, however, has declined. China has begun to apply tariffs to beef imports over a certain quota. It is trying to find a domestic replacement for animal feed imports too.

Since the early 2020s, food security has gone even further to ensure that China owns and domestically produces the seeds that feed its country. China is betting that investment in “seeds as agriculture’s micro chips” (种子是农业的‘芯片) will narrow yield gaps with advanced economies, thereby shaking old reliances on multinational seed companies. The country has already made strong progress.

The bigger goal is for Chinese companies to compete with multinational agribusinesses globally through independent innovation.

This interest has been reflected in a flurry of policies and announcements across the first half of this decade:

• In April 2025, China published the Plan for Accelerating the Construction of China into an Agricultural Powerhouse (2024-2035) (the key document)

• One of the PRC’s eight economic priorities for 2021 was solving the problem of seeds and arable land

• In 2022, the No. 1 Central Document noted that the seed industry is “the foundation of agricultural modernization”

• In 2024, the National Nanfan Silicon Valley Construction Plan (2023-2030) was published, outlining steps for the transformation of Nanfan Breeding Base in Hainan into Nanfan Agricultural Silicon Valley (南繁硅谷). Latest numbers indicate the base has attracted over 200 seed companies and over 30 major scientific research platforms.

• The Standing Committee and State Council continue to publish documents advocating for domestic seed breeding and production.

Aim 1: China’s seed self-sufficiency

Overall, China is now mostly self-sufficient for the triad of staple crops (maize, rice and wheat). China is relatively self-sufficient in vegetable seeds but less so for forage seed (grasses that livestock eat).

Grain seeds

The USDA’s Beijing post releases annual estimations of China’s seed production, stocks and demand.

From this data, I (Tom) have calculated China’s seed self-sufficiency, the ratio of domestic production to domestic demand (some of the seeds are exported in practice). The chart below shows China’s self-sufficiency this decade.

Across the triad of staple crops (maize, rice, wheat), the self-sufficiency ratio has consistently been around or above 100%, which means China is producing more seeds than it needs for domestic usage. (note: columns marked with an asterisk indicate that the USDA did not disclose actual numbers, but there was a statement along the lines of “China is self-sufficient with respect to x”).

Soybean seed production is also adequate to meet seed demand. This is misleading however, as China remains reliant on soybean import; domestic soybean production covers 20.9 MMT of the total 132.9 MMT consumed.

According to a recent publication from the Chinese Academy of Sciences, even with full utilization of cropping land, China would only be able to achieve 77% soybean sufficiency. But even this solution would require a 5.3-fold increase in sown area, which could not be covered by China’s current soybean seed production or stocks. So full self-sufficiency in soybeans is not feasible, but using Chinese developed seeds for local growing is possible.

Non-grain seeds

Grains are not everything in a diet, and outside of staple crops, there are two major seed types worth considering; vegetable seeds and forage grass seeds (which are used to grow feed for livestock and thus indirectly contribute to food security). The latter is becoming increasingly important due to the “Grain-to-Feed” (粮改饲) policy which aims to cut the share of soybean in animal feed, supplementing it with forage crops.

Self-sufficiency in these categories looks like a feasible goal in the near-term. China’s Ministry of Agriculture and Rural Affairs estimates that China’s annual vegetable seed usage is 100,000 tons. Seed imports are around 9,000-10,500 tons only. This seems to indicate a self-sufficiency of ~90% in vegetable seed in broad terms.

By 2030, China aims to increase its forage seed self-sufficiency rate to 75%. While there is no official data on the current rate, USDA estimates place it at around 55-60%.

Aim 2: China competing in international seed markets

The second aim that arises from the Plan for Accelerating the Construction of China into an Agricultural Powerhouse (2024-2035) is to gain an international competitive advantage in seed tech.

This aim neatly sits alongside the “new quality productive forces” (新质生产力) framework for technology-led growth and national competitiveness. There are two ways through which we are seeing China’s effort to increase international competitiveness:

• Smaller Chinese companies are venturing into foreign seed sectors

• State-owned enterprises are going global through the acquisition existing transnational corporations

Overall, the new model is innovation coupled with agricultural suppliers in source countries for China. The end goal is to make Chinese seeds a viable choice for farmers globally.

Venturing into foreign seed markets

China’s agricultural ‘going-out’ (走出去战略) strategy refers to the spread of Chinese actors’ participation in foreign agricultural markets.

Expansion of domestically developed seed varieties to developing countries is well documented: Martin Spies has written about the strong position Chinese firms have come to hold in Tajikistan’s maize seed market and Pakistan’s rice seed market (see the chart below).

This is good for farmers in those countries, it gives them extra choice about seed providers. Chinese companies are simply doing this to make money. As the chart earlier highlighted, both maize and rice seeds are produced at levels 100% greater than China’s annual need. So there is a simple economic reasoning for the push into overseas markets to this point.

These are hybrid seeds which bear a strong commercial advantage (for the seed developer) because they do not reproduce true-to-form, meaning that it does not perform similarly across generations. Farmers therefore need to purchase seed each season anew, creating a perpetual market for seed. Spies cites that this is accepted by farmers who believe the trade-off for higher yields is rational.

The hybrid seed reliance is not unique to Chinese seed developers, other large multinationals do it too. This is why China itself has decided to not rely on foreign seed producers because Chinese farmers need to buy new seeds each year - a source of food security risk.

Even when some amount of seed is multiplied locally, this still relies on foreign proprietary technology, and so foreign actors can theoretically exert disproportionate influence over food security in crop-dependent economies.

The obvious next question is whether reliance on Chinese seeds creates leverage for China over other countries.

The desire for this kind of leverage is certainly consistent with China’s broad political ambitions. Xi Jinping stated in 2020 China should “strengthen the dependence of international industrial chains on China, thereby creating powerful countermeasure and deterrence capabilities” (拉紧国际产业链对我国的依存关系，形成对外方人为断供的强有力反制和威慑能).

However, our assessment is that it can only create short-term leverage. It is annoying to change seeds and techniques (understanding disease resistance, fertiliser needs etc), and alternatives may be more expensive (farmers in Tajikistan and Pakistan are typically price sensitive). But farmers usually have other alternatives.

Similarly, advancements in seed biotech have typically been used as a ‘carrot’ rather than a ‘stick’ in statecraft; for instance, the US shared high-yield crop varieties through Europe, Asia, and Latin America during the Cold War as a means of countering Soviet influence (through the Marshall Plan and the JCRR). However, we are not aware of deliberate use or withholding of seeds or seed technology for geopolitical reasons (let us know if you have any examples).

China would also like to push its seed varieties to corn and soybean suppliers in South America. So even if there is not strict self-sufficiency in food production, there will be self-reliance in the supply chain.

Yuan Longping High-Tech Agriculture Co supplies 21% of Brazil’s corn seeds. Da Bei Nong secured Genetically Modified soybean trait approvals in Argentina, Brazil, and Uruguay.

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The changing model: acquisition to genetically modified innovation

The primary obstacle to China’s going-out strategy is that most seed markets are monopolised by multinational firms. Bayer, Corteva, Sinochem (formerly Syngenta) and BASF together control 60% of proprietary seed sales.

Acquiring multinational seed firms has been one policy pursued by China. The most obvious case of this is the then ChemChina’s (now Sinochem) takeover of Syngenta in 2017. Prior attempts to steal seeds to obtain this knowledge are well documented. Another case is Longping High-Tech’s acquisition of Dow’s Brazilian corn seed business in 2017, which included both research and production sites.

These would likely be blocked by the EU or US in 2026 and so is no longer a viable strategy.

China is now embracing GM crops and the seeds to simply create better seeds (which is the product). China’s agriscience ambition is reflected in the trajectory of GM crops. Over a three-year pilot project launched in 2021, cultivated area increased from 200 mu to 4,000,000 mu.

Seed technology is a means for China to ensure the food they do import is made with Chinese seeds. By the end of 2024, China had issued 35 biosafety certificates for GM crops to seed companies, including Longping High-Tech.

Nevertheless, China is starting from a disadvantaged position in agriscience. In 2023, the R&D of the nationwide seed industry in China was 7.6 bn yuan (6% of revenue; about 1.1bn USD). This is less than each of the major multinational seed companies; e.g. in the same year Corteva spent 1.3bn USD on R&D.

This suggests that it is probably a long time until we see Chinese firms (outside Syngenta) break up the hegemony of the global seed market.

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China’s GM play runs directly into the US

If China wants to export genetically modified seeds, it needs the US. The US had 62% of the GM market share (due to slower adoption elsewhere). If China’s ambition is ultimately in advanced seed biotech for GM crops, then it will need to sell to the US - or hope/convince other countries to adopt GM technology.

That is a hard sell. US policymakers could effectively prevent Chinese firms or firms with China connections from competing. There is already a precedent for this with Arkansas ordering Syngenta to sell its 160 acres in the state. This land had been under Syngenta’s control for 35 years and housed facilities for research and regulatory trials, making it clear that Chinese agribusinesses will need to conform to the US’ national security interests.

• The project list, like others we have covered, tells the industrial ecosystem what type of project is a priority

• The focus of this list is on R&D such as enzyme strains and saccharification, but there are industrial scale projects too - pointing to a preferred future with more industrial-scale non-food feedstocks.

• The plan names two specific industrial clusters - near farmland - to be future leaders of non-food feedstock biomanufacturing

Article

Over the last year, we have covered four model project lists published by China’s Ministry of Industry and Information Technology (often in conjunction with other departments)

These lists serve three purposes. One, they tell the broader ecosystem of universities, local governments, companies and financiers what type of projects are desirable. Two, it funnels money toward projects on the list. Local governments provide moderate subsidies to companies that have projects recognised at the national level. It is also easier to obtain finance if a project is on the list. It is unclear to us whether projects get direct money from national-level MIIT for being on the list. Three, it reaffirms the national government’s broader commitment to biomanufacturing.

In January 2026, the Ministry of Industry and Information Technology and Ministry of Agriculture and Rural Affairs together announced a list of “Typical Cases of Innovative Development in the Non-Grain Bio-based Materials Industry” (两部门关于公布非粮生物基材料产业创新发展典型案例的通知).

This particular announcement is strategically interesting because it again mentions non-grain feedstocks (i.e not competing with food) which builds from a three year plan non-grain biomanufacturing plan (2023-2025). Dirk on his recent trip to China saw companies actively building large scale facilities to convert corn and rice stalks to chemicals. It is also interesting because of the focus on materials. Our team is currently collecting data on global bio-based capacity. One of the early findings is that China is building a lot of bio-based materials capacity.

The announcement divides the cases into three categories: technology innovations, application scenarios, and speciality clusters. ~70% of the focus of this announcement is at the R&D level because turning economically non-food feedstocks into usable biomanufacturing material is still nascent (notwithstanding the notes on Dirk’s China trip above). There are, however, a fair few scaled up projects. So, this list is connecting the initial research to the broader industrial ecosystem.

A full translated table can be viewed here.

Key technology innovations (mostly R&D)

The majority of the announcement (25 out of 35 typical cases) focused on companies targeting fundamental R&D. This covers industrial strain design, enzyme engineering, saccharification of non-grain biomass and development of fermentation platforms.

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We can compare this to the 2023 “Three-Year Action Plan for Accelerating the Innovative Development of Non-Food Bio-Based Materials” (加快非粮生物基材料创新发展三年行动方案). Among other goals, this action plan contained a target list of 32 molecules that China wants to manufacture from non-food biomass.

Of the target list of 32, 8 are covered in the new announcement. This provides a clear insight into how firms in China are responding to government targets. The emphasis among firms is towards upstream building blocks for bioplastics and biotextiles, which is unsurprising given government regulations over single-use plastics.

These are mostly at the research level, we have picked out the new advances for these targets:

Application scenarios (larger scale, geared toward to end-use product)

The announcement also recognised 8 application scenario expansions. The distinction between this category and technology innovations (above) isn’t clearly articulated in the document.

Our working assumption is twofold. One, the application scenarios lean more toward end-product products such as PLA bottles or filaments for 3D-printing. This is not a perfect delineation. PHABuilder’s usage of genetically engineered strains is also listed as an application scenario.

Two, the application scenarios also lean toward larger-scale production. With the exception of PHABuilder and ESun, the companies identified here claim to have production capacity of at least 100,000 tons per annum.

Of course, not all of this is from non-grain feedstocks but it indicates that investment in the feedstocks of the future is being shared across the country and not just shouldered by academic labs and early stage start-ups.

This is important, as these companies have already put steel in the ground. Where research in other nations has stalled from difficulty accessing scale-up capacity, future feedstocks are already being introduced at the same industrial plants as existing processes.

Speciality clusters indicates a co-localisation industrial policy

The last part of the announcement was that economic development zones in Anhui and Henan have been identified as speciality clusters: these are industrial areas that are already using non-grain feedstocks and have a broader biomanufacturing base already. It is likely that most of the existing biomanufacturing in these locations is still using corn or sugar.

The Guzhen Economic Development Zone (安徽固镇经济开发区) in Anhui houses the BBCA Group (丰原集团), and in particular its PLA manufacturing base to produce 500,000 mt/y lactic acid and 300,000 mt/y of PLA. Other BBCA subsidiaries in the region are producing vitamins at 150,000 mt/y (Anhui Tiger Biotech Co., Ltd., 安徽泰格生物技术股份有限公司) and amino acids (Anhui BBCA Biotechnology Co., Ltd., 安徽丰原生物技术股份有限公司).

In terms of feedstock, BBCA group uses both food (corn) and non-food sources (straw) to produce PLA, as shown by the pathways below. To our knowledge, only 1,000 mt/y of lactic acid is produced using the latter pathway. So non-grain feedstock are in their infancy in this setting.

By contrast, Nanle County Advanced Manufacturing Development Zone (南乐县先进制造业开发区) in Henan operates on a multi-enterprise basis. Major players in this area include Hongye Biochemical Co., Ltd (宏业生化股份有限公司), Nanle Shengjiu Sugar Alcohol Technology Co., Ltd. (南乐县盛久糖醇科技有限公司) which operate a 20,000 mt/y xylose facility, and Henan Xinghan Biotechnology Co., Ltd. (河南星汉生物科技有限公司) which produce lactic acid. As of October 2023, the total bio-based material capacity was reported at 800,000 mt/y. Adding to this capacity is a recently announced industrial park to produce PLA and PBAT products, expected to finish construction in 2027. While most of this capacity will rely on food feedstocks, the announcement suggests that forestry residues may also contribute in the future.

Unsurprisingly both of these provinces are among the most productive agricultural regions in the country. Crop straw holds immense potential as a feedstock, with China producing 860 million metric tons annually. This co-location of manufacturing with biomass inputs is the blueprint, and consistently emerges in a lot of bioeconomies because transport of biomass is prohibitively expensive.

While it wasn’t included in this announcement, another area to look out for is Pingdingshan where BBCA has signed a four-party agreement to establish an industrial base using sugars derived from “straw, reed, tree twigs and other agricultural and forestry wastes” (pg 6 of this report) to produce lactic acid and PLA. There have also been previous plans of Shenma Industrial Co., Ltd. to establish a pilot plant for bio-based nylon 66, nylon 6 and related nylon raw materials in this region.

How does this announcement fit into China’s roadmap?

Industrial biomanufacturing is planned to be big business in China. In the short term, there will be lots of sugar from food feedstocks that gets turned into biomanufactured products. That is unavoidable for any country that wants to quickly get novel biomanufacturing to scale.

However, the Chinese government is concurrently laying the foundation to increasingly move away from first generation feedstocks such as corn sugars and sugarcane that are commonplace in biomanufacturing today. As the table earlier in the piece shows, there are companies reaching scale right now.

This is consistent with the prevailing policy paradigm in China that holds that food security is a huge concern. Using feedstocks that could otherwise be used as food will be scrutinised. For example, Jinbei Li reports that a biobased company had plans to go public halted because they were using corn as the feedstock.

It also serves as a reminder that a nation’s resource profiles have big implications for biomanufacturing. As Cam Watson notes, across different regions, we can consistently see that glucose and energy costs are major factors in profitability of amino acid production.

In North America, sugars derived from corn will be the predominant carbon source available to feed the industrial biotech engine. The US views this as a comparative advantage (manifests as lower glucose/‘biological energy’ costs, see the chart below).

Cost structures of biomanufacturing firms. Source: Cathay Biotech’s Xiucai Liu, annotated by Jinbei Li

• Green tech that generates clean energy is different to green tech that rearranges carbon and hydrogen atoms

• Humans have become pretty good at generating green energy at a competitive price – the clean electron

• We have few economically viable alternatives to fossil fuels for producing hydrocarbons, the building blocks of many of the world's goods. These alternatives are what I call clean hydrocarbons.

• The next round of green technology competition will be how to produce clean hydrocarbons.

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The difficulty of explaining industrial biotechnology

Anyone, like me, that spends some portion of their working life explaining the strategic importance of biotech, often runs into two problems. The first is that most lay people immediately consider the health applications of biotech. I often find myself saying that longer term biology can actually be the base science for industrial production to…crickets.

The second is that people ask well “what can be made by biotechnology?” The answer is often everything. Immediately, the listener tunes out as they want to hear a specific use case.

The more I think about it, the more I think that new biotechnology is best explained as the manipulation of hydrogen, carbon (and sometimes oxygen) atoms. Biology is BAD at generating energy at scale cheaply, but it is brilliant at moving carbon and hydrogen atoms around (think yeast turning sugar into alcohol). Many global industrial goods (from pharmaceuticals to fertilisers) involve rearranging hydrocarbon atoms.

Fossil fuels are both a source of energy and carbon

Fossil fuels are extraordinary. They are energy-dense, relatively easy to extract plus transport, and available at scale across much of the world. Few resources in human history have combined these advantages.

They have one other unique trait: Fossil fuels are both source of dense energy and a source of carbon and hydrogen atoms.

In practice, this means fossil fuels don’t just help us move stuff and heat stuff (the energy part). Fossil fuels provide much of the carbon and hydrogen atoms (called feedstock in industrial terms) used to manufacture plastics, chemicals, pharmaceuticals, fertilizers, synthetic materials, and thousands of industrial products.

For example, plastics do not consume fossil fuels as a source of energy; they consume them as a source of atoms. The carbon and hydrogen in oil and natural gas are rearranged into long polymer chains that form everything from packaging and clothing to medical equipment and electronics.

A ChatGPT derived figure of crude oil turning into plastic polymers (yes I know oil looks similar to a polymer to the untrained eye.)

So far, humans have done a good job of replacing fossil fuel-derived energy with a combination of solar, wind, hydroelectricity, and nuclear power, then electrifying end uses where practical (like electric vehicles).

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(hydro)carbon competition

While alternatives to fossil fuels for energy are becoming increasingly competitive, economically viable substitutes for fossil fuels as sources of carbon and hydrogen remain more elusive.

As a result, the next frontier in green technology will be developing cost-effective methods to transform these atoms into fuels, chemicals, materials, and other products currently derived from fossil fuels.

Biology is a natural fit.

Biology is good at growing and rearranging carbon/hydrogen/oxygen atoms. For example, yeast eats sugar (usually glucose - C₆​H₁₂​O₆​) and produces alcohol (usually ethanol - C₂​H₅​OH). At a bigger scale a cow eats grass (made up of cellulose C₆​H₁₀​O₅​ / starch C_6​H₁₀​O₅​ / glucose C₆​H₁₂​O₆​) and microbes inside the stomach turn the grass into beef (made up of water, fat and a range of proteins like alanine C₃​H₇​NO₂). So, carbon atoms are recycled through the system, not created anew.

We see China recognising this right now. As we have banged on about in the past – China is prioritising biomanufacturing (to be expected in this blog). The NDRC writes in its bioeconomy plan: “Bio-based materials to replace traditional chemical feedstocks and bioprocesses to replace traditional chemical processes (生物基材料替代传统化学原料、生物工艺替代传统化学工艺).

Other countries have been slower to believe in this potential (or have been burned in the past). There is rhetorical movement across the US, EU, Japan and India – and some practical movement. But it is at a much slower pace.

Clean hydrocarbon tech is an economic security play

Rearranging the carbon and hydrogen atoms of fossil fuels can come at a significant environmental cost. Many industrial processes require large amounts of heat and energy, which today are often supplied by fossil fuels. In some cases, carbon atoms are also converted into carbon dioxide as part of the manufacturing process, which is then released into the atmosphere.

While some of these emissions could be reduced by switching to low-carbon electricity, the underlying source of carbon and hydrogen would still be oil and gas.

For a major importer such as China, that means continued reliance on foreign supplies. Hence why China stated in its most FYP, that it wants to “Advance efforts to bring coal and oil consumption to a peak” (推动煤炭和石油消费达峰) – something that appears close to occurring.

Cheap electricity and the bioelectric state (H/T Cam Watson)

Cheap electricity helps industrial biotechnology. Energy is roughly between 15-25% of operating costs. Renewable energy costs that drive prices down are improving the viability of biology.

It is tempting to see biotechnology as another end use of the electric stack. But it is more than that because the electric stack cannot easily manipulate hydrocarbon atoms and it cannot easily make complex molecules. Biology can do that in spades. Humanity is just scratching the surface of controlling it. It is both an input into manufacturing processes and an output (that uses renewable energy)

As Cam Watson argues “biotechnology, then, is not just another vertical of the electric economy. It is becoming its chemical manufacturing layer.”

To the cynics out there, they have heard many times how biology is going to recreate petrochemicals and everything else under the sun. This time, IMHO, really is different.

• China is pursuing a ‘stringing together’ of the biomanufacturing industry chain, from bench top to big scale. The idea is that any researcher in China with a lab-proven idea will be able to quickly move through the levels to commercial manufacturing.

• Three things are happening: steel in the ground; science combined with manufacturing; and increasing numbers of cutting edge startups.

• As always, there is a speed and urgency I have not seen elsewhere.

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In April, I travelled to China to visit industrial biomanufacturing companies. This was my chance to see if all the biomanufacturing promises and plans were being translated into action. The short answer is yes.

China watchers – like me - make our living on China’s government opaqueness. We get paid to work through the opaqueness of the system for a country that is globally important.

Certainly, this opaqueness arbitrage remains true for security policy in China, the world does not know how China is going to behave on issues like Taiwan (neither does the analyst to be honest).

But, on tech, China is potentially more transparent than it has ever been. I have been struck by the clarity and transparency of China’s biomanufacturing policy in the last 12 months. Sure, some subsidies remain behind closed doors and civil-military partnerships are sometimes clandestine. And the Chinese government plays down current economic hardships. But the broad tech directions are clear.

So, the question is no longer whether the plan is there, but rather whether it is succeeding and how it is being adapted by companies that need to make money.

China is pursuing a ‘stringing together’ of the biomanufacturing industry chain, from bench top to big scale. The idea is that any researcher in China with a lab-proven idea will be able to quickly move through the levels to commercial manufacturing. In practice right now, we are seeing three things: steel (in the ground), science (combined with manufacturing), and increasing numbers of cutting edge startups.

I saw researchers and startups, provided they had a good idea, with access to large industrial-scale high-throughput labs that quickly transitioned into pilot and commercial facilities. More Meat, for example, was established in 2022 by leading fungus scholars. The company is about to open a 20,000 tonne mycoprotein facility in June or July this year which I believe will be one of the largest facilities in the world. They have built a huge database of strains. All in four years – admittedly after decades of scholarship.

The key takeaway was that China – as already advertised publicly – is moving quickly on this technology. It is not a mirage. And things that have seemed commercially unlikely for decades might be possible.

Steel is going in the ground

Every company I visited in China is building, expanding or repurposing large scale commercial facilities to produce new or novel products. If some of them succeed, it will be the start of the biomanufacturing revolution.

Suzhou Polynovo biotech (聚维元创 – note there are lots of companies call Polynovo in English) which makes bio-based chemicals from rice and corn straws is building a manufacturing facility that can process a few hundred thousand tonnes of straw annually in Lianyungang (Jiangsu).

It produces two types of products. One is the base products derived from straw. This means lignin, xylose and glucose. Suzhou Polynovo sells these to fermentation companies for their own biomanufacturing needs.

Two, the company itself uses its own base sugars to produce their own chemicals. They are targeting succinic acid first but with plans for others.

This is remarkable. The company is using 2^nd generation feedstocks (those that do not compete with food sources) and being able to compete with traditional petrochemicals. There is a long way to go, and globally the promise of chemical biomanufacturing has so far been larger than reality. But here we have a company building a large facility to produce chemicals from 2^nd Gen feedstocks.

Wheat stalks being prepared for Polynovo biotech’s factory

The CEO told me that they would like to systemise their process and eventually expand it to multiple sites.

Beyond Polynovo, I was in China to research a forthcoming publication for the Good Food Institute. There is a lot of steel going in the ground for novel protein. MoreMeat (a 20,000 tonne mycoprotein facility), Fushine Bio (20,000 tonne mycoprotein facility), Angel Yeast (expansion of a 30,000 tonnes yeast protein facility), Jiangsu Jiangshan Pharmaceutical Co. (repurposing large vitamin C facilities for protein)

Attempting to build a moat by integrating science and manufacturing

The steel in the ground was notable because nowhere else is building at such scale, but - more notably - all Chinese firms recognised that scale alone will not protect them in the competitive Chinese industrial landscape.

Every company I spoke to was trying to build large organism libraries, AI organism design platforms, and developing crack scientific teams to build and improve strains throughout the scale-up and manufacturing process.

The reason for this is simple – straight manufacturing (in any industry) is a mugs game. The margins they are razor thin. Let’s take semiconductors, for example, the companies making big money are those designing chips, not those manufacturing.

Biomanufacturing is a little different because large scale manufacturing of most products remains in the future (yes there are some amino acids and vitamins that have been biomanufactured for a long time). The company to do it first will make money initially, but then 20 other Chinese manufacturers will jump in and do the same thing. By integrating the upstream organism design and downstream product fit, more of the profit stays in the company.

There is one other benefit to vertical integration for these firms. Iterations of the strain can be much faster when kept in house. Those iterations can then be used to train AI platforms. The strain can be rapidly edited during scale-up and the successful.

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The rise of Chinese startups

A photo taken at an startup park in Guangzhou. Xi Jinping reportedly visited the site in 2018 and said “SMEs can do great things” (中小企业能办大事）- so a commemorative stone was made.

Historically, Chinese firms at the cutting edge of manufacturing start by selling low value products and work their way up the chain. Huawei, for example, began in 1987 as a reseller of telecommunications switching equipment before growing into a global communications technology leader. CATL traces its origins to ATL, a manufacturer of standard consumer electronics batteries, before becoming China’s leading electric vehicle (EV) battery manufacturer. BYD started as a low-cost nickel cadmium battery maker before evolving into the world’s largest EV company. (A version of this para will appear in the forthcoming GFI report – there is lots of good stuff in the longer report, so you should read when it is published).

The exception had been digital startups like Tencent and Alibaba which then became digital behemoths. There have been a handful open-source LLM startups in China too. But it rarely happened in physical products.

This has changed. startup parks have sprouted across the country. They are at the cutting edge of where science meets manufacturing. In any field of biotechnology, there are now Chinese startups.

We are about to find out whether all these new products that come online can actually find market. Some have found it hard. Bluepha (蓝晶微生物) commissioned a facility in Yancheng, Jiangsu, with an initial production capacity of 5,000 tonnes per year of PHA bioplastics, and it had planned expansion to 25,000 tonnes per year. In April this year, the company decided to delay the bigger facility and repurpose 60% of the smaller facility for animal feed because the market just has not been there. And there have been gluts in many established areas of biomanufacturing.

This is to be expected with China indutrial policy. As the National Development and Reform Commission (China’s macroeconomic planning agency writes: “In emerging industries, we will allow appropriate surplus capacity and encourage competition and innovation.”

That is probably the subject of another post in six months or a year. But for the moment, it is full steam ahead for biomanufacturing in China.

Key points:

• China is projected to account for approximately 35% of US Food and Drug Administration (FDA) approvals by 2040, up from around 5% in 2025

• The FDA approval record of Chinese firms is terrible mostly due to a lack of genuine differentation (for most, not all of the industry)

• There regulatory pieces are already in place to fix this

• The industry is hugely motivated to develop genuinely innovative at scale for the US market (and Dirk thinks they will get there).

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China’s biopharma is having its moment. Chinese drug makers struck a record US$136 billion in out-licensing deals in 2025, up from basically zero before COVID. But the goal for Chinese firms is not to merely out licence promising drugs to multinationals who eventually reap the rewards. Chinese firms want to see drug development the whole way through to FDA approval, in turn creating large Chinese multinationals.

According to Morgan Stanley’s industry analysis The Innovation Boom in China Biotech (September 10, 2025), China is projected to account for approximately 35% of US Food and Drug Administration (FDA) approvals by 2040, up from around 5% in 2025 (2 of 46 approvals in 2025; 24 of 46 were from the US).

Table 1, China-Sponsored Innovative Drugs Approved by the FDA (Updated Feb 2026)

* Beijing Wenfeng Tianji Pharma or Tianjin Pharma is not listed as the sponsor of Benvitimod to the FDA.

Chinese pharma has a terrible FDA track record

From 2007 to 2023 the overall probability of a Chinese biopharma company progressing from phase I to US FDA approval success rate of approximately 1.7% (350 candidates with an eventual approval of 8 candidates), which is far below the global average (14.3%). To be fair to Chinese firms, the success rate has probably improved in recent years (we only have the 2007-2023 data), but it would still be well below competitor countries. If China wants to eventually achieve the goal of 35%, they need to overcome this.

Figure 1. Probability of accumulating success at each phase for Chinese innovative drugs studied in US clinical trials. BLA, biologic license application; EUA, emergency use authorization; NDA, new drug application.

Figure 1 demonstrates that the biggest challenge is between Phase II to Phase III, a stage at which programs must move beyond proof-of-concept to demonstrate meaningful clinical differentiation.

The structural challenges at this stage are:

- limited experience in designing and executing global multi-centre trials,

- and weaknesses in regulatory strategy and sponsor–regulator communication.

- In many cases, drug candidates are optimized for domestic approval pathways rather than for the evidentiary standards required by other global market,

Although Phase II establishes biological activity and informs dose selection, advancing to Phase III requires clear superiority or clinically relevant advantages over established standards of care (SoC). In therapeutic areas crowded with “me-too” drugs that function identically, proving a new candidate’s unique value is increasingly difficult. This lack of clear differentiation often leads to projects being abandoned at the critical Phase II-to-III transition.

The divergent outcomes of PD-1 inhibitors exemplify this: Sintilimab (Innovent, 信达生物制药) failed to secure FDA approval after attempting to enter the U.S. market based primarily on “China-only” data, which lacked the ethnic diversity and global trial design expected by regulators. In contrast, Toripalimab (Junshi Biosciences,君实生物) successfully navigated this inflection point by targeting an “unmet medical need” in nasopharyngeal carcinoma. This contrast illustrates the importance of the strategic shift from domestic optimization toward rigorous, science-led global regulatory alignment.

The “innovation” question

In medicine – as in all technology – what constitutes innovation is contested. There are “first-in-class” drugs , “novel” drugs and “innovative” drugs that do something new that fall into neither of those categories. (First-in-class drugs can also be novel).

First-in-class drugs: medicines that introduce a new mechanism of action, a new target [a specific molecule in the body - usually a protein, enzyme, or receptor - that a medicine is designed to interact with], or new therapeutic class. The drug molecule is often new in first-in-class drugs, but that is not the defining feature (it is the defining feature for novel drugs). If a drug has a new mechanism of action and is a new molecule or substance then it can be both novel and first in class.

For example, nivolumab (Opdivo – developed in Japan) was among the first drugs to use a new approach to cancer treatment known as immune checkpoint inhibition. Rather than attacking cancer cells directly, it works by removing one of the biological “brakes” that prevents the body’s immune system from attacking tumors. This allows the patient’s own immune cells to recognize and destroy cancer cells more effectively. Because the checkpoint inhibition was a new mechanism of action, it was a first in class drug.

Novel drugs: medicines containing active substances or biological molecules not previously approved or marketed as a regulated medicine. Essentially an entirely new substance to be used as a regulated medicine. For example, Nivolumab (from above) is also a novel drug. It is a new monoclonal antibody that had never previously been approved as a medicine. By contrast, toripalimab (Junshi Biosciences – developed in China) is a novel monoclonal antibody because it is a distinct molecular entity that had not previously been approved. However, it is considered a novel drug rather than a first-in-class therapy as it targets the already established PD-1 pathway.

Incremental or value-based innovation: medicines that improve outcomes through treating a different disease with an existing active substance; a new delivery system for an existing active substance; new combinations of already regulated substances; new more effective dosing levels etc. For example, Penpulimab (Akeso Biopharma - China) also targets PD-1 pathway as earlier checkpoint inhibitors, but the antibody was strategically engineered to optimize its clinical profile, representing innovation through refinement rather than new biology.

Only a small subset of Chines drugs are FIC, novel or innovative

China’s drug development system is huge. A small subset of those is either novel or first-in-class drugs (or both). It is these assets which have attracted large multinational licencing deals.

Table 2: Examples of large MNC licencing deals

Despite the attention, the above drugs remain the small minority. For China to get to the headline 35% at the start of this article, the country seeks to develop a much broader pipeline of truly innovative drugs.

Many China biotech companies still concentrate on well-established or “hot” targets [again a target is a specific molecule in the body] such as PD-1/PD-L1, BTK, and HER2, resulting in crowded pipelines and huge amounts of overcapacity in a single target.

For example, CLDN18.2, a gastric cancer target molecule [CLDN18.2 is the target protein – proteins are large molecules - in the body] regarded as innovative, has been pursued by multiple Chinese developers in parallel, including Zai Lab, Innovent, and Hengrui, among others. As a result, even at the level of emerging targets, competition remains intense and differentiation limited. This helps explain why China’s rapidly expanding research output has not yet translated into a proportionate number of FDA approvals.

China’s solutions to the bottlenecks – Part 1 regulatory reform (mostly complete)

For years, regulatory misalignment between China and major pharmaceutical markets forced companies to repeat clinical trials across jurisdictions, increasing costs and delaying access to innovative medicines. This began to change in 2017 when China joined the International Council for Harmonisation (ICH) and gradually aligned its regulatory standards with those of major global markets. This facilitated the use of multi-regional clinical trials (MRCTs), reducing duplication and making it easier for Chinese firms to participate in globally synchronized drug development.

This is one the first regulatory change China made in the process of moving toward pharma differentiation over the last decade. This shift is reinforced by the National Medical Products Administration (NMPA) increasingly emphasizing “clinical value-oriented” drug development and prioritizing candidates that demonstrate meaningful advantages over existing standards of care.

In practice, the NMPA is trying to speed up the development of innovative medicines through faster review timelines (30 working days), support for international multi-centre trials, and closer alignment with global development pathways. At the same time, companies are expected to move quickly (within 12 weeks) from approval to trial initiation and to demonstrate that their products offer genuine clinical value and global competitiveness.

Toripalimab (approved in 2023) and penpulimab (approved in 2025) offer a telling example. Despite targeting the crowded PD-1 class, they avoided direct competition in lung cancer and focused on nasopharyngeal carcinoma, ultimately securing FDA approval. Strategic indication selection differentiation can be as decisive as molecular innovation in an increasingly congested R&D landscape.

However, regulatory reform alone cannot fully address the factors behind China’s low FDA approval rate.

China’s solutions to the bottlenecks – Part 2 industry changes (still nascent)

One part of the solution is just time. China’s pharmaceutical industry is still relatively young compared with the large established drugmakers that have spent decades building expertise in developing new medicines. Drug development is not simply a scientific project; it requires experience at every stage, from drug design and clinical trial strategy to regulatory engagement and commercialization. While Chinese firms are rapidly building these capabilities, much of this experience can only be acquired through time and repeated participation in global drug developments. But this probably lends credence to the JP Morgan stat at the start. With enough time, China’s ecosystem will produce enough innovative drugs to get 35% of FDA approvals.

The industry’s relative youth is also reflected in financial capacity as young Chinese biotech firms have less time to accumulate the financial resources needed for large-scale drug development. Developing a globally competitive medicine often requires sustained investment over many years, with no guarantee of success and frequent clinical failures along the way.

A further challenge is still differentiation. Regulatory reforms can only encourage companies to pursue clinically valuable products from a policy perspective. Ultimately, firms respond to commercial incentives, which often favour validated targets with clearer paths to approval and commercialization. As the cases of PD-1 and CLDN18.2 demonstrate, once a target shows commercially promising, companies tend to converge on it rapidly. The real challenge is therefore not only finding promising targets, but also building drugs that can stand out in crowded ones.

In short, China has largely overcome many barriers to pharmaceutical innovation. The next stage of development is less about regulatory reform and more about capability building. Improving FDA approval rate will depend on the ability to accumulate industry experience, strengthening financial resilience, and creating scientific differentiation. These capabilities are essential for Chinese pharmaceutical industry to move from excelling at refining known biology to consistently producing globally competitive and clinically differentiated therapies.

• Higher oil and gas prices hurt everyone. No one is “winning”.

• China is better cushioned than the US because 60% of its energy still comes from coal.

• The US faces a mixed situation:

  • Consumers are uniquely vulnerable to high prices because 72% of the country’s energy comes from oil and gas.

  • US companies and government get a huge windfall from higher oil prices.

• Nothing motivates like a crisis. Major import countries will find alternatives…sooner than we think.

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In China, coal is king and oil is fungible

China is the world’s largest oil and gas importer. So, the natural inclination is to argue that it is disproportionately vulnerable to oil and gas price shocks.

But oil and gas are globally traded fungible commodities. That means if oil prices rise in Kenya, they also rise China, and they also rise in the US. So, even though the US produces the most oil in the world, its consumers still get hit with price rises.

A few middle eastern countries buck this rule by siphoning off supply for the local market at discount rates. But this is the exception, not the rule. It is not feasible to offer long-term discounts to all consumers in a country the size of the US.

Thus, a much more important question to assess hydrocarbon price vulnerability is what percentage of a country’s total energy supply come from oil and gas.

Fortunately for us, the International Energy Agency collects this data.

The short answer is that Europe as a whole and the US are significantly more exposed to oil and gas than China.

• China total energy supply from oil and gas: 26.2%

• United States total energy supply from oil and gas: 72%

• Europe total energy supply from oil and gas: 57%

No country - including China - feels comfortable with high oil and gas prices. Higher energy prices flow into all other goods. Food, for example, is produced and transported using oil-powered vehicles, and oil-derived chemicals and so prices spike alongisde energy prices.

It will also impact China’s manufacturing sector - a significant source of wealth.

But compared to the US, China’s vulnerability is much smaller.

Globally fungible goods are hard to weaponise

The war in the Middle East is raising prices for everyone, not just hydrocarbon importers.

If the US wanted to protect its own citizens, it could theoretically reserve its domestic supply of oil and gas for its own market, and only allow the surplus to be exported. The government would also need to mandate local oil and gas had to be delivered at a certain prices. Otherwise companies would continue to sell at global benchmarks.

This is hugely complicated to do. The producing companies - whose leaders are close to the President - will push back because they are about to lose a windfall. Smuggling would begin.

Mandated lower prices would encourage lower levels of production (this is the what happens with centrally planned economies like the USSR). Lower prices will also increase demand for energy at a time of global scarcity. And an enforcement apparatus would need to be set up to monitor the system. Hence why this almost never happens.

If the US alternatively refuses to export to China, it will not make much difference. The amount of oil and gas available globally will be the same and other supply will be diverted to China. Similarly, ongoing supply to China from Iran is effective for all in that it increases global supply.

The US could again theoretically try to lobby a global coalition to ban exports to China. I see very little appetite for this from major suppliers (the gulf states would love to sell to anyone right now). And it does nothing to lower prices in the US.

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Nothing motivates like a crisis

The general public has no idea of the US goals for this war, nor does we know the timeline. Nor do we know the ongoing impacts to the Strait of Hormuz and insurance costs after the war.

However - even if the war ends tomorrow and energy prices go back to their previous levels - major energy importers China, India, Japan, Korea and the EU have already heard the message loud and clear. Oil and gas are risky. They will not be able to absorb that level of risk long term.

For decades, these countries - led by China - have tried to wean themselves of fossil fuels anyway because of external reliance and environmental concerns. But, for the most part, crisis conditions have not provided the necessary motivation. These were theoretical vulnerabilities, not reality.

China has made genuine progress on green technology.

But the kind of oil crisis that exists now is of a level above. We are about to see a level of motivation hitherto unseen. It will be like semiconductors have been for China for the last five years, and refined rare earths are for rest of world. But it is the global energy system - a much bigger slice of the global economy. It is the global economy.

Current alternatives to oil and gas themselves grew out of geopolitical crises. Oil shocks in the 70s forced the US to fund solar and wind research to overcome reliance on the Gulf.

Unlike previous crises though, genuine alternatives now exist for electricty and transportation. China is working on active solutions for the replacement of petrochemicals with bio-based solutions. The price points for alternatives had not previousy been there. Now that won’t matter. Companies will be told to pay a premium.

There is almost no discussion of the environment. Governments from Beijing to Brussels are focusing on how to use renewables to boost security.

A silver lining: market mechanisms cushion the worst of the price rises

I have to end on a silver lining.

I confidently (foolishly?) stood in front of my Geoeconomics class (which I teach at the Australian National University) and said the war in the Middle East will lead to higher energy prices, but WON’T be as bad as the high-end predictions. Certainly that is looking more foolish by the day.

But experience indicates that inbuilt market mechanisms eventually soften the blow:

• Fungible goods like oil and gas with a wide range of global suppliers relatively quickly reorder their supply chains. (hydrocarbons delivered via pipelines are not fungible hence the Russia-EU shock)

• Price increases encourage other suppliers to ramp up production.

• Oil and gas are somewhat price sensitive, so consumers can reduce demand.

• Countries have strategic reserves to soften the blow during supply chain transition periods.

It is also possible that all sides find a way to quickly deescalate, and insurers and shipping companies get trade going again.

But this won’t matter. The rest of the world has got the message about risky hydrocarbons. And in the interim, China is better protected than the US or Europe.

• China’s List of 35 Signature Biomanufacturing Products indicates genuine innovation that is still underappreciated elsewhere. (full innovation assessment at end)

• The broad diversity of products demonstrates this is not about leading in individual products, but rather about leading in biomanufacturing platforms that can produce an array of products.

• There is a clear economic security dimension, with several products representing domestically produced alternatives to established international supplies.

What biomanufactured products does China actually want?

We recently reported on China’s List of 35 Signature Biomanufacturing Products (First Batch). The list signals domestically that biomanufacturing is a priority and clarifies the types of projects the Chinese government intends to support, or wants local governments to support.

One of our team (Dirk) reported that China was seeking new and novel process. Readers pushed back asking what, specifically, is genuinely innovative about those products. So the three of us looked in greater depth at the projects.

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We found three types of projects with varying levels of innovation:

1. Domestic onshoring of foreign processes (particularly for biopharmaceuticals) which looks an economic security play. Many of the listed products have mature bio-based processes based outside China. The government supports onshoring those processes both at a design and manufacturing level.

2. Iterative engineering and scale improvements on existing mature bio-based processes.

3. Genuine frontline innovation for immature bio-based processes. Numerous projects are industrialising new approaches to producing bio-based goods.

The Chinese government probably does not see these as completely separate, with all three necessary conditions for developing a truly innovative bio-based production sector. Reshoring provides scale and economic security. Iterative improvements provide process knowledge and price parity with non-bio based production. Genuine innovation is necessary to create the breakthroughs for the industry to really take off.

The diversity of the products signal platform ambition

The biomanufacturing processes for the 35 products cover a wide span of production scales and technological sophistication. Production volumes range from pharmaceutical pilot runs (Human Fibroblast Growth Factor 21) to large-scale industrial operations (polyglutamic acid). Technological complexity varies, from decades-old traditional fermentation technologies (Spinosad) to ground-up metabolic engineering (allulose). Many of the companies mentioned are actively expanding their production capacity while investing in further research and development, suggesting continued dynamism in this space.

The diversity of products highlighted reinforces that China views biomanufacturing as a foundational capability rather than a sector-specific advancement, a concept that is underestimated by Western policymakers. By spanning complex pharmaceuticals (bispecific antibodies), food and agricultural products (Fusarium brachyggiboseum protein), materials (polyhydroxyalkanoate bioplastics), and bulk chemicals (putrescine), they are showing that this technology is poised to have a whole-of-economy impact.

Genuine innovation

The listed products extend beyond the stereotypical paradigm of scaling Western innovations at a lower cost. While the adoption of foreign technology remains present—Beijing Shoulang Biotechnology’s partnership to deploy U.S.-based LanzaTech’s ethanol Clostridium protein production is illustrative—the list also highlights significant domestic advances in biotechnology and process engineering. For example:

• Qingdao Institute of Bioenergy and Bioprocess Technology (QIBEBT), in partnership with Shandong Lukang Pharmaceutical - trans-aconitic acid (tAA)

QIBEBT has engineered a fungal strain to produce tAA, a chemical with emerging potential in pesticides and bioplastics. In partnership with Shandong Lukang Pharmaceutical, this process was scaled up to a commercially-relevant >100,000 L. tAA has not previously been economically viable at commercial scale via petrochemicals or plant extraction. So this is a completely new market with applications being explored on the run. Given the substantial technology development and process engineering required, this example reflects a major full-stack innovation–laboratory design to pilot production to ongoing commercialization–pioneered in China.

• Microcyto - Allulose via fermentation

Microcyto developed a new microbial fermentation process for allulose which is widely used as a food sweetener. From the 2010s onward many companies (including Chinese companies) commercially used enzymatic conversion of fructose into D-allulose. Commercial scale fermentation of allulose has been rare and so represents genuine innovtion. Microcyto’s (JV with Sinopharm) first-phase allulose fermentation plant has already officially begun operations at a tonne-scale annual capacity (reported in mid-2025), and the second phase is under construction with plans to complete by about 2027. There are few - if any - other companies to get this method to commercial scale globally, and it could lead to significant cost reductions.

Iterative improvements on mature processes (Not flashy but effective)

Chinese firms are also deploying modern biotechnology tools to improve existing processes in ways that, while not always cutting edge or flashy, are allowing them to make major competitive strides.

• Bloomage Biotechnology - hyaluronic acid

The market for hyaluronic acid, a common ingredient in skin and haircare products, is currently dominated by Bloomage Biotechnology. Traditionally harvested from rooster combs, the industry has almost completely shifted to extracting hyaluronic acid from fermentation of Streptococcus bacteria. Bloomage’s success can be traced to iterative-but-substantial improvements in its biomanufacturing processes over 20 years. They have, for example, increased fermentation yields from 3 g/L to 73 g/L and cut production costs by 75%. This type of technological development doesn’t make headlines in scientific journals, but it does facilitate commercial excellence.

• Hunan Lier Biotechnology - glufosinate

Hunan Lier Biotechnology has achieved a major market position in the manufacture of glufosinate, a broad-spectrum herbicide. While glufosinate was historically produced via chemical synthesis as a mix of active and inactive forms, biomanufacturing approaches–specifically enzymatic biocatalysis–have enabled targeted production of just the active form. Hunan Leer Biotechnology has been a key player driving this shift. Though biocatalysis is a well-established strategy, further process optimization and aggressive capacity expansion have collapsed glufosinate prices globally and pressured Western firms out of this market.

The economic security aspect

China has made a clear strategic decision to reduce its dependence on the United States and its allies wherever possible — across critical sectors ranging from food and energy to semiconductors and pharmaceuticals.

Although China has made impressive advances in developing first-in-class medicines, the majority of such breakthrough drugs have historically originated in the United States, Europe, or Japan. That balance is likely to shift over the next five years.

A number of the products on the list appear to be Chinese-developed versions of drugs already available abroad. While there are minor modifications — and in some cases additional approved indications — they largely resemble efforts to replicate or localize foreign medicines for the domestic market. Some examples:

• Juventas - CAR-T Cell Injection (Anti-CD19)

Juventas developed China’s first fully independently developed CD19-targeting CAR-T product with domestic IP, receiving its China approval in 2023. The therapy uses the same core biological mechanism as established international CAR-T products first approved in 2017 (e.g., Kymriah and Yescarta) to kill cancer cells. So, this is essentially recreating processes in China. Beyond single-target autologous therapies, the company is developing multiple modalities, including dual/multi-target CAR-T and universal/allogeneic platforms, positioning it for broader disease applications in the future.

• Changchun GenSci Pharmaceutical Co - Vuxinqibai Monoclonal Antibody Injection

Changchun developed the First IL-1β–targeting monoclonal antibody approved in China (in 2025). It treats inflammatory pain. It employs the same fundamental mechanism as other IL-1β-targeting monoclonal antibodies, such as canakinumab (Ilaris), which has been widely used outside China since the early 2010s. As of early 2026, none of the major IL-1 inhibitors approved in other markets — including canakinumab, anakinra, or rilonacept — have received approval for use in mainland China.

• Chengdu Kanghong - Conbercept Ophthalmic Injection

Conbercept uses the same science and production methods as established drugs such as Aflibercept (Regeneron) and Ranibizumab (Genentech and Novartis) to treat age-related macular degeneration (AMD). However, it is the first commercially successful and large-scale production of this class of biologic in China. Conbercept first entered the Catalogue of Medicines Covered by National Medical Insurance in 2017, substantially lowering the price on China compared with the imported alternatives.

Political expediency and survivorship bias

Naturally, the MIIT’s list features some level of survivorship bias. As a guidance document designed to highlight strategic priorities, it focuses on some of the most notable technological and commercial successes. Within Chinese biomanufacturing, there have doubtless been many fundamentally unviable projects that have received extensive state support, or commercialization efforts that have led to economically damaging outcomes.

Some projects are also likely due to political wrangling and the need to share between provinces as much as they are for strategic intent.

Yet, despite this, the overall strategic message indicates a focus on developing diverse biomanufacturing capabilities and a willingness to look at the wider technological landscape.

• Heilongjiang and Beijing governments publicly announced subsidy programs for biotech (list of subsidies at end of doc).

• Subsidies span the entire commercialisation pipeline: commercial-scale facilities, pilot plants, technology transfer, innovation centres, industrial parks, public procurement, and R&D initiatives.

• The subsidies at each stage are not huge, but factoring in the lower cost of contruction, the ability to stack the subsidies at each stage, and opportunity for suppliers to also be subsidised means they add up.

• This is more coordinated and deeper than elsewhere. While many countries subsidise R&D and commercialisation, few present coherent integrated roadmaps that sets out the subsidy pathway across the entire stack.

The dichotomous views on Chinese subsidies in biotechnology

There is a dichotomy on the views of Chinese subsidies of its biomanufacturing sector. Members of the startup industry in China contend the country has more profitable industrial bio startups than anywhere else on earth because at the startup level, the funding is genuinely limited. The other side of the argument is that Chinese firms writ large are subsidized to the hilt, so it is naturally assumed that bio firms are subsidized too. Perhaps this is not contradictory, merely different parts of the ecosystem receiving different treatment.

Our investigations so far have been dissatisfying. Most biotech companies are not publicly listed. As such it is hard to gather information about their profitability and subsidization. Of the public companies we investigated, they basically all received subsidies but as a percentage of revenue it was still relatively small. Even this has caveats. The companies tend to be diversified across mature industries with cutting-edge biotech a small part of their work. So, we do not get a sense of their bio subsidies. Finally, there is also the possibility of hidden subsidies not included in reporting.

In meetings with foreign firms weighing investment in China, we repeatedly hear the same message: local governments are prepared to offer massive support and low-cost financing to secure manufacturing projects. Much of it, however, is negotiated quietly—behind closed doors rather than in public filings.

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Beijing and Heilongjiang publish subsidy plans

While the central government sets technology directions - and has the power of revenue to enforce its dictates - it is local governments that actually implement most industrial policy. They themselves are in search of high-quality tech projects that employ people. Often local governments are in competition. A manufacturing firm in Zhejiang competes with a factory in Guangdong. This fuels provincial subsidy races.

Heilongjiang and Beijing have publicly available information on their biotechnology subsidy programs.

Depending on your viewpoint, the subsidies are either big or not. Beijing’s $7 million for a pilot plant is pretty significant (capped at 30% of total investment). In China, it is possible to build a sizeable pilot for $10-20 million. Having one third of that covered would be helpful. The rest of the world has struggled to build that kind of facility.

The subsidy for construction of new biomanufacturing plants (covered in the high tech industrialisation projects) is between $4.2-$7 million (capped at various percentages of total investment). The cost of a new biomanufacturing could be between low tens of millions up into the hundreds of millions. The usefulness depends on the size of the project. For bigger projects the standalone construction subsidy will not be so significant.

There is the potential to stack these subsidies. If a company wants to build a plant. They could get the subsidy fot that. They may want to add a pilot facility as part of the plant (subsidised). They will probably conduct R&D onsite (subsidised). They may purchase locally produced technology licences (also subsidised). They may need financing (subsidised). They also get a subsidy for commercial sales of their product. There are also subsidies if the government buys their product. Beyond this, industrial parks and tech innovation centres that house them also receive subsidies.

The difference between China subsidy programs and other countries

Most governments provide subsidies at different stages of the innovation cycle. In Australia (my home country), for example, the R&D Tax Incentive is a major subsidy at the research stage. Companies can also apply for a range of state and federal industry growth grants. For large-scale manufacturing, institutions such as the National Reconstruction Fund and the Northern Australia Infrastructure Facility (NAIF) provide capital support.

But these mechanisms are largely project-based and competitive. They do not pre-commit funding to specific technologies or prescribe subsidy levels in advance. Instead, they assess proposals from across sectors, weigh their commercial and strategic merits, and select those judged most viable.

China’s approach is different. Authorities identify the specific infrastructure or technology they want to build and then commit funding to it directly. If you build this designated capacity, you receive a defined level of support. There are subsidies the whole way to sale of product which is further than most other governments. Even government procurement folds into this program.

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The subsidies

1. Pilot & Platform Construction

2. Industrialization & Fixed Asset Investment

3. R&D & Technology Transfer

4. Product Commercialization & Market Entry

5. Finance & Tax

• In Aug 2025, China unveiled its first cohort of 16 AI-enabled biomanufacturing best-practice cases. (full list at end of article)

• 13 of the 16 projects apply AI to biological design rather than to downstream manufacturing.

• The reasons for these selections are probably threefold:

  • Strategic autonomy: developing alternatives to U.S.-dominated biological design tools.

  • Technical opportunity: Current AI is well-suited to biological design, making it a domain where high-quality projects are available today.

  • Long-term impact: Advancing biomanufacturing requies better organisms

AI in biomanufacturing

Biomanufacturing takes a microbe such as E. coli or yeast, or alternatively cells from mammals, engineered to produce a particular target product, and grows them in bioreactors fed with sugars, amino acids, carbon dioxide and nitrogen. These low-value inputs are taken up by the biological system and converted into wide-range or higher-value molecules that can be harvested, purified, and sold. The end products range widely from medicines to monosodium glutamate to plastics.

The issue is that even these ‘simple’ organisms have biological systems that are made up of a huge number of components that interact with each other in different ways.

This complexity is where biology diverges from conventional industries. For a long time biomanufacturing has lagged behind because the fundamental science hasn’t been solved. Effectively, companies were building LEGO without an instruction booklet.

AI is writing the instruction booklet.

At its most advanced, AI could govern all stages of the biomanufacturing value chain. Design of novel proteins or metabolic pathways could be modelled in silico by AI [that means on a computer], and then validated experimentally using robotics-enabled automated labs in a closed-loop fashion. Production of the target compound could then be scaled in intelligent bioreactors [with few employees] and adjustments made to the culture medium or process parameters in order to optimise the yield. At the commercial scale, continuous operation could be achieved using real-time AI-driven quality control.

The strategic importance of AI in biotech

The strategic importance of biomanufacturing has two dimensions to it; capability and economic security. AI will be a key enabling technology.

On capability, nations want their scientists to have access to state-of-the-art tools to enable world-class research. AI is increasingly embedded in biological research, so leading research means leading AI-driven tools or using AI driven tools better than others. From a Chinese perpsective, the US is the undispited global leader in biological design tools.

On economic security, government investment in industrial biotech is motivated by the potential to re-shore manufacturing and to thereby secure supply chains for critical chemical inputs. AI will be used at every step. The economic security advantage of biomanufacturing is that, theoreatically at least, it can make a tremendously wide range of products.

The focus of the August announcement was AI-powered biological design tools. Not manufacturing

In August 2025, China’s Ministry of Industry and Information Technology announced the first cohort of sixteen AI-enabled application best practice cases in biomanufacturing, as part of a broader national mission to incorporate AI into industry. The announcement was worded such that this seems the first of multiple tranches.

The original call for applicants identified eight major focus areas that fall into different buckets along the biomanufacturing value chain:

1. Design and construction of high-performance proteins (高性能蛋白质元件的设计及构建): modelling of protein structure and design of protein sequence to optimise traits such as thermostability, catalytic activity, substrate specificity, and target affinity etc.

2. Analysis and optimisation of gene regulation mechanisms (调控机制的解析及优化): exploration of the regulatory mechanisms of gene expression for the development of predictive models, enabling dynamic control of genes and products, and construction of gene circuits.

3. Design and optimization of metabolic pathways (代谢通路的设计及优化): discovery and design of new metabolic pathways to open up new biosynthetic pathways or increase yield of known metabolites

4. Construction and optimization of cell factories (细胞工厂的构建及优化): model the correlation between genotype and industrial indicators (e.g. stress tolerance, yield) and use high-throughput gene editing technology to improve the adaptability of cell lines to industrial contexts

5. Design and optimization of culture medium formulation (培养基配方的设计及优化): use IOT-based monitoring to obtain real time fermentation process data. Combine with metabolomics to find the optimal ratio of substrates, key nutrients, and trace elements in the culture medium.

6. Intelligent control of biological reaction processes (生物反应过程的智能控制): Utilise intelligent sensing and control technologies to test control strategies such as precise feeding, variable speed stirring, and aeration adjustment, important process parameters (e.g. temperature, pH, dissolved oxygen) in bioreactors. Use digital twins and other means to simulate bioreactor processes in order to accelerate the process of fermentation condition optimization and process scale-up.

7. Intelligent detection and quality control of biomanufactured products (生物制造产品的智能检测和质量控制): achieve closed-loop quality control of biomanufacturing processes by automatically analysing data from sensors and feed quality information back to the production control system, thereby enabling real-time dynamic optimization of process parameters.

8. Other cases (其他案例): other AI-enabled cases that empower the biomanufacturing industry. What this refers to exactly is unclear from the text, but I imagine it could include AI models implicated in feedstock processing or energy management.

This is a major scope of applications. And yet, the current awardees are concentrated across four of these focus areas.

• 9 in AI for protein design

• 3 for construction and optimisation of cell factories (a cell factory is the whole engineered organism or cell that is a “factory” to produce the desired output)

• 3 for intelligent control of biological reaction processes (this is precise of the biomanufacturing process, so manufacturing )

• 1 for design and optimisation of metabolic pathways.

13 of these 16 tools (the protein design, metabolic pathways, cell factories) are AI-powered biological design tools to be used when designing the organism. The drivers of this could be concern over US control of of the tools, a recognition that better organisms are needed for China to suceed in the industry, or maybe they were simply the best applicants for the original call-out (it could be that simple).

As computational biological design tools have proliferated, many have become more narrow focusing on subsets of proteins or metabolic pathways for which they have been trained. That is case for some of the projects with proteins being designed for relatively narrow applications (such as Vanillin production). Others look to be a little more broad ranging.

Some of the datasets for the Chinese tools are possibly (we do not know for sure) partially built on open-source US tools like Alphafold.

As far as we can tell, these companies were already working on these areas, so the announcement is not driving the awardees into new territories.

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What does this actually mean?

This announcement is a vote of confidence in these companies and the work they are doing, rather than a forward-looking public investment in the form of a grant or major loan. It probably is meant to signal to the system (provincial governments, universities, governments, financiers) that these companies and similar style projects should be supported. It probably also signals a first step into bigger AI x bio policy directions.

We can also question the extent to which this will galvanise the Chinese biomanufacturing industry. While the Chinese government is sending a signal with announcements like these, market competition on its own will tend to drive companies to adopt these technologies if they are useful at the right price point. They might see other opportunities. At the very least the potential government support may figure in their calculations.

The Chinese government has a broad library of strategies for biomanufacturing that focus on bioreactors, scale-up, feedstocks, and end products. No other nation has anything comparable to this level of planning.

Key points

• The US accounts for ~45% of global pharma sales. It is potentially a very powerful form of leverage for the US.

• We count 16 Chinese firms at immediate risk of being cut off from the US biotech ecosystem (list at end of article).

• The Act is designed to reduce data and economic security risks, but it also has the potential to be deployed in broader US-China economic stoushes.

• The power of BIOSECURE relies on inflated US drug pricing. Trump is simultaneously trying to reduce US drug prices.

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BIOSECURE passes as part of a bigger bill

After years of vacillation, the US government signed a version of the BIOSECURE Act into law on December 18, 2025, as part of the National Defense Authorisation Act (NDAA) for Fiscal Year 2026.

The NDAA FY26 folds in an updated version of the BIOSECURE Act in Sec. 851 (it is no longer formally called this but the name has stuck around as a convention). The broader Act contains 17 provisions relating to biotechnology. Many of these have a heavy domestic focus, empowering the Department of Defense to fund bioindustrial research and commercialisation facilities.

Differences between the new version and the original

The BIOSECURE Act (H.R. 8333) was first introduced in May 2024 as a security measure to prohibit entities that receive federal funds from procuring or obtaining ‘any biotechnology equipment or services produced or provided by a biotechnology company of concern’

The updated act does two new things:

1. It removes the five explicitly named companies in the original version. This gives the US government wiggle room in implementation.

2. Biotechnology companies that are already on Department of Defense’s (DoD) existing 1260H List will automatically deemed companies of concern. 1260H List identifies Chinese companies that have military links and operate in the US, updated annually by the DoD. .

In the original BIOSECURE Act, two Chinese contract development and manufacturing organisations (CDMOs) - WuXi AppTec and WuXi Biologics - and three Chinese genomics firms - BGI, MGI, and Complete Genomics were directly named as companies of concern.

This pattern reveals two distinct motivations for US policymakers. The first is a matter of economic security. The US does not want its biopharma sector to be dependent on Chinese CDMOs or on Chinese manufacturing of cutting-edge equipment. An extra motivation against genomics firms is to protect US genomic data from being used to develop new biotech products.

Beyond the two obvious motivations, the Act creates a way to block almost any Chinese biotech company from accessing the US ecosystem which could be deployed for broader geopolitical purposes. Because the US market is more profitable than any other in the world, losing access to it is a major blow for firms — effectively creating a global bottleneck, similar to US control over finance or China’s control over critical mineral refining.

There is no indication that the Trump administration intends to use it more broadly. But the tool is there.

Which Chinese companies are under threat (there is a list at end of article)

The 1260H list covers a lot of ground from telecoms to aviation to facial recognition software, and the majority of the companies are not biotech-relevant. Of the original named five, BGI and affiliate MGI both appear on the 1260H list. So we know that they will automatically be included on the company of concern list, alongside forensic DNA testing service FGI (another BGI subsidiary) and the cell bank network Origincell.

The 1260H list is updated annually (most recently in Jan 2025), and an imminent update will be important to watch. According to Bloomberg, Deputy Defense Secretary Stephen Feinberg informed Congress in an October 7 letter that the department should add WuXi AppTec to the 1260H list. This makes WuXi Biologics a likely contender as well.

Additionally, in a March 2024 letter from the Select Committee on the Chinese Communist Party to the DoD several biotech companies are listed as warranting inclusion on the 1260H list. The same committee has had a continued interest in Genscript and its affiliates Bestzyme, Legend Biotech, and ProBio. Requests to the ODNI and the FBI for an investigation into these companies’ government links were made in May 2024 and July 2025.

We have collated this information in a table at the bottom of the article. It is our best guess at what Chinese biotech companies may be at risk of a ‘biotechnology company of concern designation’.

Chinese CDMOs will be hit hardest…and US small capital biopharma will stomach the cost

US biopharma is coupled to Chinese drug services firms. Drug development involves the synthesis of hundreds of thousands of drug candidates, which is done by manual stepwise synthesis. This is prohibitively expensive to staff in the US.

China has become the major destination for this work - an oft-cited Biotechnology Innovation Organisation survey in May 2024 highlighted that 79% of their members relied on at least one contract with a Chinese research or manufacturing partner. Large CROs such as WuXi AppTec have over 38,000 employees and synthesise over 500,000 compounds annually.

Curiously, the threat of the BIOSECURE Act over the past few years has not seen real change in the extent to which these services are being contracted. Both WuXi AppTec and WuXi Biologics’ share of revenue from US customers has remained consistent (shown below). Additionally, WuXi AppTec backlog of orders increased 41.2% year-over-year in Q3 2025. This could indicate companies rushing to sign contracts in the looming shadow of BIOSECURE.

At the same time, there are anecdotal examples that US firms are trying to de-link their manufacturing from China. We have spoken to Chinese bioreactor suppliers that claim US firms are skittish about buying their equipment.

Small-capital US biopharma firms will rightly complain that they are being locked out of the cheapest research ecosystem.

It seems then, that small-capital US biopharma firms are stuck between two pitfalls. Continuing to do business with Chinese CDMOs is a risk that private investors will be unwilling to take on. But many innovative biopharma firms are outsourcing to China because it is significantly cheaper than the rest of the world. Increased demand for non-China manufacturing will simply drive up prices elsewhere and lead to longer wait times in drug development.

The effect for the genomics firms is smaller because they typically have less concentrated revenue streams - only a very small fraction of MGI and BGI’s business comes from the US. So, it is less of an economic security concern and more of a data security concern.

Regardless, the wording of the bill seems to imply that BGI and MGI equipment being used for any work done will be prohibited. This could mean that contracting a CDMO that has a BGI genome sequencer is no longer fair game. Even if it isn’t explicitly stated, companies might start to self-censor.

How will Chinese firms (and the CCP) respond?

When the BIOSECURE Act was first being discussed in 2024, there was dismay among Chinese firms. BGI and MGI both released statements arguing against their inclusion, while Complete Genomics set up a website to protest the act.

Denials aside, companies that see themselves at threat of a ‘biotechnology company of concern’ designation will seek to ‘de-China’ their operations. We are already seeing this manifest in a few ways.

1. Chinese companies set up a subsidiary in the US that operates separately from their operation in China. This may be enough to avoid restrictions. Complete Genomics made progress towards its localisation strategy; establishing a manufacturing facility in San Jose, CA to produce low-to-mid range sequencers

2. Chinese companies sell their overseas operations. BIOSECURE has been shown to reduce market valuations of Chinese firms, meaning they can be bought at a discount. Even the threat of the BioSECURE Act has been enough to drive action - in early 2025 WuXi AppTec sold UK and US based operations of its subsidiary Advanced Therapies to the NY based firm Altaris and its US based medical device testing services to NAMSA.

The Chinese government also has options:

1. It can retaliate in the bio space. Gene-sequencer producer Illumina was placed on the Ministry of Commerce’s Unreliable Entities List in early 2025. Illumina remains the only life sciences company on the UEL, and therefore this may be a unique case (Illumina lobbied for the BIOSECURE Act).
   
   Although the export ban on Illumina has been lifted, it remains on the UEL and thus purchases require government approval. Given this, it will likely be excluded from Chinese research institutes procurement - Matt Marlowe notes an interviewee who claimed “Even if Illumina performs well, it’s no longer worth the operational uncertainty.”

2. It can choose to use tools outside of bio (no indication that it is planning to do so). China has many tools to potetially punish the US, athough it appears not willing to do so for pharmaceutical CDMOs.

The takeaway is that even without formal sanctions, we could end up with geographic siloing of sequencing technologies. This will further drive down Illumina’s China business: their Q4 25 financial presentation indicates a year-on-year decrease in Chinese revenue by 30%.

‘Most-favoured nation’ pricing is inconsistent with BIOSECURE ambitions

The bite of BIOSECURE relies on the fact that the US accounts for ~45% of global pharma sales despite having only 4% of the population. Firms’ pathway to profit is the US. This is particularly the case for name-brand drugs, where Americans pay 4.22 times more than consumers in other OECD countries.

But if the US market becomes less valuable, and thereby less crucial to drug manufacturers, the US government loses bargaining power.

This leverage could be lost because of Trump’s executive order to pursue a ‘most-favoured nation’ (MFN) pricing policy for drug sales. It aims to tie the price of prescription drugs to the lowest price available in an OECD country.

The loss of the US premium would change the calculus for pharma. Companies will migrate to more economically viable locations where they can access cheap development costs and market revenue. This may preclude innovation or manufacturing in the US. Rather, companies might look to Europe for research, Australia for early clinical trials, and India for manufacturing. So while BIOSECURE aims for de-Chinfying bio supply chains, MFN doesn’t necessarily favour reshoring them.

Ultimately, if the overarching ambition for the Trump administration is to make biotech American again, then the US might be shooting themselves in the foot.

List of companies who are at threat of a biotechnology company of concern designation

• China’s economic security is quietly expanding into a wider range of areas, including bio, with greater granularity.

• China’s recent actions on beef and bioreactors demonstrate new approaches and new areas for China’s economic security

• The national bioreactor plan - a centrally released plan involving nearly 100 orgs - looks like someone in the commerce department pulled data identifying vulnerabilities on US and EU imports.

A subtle new step in China’s economic security approach

China is in the middle of multi-decade program to simultaneously lead in innovative manufacturing and reduce reliance on the US and its partners (even if Trump is stretching those partnerships).

Two Beijing-led activities in the last couple of months show how this program seems to have found a broader mandate.

China got beef

In January, Beijing raised tariffs on beef imports above a certain quota. The fanfare around it died quickly, as jaded China watchers rolled their eyes and wrote it off as China-being-China.

This was different though. Beijing often withheld approval for food imports from certain countries and frequently used its food market as a tool for biateral punishments. But it has rarely (never?) essentially capped imports from all countries for a food it supplies 70% domestically, and one in which domestic supply is growing rapidly.

There was no political transgression, no foreign domination, no emerging technology competition, just unadulterated economic securitisation of food. China has long been sensitive about food security, but it has not - in recent times - limited foreign supplies to achieve that security.

My read then (and now) remains that China wants to ensure that new growth in Chinese beef consumption is met by domestic production. If China continues down this path, it will limit opportunity for foreign producers in the China market.

It also asks uncormfortable questions about why now?

The bioreactor battleground

In 2025, in a completely different part of the bio-sphere, China’s Ministry of Industry and Information Technology and the Chinese Academy of Sciences were crafting a “High-Performance Bioreactor Innovation Challenge” (高性能生物反应器创新任务). In January of this year, we reported on the first tranche of nearly 100 winners spread accross 28 projects.

At first blush, taken alongside multiple other high-level biomanufacturing plans and early signals that biomanufacturing will be a top priority in the next five-year plan, our team argued this appears to be an effort to reimagine the bioreactor. For many bio-based processes, bioreactor costs do need to drop.

After futher consideration, this appears to have as much an economic security angle as an innovation lead-from-the-front approach. The project names themselves are fairly vague but the areas they are working on: advanced bioreactors, sensors, and intelligent industrial systems are dominated by US and EU companies. There are lots of alternatives available, but the really high end stuff remains in US-EU companies.

It feels as though someone from the Chinese government went through a list of China’s biggest bioreactor vulnerabilities, and drew up a plan to create alternatives. By doing this, the government has chosen preferred companies to help solve these problems. In general, the chosen companies work in the same space as the international leaders but usually with lower quality.

To be fair, I am trying to read the tea leaves here - the published plans do not articulate such an angle.

If I am right, this level of economic security activity for bioreactors which have alternatives - albeit lower quality - speaks to granularity and broadness in China’s economic security efforts that have not been there. China’s Little Giants program - small companies targetting indiviual items of vulnerability - is perhaps analogous, but even that program did not enlist nearly 100 companies to solve potential vulnerabilities for one narrow suite of technologies that have not yet been exploited by the US and EU.

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Why now?

No one knows for sure. It would be easy to say this is an early indicator of Taiwan preparations, or that Chinese companies are tired of reliance on US and EU bioreactors and they effectively lobbied for change. Or Beijing genuinely believes - as it seems to - that biomanufacturing is core future industry and as such foreign vulnerability is not acceptable. Or maybe this is a natural next step in the economic journey. Or all of the above.

This is, of course, a highly dissastifying answer to the question. But it is the reality.

Either way, we will likely see consistent and broadening attempts to limit vulnerability in food and critical tech.

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Key takeaways

• Brain-computer interface (BCI) will likely be a priority for the 15th FYP.

• Chinese companies are behind the US. But China is ahead in thinking about how it should be incorporated into the health system.

• China is running a dual track approach:

  • China is positioning BCI as a medical capability that should be absorbed into the existing healthcare system, with integration into state pricing and insurance frameworks to create predictable demand.

  • A parallel policy track that drives technological progress across defined product categories.

BCIs are mostly NOT brain-chips

A brain-computer interface (BCI) is a technology that establishes a direct, real-time communication link between the brain’s electrical activity and a device, such as a computer, wheelchair, or robotic limb.

Despite the interest in neurochips (such as with Elon Musk’s company), most of the cases being promoted by new Chinese policy documents are external sensors used to measure brain activity and then connected to an external device. Implantation of chips directly into the brain is not the main goal.

Pillar 1: Technology leadership

China’s aging population has made BCI a priority (after years of relative policy obscurity). In the teaser version of the upcoming Fifteenth Five-Year Plan, BCI is one of only 6 frontier technologies to be prioritised for the next five years. In a country as large as China, this means a lot of resources.

Additionally, in August 2025, seven PRC government bodies jointly issued “implementing opinions” on the development of a Brain-Computer Interface Industry.

The plan - while dressed in Communist Party Bureauspeak - is pretty clear on what it wants to achieve:

1. A full BCI industrial system from R&D to manufacturing with:

   1. 2-3 leading global companies

   2. Many highly specialised SMEs to build components of the bigger companies /

   3. Manufacturing hubs - agglomerating all the different companies and research skills needed - to produce BCI goods.

2. Strong Chinese-developed foundation software and design tools (at the moment those are produced in the US)

3. Chinese-led breakthroughs in the chips and sensors which are the most important parts of BCIs

4. Chinese led-development of six types of devices (which are listed at the end of this article)

The article is long on ambition and short on practical implementation (despite the name). But if the experience from biomanufacturing over the last 18 months is a guide, we would expect detailed policy implementation roadmaps to be published in 2026 and 2027 by the Ministry of Industry and Information Technology and the National Development and Reform Commission.

Pillar 2: The move from outlier to (nearly) mainstream

Beijing is moving to make brain computer interfaces to the mainstream part of the country’s health offerings, beyond simply improving the technology.

Towards this end, China has already incorporated BCI into the national medical service catalogue. This does NOT mean people chose en masse to get computer chips in their brains. Rather, it sends the message that BCI is a legitimate medical act. Once a procedure enters the catalogue, the healthcare system begins to reorganise itself around the expectation that the procedure exists. Regulators can audit it, doctors can train for it, and device makers can design products to fit defined categories. The result is institutional commitment prior to economic optimisation.

That commitment has begun to be tested. Hubei became the first province to set explicit fees, pricing invasive BCI installation and retrieval at 9,691 RMB (~ 1,391 USD) and non-invasive BCI services at 966 RMB (~ 138 USD).

The Hubei model will expose BCI to real world conditions. Other provinces can now observe cost structures, clinical uptake, and supplier responses before making their own adjustments. In parallel, national standards for BCI devices and regulations further narrowed the range of acceptable technical and clinical variation.

What are the BCI technologies China wants to make ordinary?

The seven-department policy document narrows this question considerably. The six product types prioritised in the document do not describe the full frontier of BCI development in China, but the subset of applications desired for near-term normalisation.

Notes on selected companies

NeuroHua (华脑安全): https://h5.cinn.cn/davmu/share/holly/doc/2024/08/DBERVOsN/index.html).

StarNet (星网锐捷) http://fj.people.com.cn/n2/2025/1114/c181466-41412039.html)

Chengdu buffalo (布法罗) https://finance.sina.com.cn/tech/digi/2025-10-29/doc-infvpywm7979847.shtml

Ant Research (蚂蚁技术研究院) https://baijiahao.baidu.com/s?id=1835119321246635937&wfr=spider&for=pc%EF%BC%89

The Shanghai Mental Health Center (https://www.thepaper.cn/newsDetail_forward_32190502)

Mindtrix (视觉脑机) https://www.mindtrix.cn/about

Takeaways

• Synthesis of dangerous DNA is the principal biosecurity risk, yet the burden remains mostly on an industry-led biosecurity system.

• Screening costs remain fixed as DNA synthesis prices are collapsing, pushing the anti-money laundering-style “screen everything” model beyond sustainability.

• AI-enabled biological design tools will generate more novel, ambiguous sequences than current screening systems can interpret or afford to review.

• Companies are turning to AI-powered screening software to affray costs and improve biosecurity, but flagged sales need human review.

Article

In 2009, a handful of DNA synthesis companies realised they had a problem.

Synthetic DNA promised to help cure disease, fight climate change, solve world hunger, and reshape global industry. But the same technology, mishandled or misused, could destroy public trust overnight and sink the field before it even began. As two executives stated in Nature at the time, “we have the greatest incentive to ensure that the genes we synthesize do no harm”.

While DNA itself is harmless, these molecules can be pieced together to create dangerous pathogens or toxins. Shrinking costs and feverish competition meant affordable, on-demand DNA could now be accessed by anyone with just the click of a button. Without vigilance, malign actors could covertly order and attempt to manufacture any number of infectious viruses or deadly poisons.

Biology, like each of the CBRN domains, is inherently dual-use.

But biology has several novel features. It self-replicates and mutates. A pathogen released - accidently or deliberately - can cause harm globally. A single nuclear or chemical weapon can not do that. The weapon will change with mutations, making it terrifying, limp or somewhere in between.

The Biological Weapons Convention is less stringent that its chemical or nuclear counterparts. It lacks formal verification techniques.

DNA synthesis, in particular, is only lightly governed by law or international treaties. Strict rules exist on the synthesis and sale of well known pathogens. But smaller fragments with a wide range of uses can be pieced together to make known pathogens or unknown pathogens, and this is hard to regulate.

Thus, most DNA synthesis screening falls under the auspices of corporate self-regulation and a range of voluntary guidelines from governments and industry. New US guidelines/regulations are on the horizon but they remain in a state of flux - discussed later in this piece.

Finally, technology in biology is changing more quickly than in nuclear or chemical. The quality of biological design tools, DNA synthesis, DNA sequencing are rapidly improving. Every subset of biology is experiencing quickfire breakthroughs. This means the scope of potential pathogens is expanding rapidly.

What happens when a technology with world-changing potential depends on a safety system that is mostly voluntary?

For more than a decade, the corporate self-regulation arrangement held. Screening burden was manageable, the market was small, and the risks felt theoretical - traditionally biological weapons have been ineffective. A voluntary system made sense when DNA was expensive and the industry concentrated in a few U.S. firms.

That world is gone.

Today, DNA synthesis is cheap, globally distributed, and increasingly shaped by AI-enabled biological design tools. The system that allowed the early field to safely emerge is now showing its limits, and its fragility is becoming harder to ignore.

The Anti-Money Laundering approach to synthetic DNA screening

When a DNA order arrives, providers ask two basic questions: What is this DNA? and Who wants it? If either answer raises concerns, the order is escalated for review.

The logic parallels anti–money laundering (AML). Since the late 1980s, financial institutions have been required to monitor transactions, vet customers, and investigate suspicious behaviour. But AML operates through a mandatory, globally harmonized framework backed by strict compliance laws. DNA screening borrows the architecture - through voluntary industry regulation - without the consensus or the enforcement.

Early screening protocols, such as the International Gene Synthesis Consortium’s (IGSC) 2009 Harmonized Screening Protocol and the U.S. Screening Framework Guidelines for Providers of Double-Stranded DNA (2010), focused on comparing DNA orders against lists of controlled organisms and toxins maintained by the U.S. Government and the Australia Group.

But as early as 2006, stakeholders recognised the limits of this approach. What happens when a dangerous sequence isn’t on any list? DNA screening cannot afford to stop at matching sequences; it has to interpret what a sequence might do.

It took almost two decades before that reality began to be reflected in policy. In 2017 the U.S. Intelligence Advanced Research Projects Activity program launched research into function-based threat detection, but it wasn’t until 2024 that the U.S. Framework for Nucleic Acid Synthesis Screening formally recommended providers screen for any DNA sequence that could be harmful or weaponised.

Customer screening emerged as the second chokepoint. The same DNA sequence might be ordered by a researcher studying infectious disease or by someone with malign intent, and distinguishing between them was essential. During onboarding, providers collect basic information to screen against sanctions lists and verify institutions, but reserve deeper vetting for when a DNA sequence is flagged.

Like AML, this is where the costs begin adding up. A 2015 survey of IGSC members found that customer follow-up alone accounted for up to 87% of biosecurity time and cost.

When considering how to implement biosecurity measures, a 2007 report noted, “the costs and burdens of [sequence and customer screening] are inversely proportional to their effectiveness for preventing a bioterrorist attack.”

In other words: the safer the system, the harder and costlier it becomes for the companies operating it.

Synthesis economics do not support an Anti-Money Laundering model

A decade ago, screening accounted for just 1.5 - 3% of the cost of goods sold, manageable when genes prices ranged $500 to $1,000. But prices have collapsed. Those same genes can sell now for $20 to $400. Meanwhile, screening costs haven’t budged, about $15 per order sold.

The economics no longer scale.

For companies like Twist Bioscience, one of the sector’s largest providers, that cost adds up. Gene orders bring in a little over $120 on average, and our analysis suggests screening accounts for between 3 - 13% of the cost of goods sold.

Figure 1: Data extracted and calculated from Twist Bioscience Annual Report (2024) and J. Craig Venter Institute’s DNA Synthesis and Biosecurity Report (2015).

Twist’s 2024 annual report claims current screening regulation doesn’t “present material challenges”, but flags future biosecurity expansion as a potential pressure point. Other companies, in discussions with the U.S. government ahead of the 2024 framework, expressed similar concerns: if expectations rise further and prices continue to drop, biosecurity screening could become a leading cost.

The contrast with financial compliance is striking. In AML systems, a transaction generally must exceed $10,000 in a single day to trigger follow-up. In DNA synthesis, orders in hundreds of dollars need to be screened. Even then, AML is notoriously inefficient; compliance costs exceed recovered criminal funds by more than a hundred-fold. It is a burdensome model and DNA screening has inherited its cost structures on very cheap goods.

These inefficiencies ultimately flow downstream, to scientists and companies operating on tight budgets and short deadlines. The pressure for fast, inexpensive DNA delivery stands in direct tension with a resource-intensive screening model.

Regulatory scope creep could raise costs further

Even as companies absorb the full cost of screening, regulatory expectations are (potentially) rising.

The 2024 U.S. Framework for Nucleic Acid Synthesis Screening marked a significant shift in policy. However, in May 2025, a Presidential Executive Order paused the framework pending revision within 90 days. To date (as far as we are aware), no revised framework has been released; proposed legislation to codify the order sits unpassed, and while the framework has been referenced in subsequent AI action plans, no rules have followed. There is an expectation that more stringent rules will follow.

So, the 2024 framework is the latest update we can assess. It shifts focus from primarily gene-length sequences and regulated pathogens to encompasses far more.

To prevent the assembly of gene-length DNA from smaller fragments, one major change in the paused 2024 framework was to reduce the screening window from 200 base pairs to as short as 30–50 base pairs. This quadruples the amount of screening performed on each gene, and expands screening to include oligonucleotides. This means short DNA fragments that are cheap, high-volume, and rapidly turned-around will - if they trigger red flags - require screening and human review, despite costing as little as $4.

Table 2: The minimum price of an order currently requiring screening is USD$21, but could be as low as USD$4 by 2026

* Max includes most-expensive purification; ** Prices imputed from min-cost/min-length; *** Based on promotional pricing

Proposed guidance also broadens the categories of that companies are expected to check. Beyond regulated pathogens and toxins, providers need to assess a wider landscape that includes “sequences contributing to pathogenicity or toxicity in humans and animals”. This expands reference datasets and increases the analytical complexity and cost of screening.

Unlike a definitive regulated list, what sequences actually fall into this category remains ambiguous. The International Biosecurity and Biosafety Initiative for Science (IBBIS) notes “this uncertainty is a key challenge for providers, driving up bioinformatic costs and requiring each company to make its own judgement.”

The combination of more DNA being screened and smaller windows of sequence analysis inevitably generates more ambiguous results. Even if the computational burden is manageable, the downstream effect is clear: more follow-up and more expert review, without any corresponding increase in revenue.

And as the scope of screening grows, so does the ambiguity around what actually constitutes “compliance.” Providers are being asked to interpret broader categories of biological risk without clear thresholds or definitions. In that ambiguity, economics begins to compete with, and sometimes outweighs, effectiveness.

Artificial intelligence derails DNA screening

Even if policy stood still, technology alone would squeeze biosecurity budgets.

The capabilities of AI-powered biological design tools (BDTs) already read like science fiction: predicting COVID mutations a year before they emerged in the population, or designing bacteriophages (a virus that infects bacteria) more infectious than natural viruses.

In October, a paper in Science showed how toxic protein sequences produced by BDTs passed undetected through two state-of-the-art DNA screening systems. The software was patched afterward, but the episode illustrates a larger trend: as AI-enabled design becomes more capable, there will be a two-way AI-powered arms race for screening software to keep up with BDTs.

Only a fraction of those AI-generated proteins behaved as intended in the lab, but that fraction was enough to expose a systemic problem. DNA from a known pathogen has a clear biological context. AI-designed sequences often do not. Traditional frameworks rely on matching against known sequences of concern and checking against whitelists of benign organisms. Novel sequences break these assumptions. They require interpretation, judgment, and manual review, none of which scale.

AI also deepens the core asymmetry: it is far easier to generate new biological designs than to evaluate them. Screening tools will need to incorporate AI, but that will increase, not reduce, the number of ambiguous orders requiring human expertise.

AI may ultimately improve screening, but for now it widens the gap between what can be designed and what can be responsibly evaluated.

Conclusion

Rob Carlson, a pioneer of synthetic DNA economics, summed up the fundamental mismatch in 2009.

“As the value of the products generated from synthetic genes and genomes increases, so will the demand to produce DNA faster and cheaper. In that environment, any barrier, whether economic, technological or regulatory, that slows down access to synthetic genes and genomes will be subject to pressure.”

And now, those pressures are converging: DNA prices are falling, biosecurity costs are rising, regulation is expanding, and AI is widening the gap between creation and interpretation.

There appears to be a choice. Government could increase screening impositions on companies which will have a corresponding effect on price. Government can do nothing and leave it to the companies and hope that nothing goes wrong (historically this has been true). Or Governments can start to take on some of the screening of customers themselves - moving the burden from companies to taxpayers. None of these are particularly attractive options. So it is a “least-worst” policy choice.

For almost two decades, corporate self-regulation quietly protected a rapidly growing industry and, by extension, global security. But voluntary systems cannot scale indefinitely. If synthetic biology is to remain both innovative and safe, nations will need to decide what exactly kind of oversight they expect, and how much of that burden they are willing to carry.

• Bioreactor construction and operation costs are one of the barriers to biomanufacturing.

• China has adopted a large national mission with ~80 organisations working on 28 projects across 3 major focus areas which are split into 9 specific tasks. (Full list at end of article)

• I am not aware of any other country adopting such a mission.

• If China succeeds, it will completely rewire global industry.

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Bioreactors

The bioreactor is the fundamental building block of biomanufacturing. At its most basic, a bioreactor is a steel vat that houses microorganisms grown to sufficient numbers (or cells in the case of a cell bioreactor) to then produce a target product, such as yeast for beer.

With modern biotechnology, almost any product from vaccines to chemicals can be produced using fermentation in a bioreactor.

The problem is that bioreactors produce goods too expensively compared to incumbent methods, like petrochemical refining.

A reduction in bioreactor costs would fundamentally alter the market dynamics for all biomanufactured products and change the global industrial landscape.

Bio-based production has huge advantages. It can replace petro-processes; one tank can be used to create multiple products by changing the microorganism; the feedstock can be agricultural offcuts or gas or sugar which is often locally available; in many cases biomanufacturing is a more environmentally friendly process.

China’s national mission for reimagining the bioreactor

In December 2025, China’s Ministry of Industry and Information Technology and Chinese Academy of Sciences announced the winners of a “High-Performance Bioreactor Innovation Challenge” which is a national mission to find breakthroughs in bioreactor technology.

China is trying to work on both the science and the engineering of the bioreactor. In a lot of other countries, there is an assumption that the science is solved and the new engineering is needed to cut costs. I’m not sure Beijing sees it that way. The 9 area listed below focus on sensors, scale and simultaneous (parallel) production. Much of that is engineering. But, it will require scientific breakthroughs too.

The nine tasks are:

1. Microbial parallel bioreactors

2. Cell parallel bioreactors

3. Large-scale cell bioreactor systems

4. Large-scale preparation of cell culture microcarriers

5. In-situ monitoring sensors for core physical and chemical parameters

6. Core mass transfer components

7. Key components for online monitoring of biological exhaust gas components

8. Intelligent industrial operating systems for bioreactors

9. Alternating tangential flow systems

There is limited information on the specific scope of each project. Multiple projects are addressing each of the tasks listed above, but it is unclear whether they are competing directly or working on different components of the same tasks.

Finally, the national bioreactor mission fits into a broader plan to bring down costs. Local governments are striving hard to bring down biomanufacturing costs on large scale facilities. We can see how this manifests itself in an interview with a local biomanufacturing company:

“Steam prices have been declining year by year. When we first arrived, it was 320 yuan/ton, and now it’s down to 220 yuan/ton. The government is coordinating and supporting businesses in developing green power systems, and our company will begin construction on a 4.6 MW photovoltaic project this year. These practical measures are helping businesses reduce costs and increase efficiency,”

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The money

The opaque Chinese system does not tell us the level of financial investment specifically. I always get the question of “how much money”, and I can rarely answer adequately. This article is no exception.

We have some hints that this will receive significant funding. The major Chinese news outlets all ran a similar version of a story which list a wide range of funding bodies that will support the program. In practice, the media releasees are instructing those funding organisations to support the bioreactor program. Sorry for CPC bureaucratese:

They (The Ministry of Industry and Information Technology and the Chinese Academy of Sciences) will make full use of the National Key R&D Program, the National Natural Science Foundation, government investment funds, the national industry–finance cooperation platforms, forward-looking strategic science and technology pilot programs, and other instruments to increase support for eligible shortlisted entities or consortia, create a sound environment for original innovation, the development of key technological products, and the industrialization and application of research outcomes, support industrial enterprises in carrying out equipment upgrades and technological transformation, continuously improve the system of standards and norms, and enhance the capacity for technological innovation and problem-solving, R&D and manufacturing, and industry-wide application in high-performance bioreactor equipment.

Different to traditional Chinese industrial policymaking

This differs to the traditional Chinese industrial policy approach where the central government identifies key technology classes but leaves provinces, companies, banks and universities to pump money into that technology without guidance on discrete tasks.

Here, the government has decided one building block for an entire technology class - the bioreactor - is so important that it needs its own mission, and it has decided which discrete tasks need to be solved. It is more micromanaged than usual.

The actual list of companies is below. I used ChatGPT to translate company and organisation names, as English names do not always correspond directly to their Chinese countrparts and often require searching. AI is much faster, though some inaccuracies in the English organisation names below may remain.

17 organisations appear more than once on the list. I have added a table for duplicate mentions below the list of companies.

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• The list of target products is the next stage in a rapidly developing masterplan for leading the world in biomanufacturing.

• China is targeting new and novel processes, not merely recreating what has happened elsewhere in the world.

• This is only the first tranche of target products. There will be further lists released.

• Food (incl additives and animal feed) + pharma are viewed as the first wave of potentially commercially viable bio-based products.

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Article

In August 2025, China’s Ministry of Industry and Information Technology published it “List of Signature Biomanufacturing Products (First Batch).” As the name suggests, it is the first tranche of 36 NEW target products to be made via biomanufacturing. (The full list of target products is available at end of article)

By NEW, I mean two things:

1. This is separate to the 2023 target list of “32 molecules to make from non-food biomass”. Many of those were already commonly biomanufactured products but China was looking to move the feedstock from sugar to a non-food source.

2. Most of the products on the 2025 list are NOT commercially available via biomanufacturing (there are exceptions like PHA). So, Beijing is trying change mature petrochemical processes (or other mature processes) to a biomanufactured one.

All systems are go

This is a big deal. It reaffirms China’s commitment to biomanufacturing which is a fundamentally new way to make stuff. So it will reduce China’s reliance on imported fossil fuels, it will increase reliance on China as they lead in this technology.

It seems no amount of domestic economic pain is going to stand in the way of government effort.

Many of the processes are novel. The list of 36 products comes with vague but helpful explainers on each process (See list at end of article. I got ChatGPT to do the translation because I do not have time to do them myself. Editor’s note: I had to rework the table after readers pointed out translation errors). The notes on each process articulate the novelty.

For example, Beijing PHAbuilder which manufactures PHA - a biodegradable plastic. The release states that PHAbuilder has propriety microorganism strains and a seawater fermentation process which reduces costs. (I do not know if that it is really novel. But policy thought has gone into the novelty of each process).

Most of the products are food/food additives, animal feed, and biopharmaceuticals areas. It is a fair assumption that those are seen as the ones with the most immediate potential. This aligns with other evidence. Food additive companies are also the most common in China’s plan to build 43 biomanufacturing pilot plants.

Finally, there is no explicit feedstock requirement here. That suggests China will accept food-based feedstocks like sugar and starch - at least in this stage of development.

The masterplan

We will have more to say in the coming weeks about this being part of a bigger master plan. But our team has already reported on Chinese efforts to identify and develop:

• The pipeline. A first tranche of 43 biomanufacturing pilot plants is in the works with more to come.

• The products. This tranche of 36 products is the first of likely hundreds of products to be identified and delivered

• The tools. China is trying to reduce US lead in computational, design, editing, sequencing and synthesis tools by making them commodities.

• The narrative. China has highly prioritised biomanufacturing in every key technology policy document in the last two years, including preparations for the next Five Year Plan.

The non-strategic strategic areas

There is a choice here for other countries. Biopharmaceuticals, feed and food additives by themselves are rarely viewed in liberal democracies as particularly strategic. Medicine is not usually weaponised and food is plentiful.

Who cares if a few food additive companies switch from petro- to bio- processes? Well we should care because if Beijing can make this work financially, then processes which are currently available in many countries collapse down to one. The products on this list are just the tip of the iceberg.

Moreover, this technology will be central to weaning fossil fuels for all products that are not easily electrified (fertilisers, chemicals, food additives, food, steel, cements, dyes among many others)

The usual caveats - China is not 10-foot tall and bulletproof

Many countries and companies have tried and failed to develop bio-industrial sectors. China’s effort is the most ambitious of them all. But there are many failures littered along the way.

Of course, there will be garbage and waste in these 36 products. A few of these companies have been around for a while and may have been doing this work anyway. Or maybe the reason they still need government help is because their business model does not work or their process is not as novel as they claim.

And as the 2025 U.S-China Economic and Security Review Commission report (pg 348) reminds us:

“The Chinese government’s support for biotechnology has not been consistently matched by China’s private sector. Specific government and private-sector support for China’s synthetic biology subsector is more difficult to track; investment in China’s ostensibly private synthetic biology industry appears to have peaked in 2022 with RMB 2.82 billion ($390 million) in disclosed value and 17 financing events.212 In 2024, these investments were down to RMB 412 million ($57.3 million) in disclosed value and 15 financing events.213 These numbers mirror the private sector investment trends in China for the broader biotechnology sector, which fell to a seven-year low of $4.2 billion in 2024.”

But, all these caveats aside, my view remains China will get there. They have a good record of delivering industrial disruption when they really care about an emerging technology, even when many other countries have failed.

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Key points:

• China’s domestic beef production (and its broader ag production) has been growing quickly. Oversupply has been from its own producers.

• The goal appears to be increased food self-reliance. The tariffs are to ensure continued growth in Chinese beef consumption is supplied by Chinese farmers not foreign imports.

• This is a step change in how China approaches food security. If it works, it is a potential trial balloon for other sectors.

• This could have impacts on Chinese consumers and producers that might see a reversal in future years (the “doesn’t work” scenario) .

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Overnight China has surprised the world with tariffs on beef imports. As the Sydney Morning Herald reports:

China, the world’s biggest importer of beef, overnight set the new import duties of 55 per cent above a certain quota to protect its local farmers from international competition of major export nations including Argentina, Brazil and Australia.

The new tariffs will apply to all beef imports into China, from any country, once China receives its annual quota of 2.7 million tonnes of beef imports. In 2024, China imported 2.87 million tonnes. The quota is set to be adjusted annually (providing wiggle room for the Chinese government)

On the surface, the goal is about food self-reliance. The tariffs are to ensure continued growth in Chinese beef consumption is mostly supplied by Chinese farmers not foreign imports.

China’s beef and food production is growing

China’s domestic beef production has grown nearly 16% in the last five years. So, it is hard to believe that Chinese farmers need protecting. China produces enough beef to meet 70% of consumption. If prices are low, Chinese producers are a major reason.

Chinese beef consumption has been growing faster than domestic production. So this seems as though it is a play to lock in foreign production at a certain level and have future growth supplied by domestic producers.

Overall China has a high level of self sufficiency in meat and grains. As the graphs below show, China’s domestic production of chicken and pork closely match its consumption. And it produces most of its own wheat and coarse grains.

China’s pork production has increased quickly. Feeding these animals remains the major vulnerability. But China is self sufficient in these key agricultural areas.

Figure (below): Global beef production by country

Overall China has made huge gains on food security

Almost all pieces on China’s agriculture start with how China’s relentless food import growth has led it to become the world’s largest agricultural importer. That is true, and the Communist Party of China has long seen it as a vulnerability.

However, in the last two years, the tide of China’s food imports have begun to turn. China has slowly reduced the value of its agricultural imports, including from the US. China’s domestic agricultural production continues to grow as it has for the past 40 years, albeit at a rate slower than the rest of the world. China has also shored up domestic fertiliser supply and is now increasing domestic yields with less fertiliser.

The exception remains soybeans, but even on this front China has shifted its reliance from the US to Brazil. This is an improvement from Beijing’s perspective.

Image copied from this Reuters article: https://www.reuters.com/markets/commodities/china-pivot-us-farm-imports-bolsters-it-against-trade-war-risks-2024-11-01/

The small turn - a hopeful inflection point from China’s perspective - has been a decade in the making.

Food security is a serious business in Xi Jinping’s China. Xi has regularly talked about food security since he took office in 2013 and basically hasn’t stopped. As a report from CSIS notes, from 2012 to 2022, “Xi Jinping engaged directly on food security topics 67 times, including through domestic province inspections and instructions to local governors on how to manage agricultural production.”

There are two broad planks to the strategy. The first is boosting domestic research, yields and production to ensure maximum domestic supply (to be covered in another blog).

The second plank is shaping the international environment to secure China’s food security. No country is completely self-sufficient. Even large net food exporters, like Australia, rely on equipment, fertilisers, seed varieties, IP and a whole bunch of other international inputs. For China, which is the world’s largest food importer, complete self-sufficiency is not possible.

Xi Jinping’s output on this, as with many other topics, is prolific. But in a 2020 speech at the Central Rural Work Conference, he outlined the key international elements to China’s food security strategy. It has four specific commitments to strengthen supply chain resilience:

• Diversification of agricultural imports (so if one country stop supplying, there are others)

• Substitutability of agricultural products (so if there is a shortage in one product, there is a plan for others)

• Improved ability to control key (global) logistics nodes

• Support Chinese agricultural enterprises to go global (presumably to help secure a level of control over production in other countries)

The tariffs appear to be a new tool in China’s food security arsenal

The tariffs appear a departure from the above speech and China’s broader food security approach of the last two decades. Generally, both foreign and domestic producers have increased production of food. It now seems that Beijing is willing to move beyond those tools.

There is a risk in this approach, it will may spike prices (noting that the quota is set at current import level, so the spike will be limited) which I guess the Chinese government assumes will encourage domestic production. But few governments want higher food prices. Consumers may also choose other foods, creating a spill over effect.

If this works though, one could imagine this spreading to other industries.

Animal feed remains the true source of vulnerability

China’s biggest agricultural import - by some margin - is soybeans to feed pigs (visual below). China has half the world’s pig population. So it’s actually Chinese pigs that have a reliance on US imports.

Figure: China’s agricultural imports in 2022

This figure is a screenshot from the Atlas of Economic Complexity: https://atlas.hks.harvard.edu/explore/treemap?exporter=group-1&importer=country-156

Soybean substitution in theory is rather simple. Pigs are highly inefficient feed convertors. If PRC residents were to replace meat with vegetarian options, the soybean problem greatly improves. You’ll notice the second biggest import is frozen beef. Same solution.

But, people like eating meat. So, we have two scenarios. In wartime or other periods of unusual disruption, the population will accept meat rations and hardship for an extended period.

This is not likely to be acceptable in peacetime. So we see a diversification of soybean imports away from the US toward Brazil. This was initially driven by Chinese tariffs on US soybean in response to Trump’s original tariffs. General diversification away from US agriculture has become clearer policy in China too.

Figure: China’s soybean imports becoming more reliant on Brazil (original here)

The longer term goal is not just to move reliance from the US to Brazil, but to reduce overall reliance on imported soybeans. China is trialling a bunch of solutions right now. One is to reduce the amount of soybeans in pig feed. The second is to grow more of its own soybeans.

So far it has not worked. China imported a record volume of soybeans in 2024. There are mitigating circumstances. Low prices and the looming threat of Trump 2.0 caused Chinese buyers to move soybean purchases forward.

The huge Chinese market has encouraged Brazilian soybean growers to expand. So for the next few years, weather permitting, we will likely see huge volumes of cheap soybean which may undermine China’s domestic soybean efforts as purchasers find international prices too attractive.

China’s diversification and self-sufficiency efforts will affect global growers in a multitude of ways

Grain crops like soybeans are commodities, so often if one market is unavailable then global supply shifts and the commodities get redistributed among other purchasers. A good example of this is Australian barley which found markets elsewhere when China blocked its purchase.

The exception is when one purchaser is larger than the rest. China consumes 60% of the world’s soybeans. If supply shifts away from one supplier (in this case the US), then it encourages other producers (like Brazil) to boost their output which drops global prices. There is no easy solution for US farmers other than take the hit or find a new crop.

In most other grains, China is not the dominant purchaser to the same level. Beijing is trying hard to remove reliance on key US allies (like Australia), for example New Russia-China Land Grain Corridor (NLGC) program is designed to funnel Russian grains to China. They may well succeed. But grain producers in this case will find other markets in place of China.

Other agricultural goods like meat and crustaceans are awkwardly wedged between commodity and consumer goods. Some consumers have genuine preferences for meat from certain locations or suppliers. Others treat meat like a commodity. So countries like Australia and the US will continue to find niches that certain consumers like. But if supply from any of the major global meat or seafood producers is disrupted, China does have ready-made alternatives. And China will consistently try to find alternatives to major Western suppliers.

For value-added non-commodity products, it may be harder to replace the China market because it needs a large number of middle class consumers. There are few markets like that. Australia lobsters and wine makers, for example, struggled to find alternate markets when China lashed sanctions on Australia.

As the Australian 2025 holiday season rolls around, our team has curated some of the best work from this year.

Our team’s writing on food security had three key themes this year:

1. Food production is increasing and so is hunger

2. Food systems are becoming increasingly geopolitical

3. China sees biomanufacturing as booster to food security, not a contradiction.

Agricultural systems are improving but Africa is being left behind

The world does not have a food production problem. It has a food distribution problem.

As we reported earlier this year, global per-capita food production has consistently increased or remained stable across staple crops, meats, fruits and vegetables since 2000. However, this agricultural productivity does not translate to globally better outcomes - conflict, weather volatility, and localised differences in increases in production entail that overall the number of people who do not receive enough calories is increasing, reversing decades of progress.

Since that publication, latest figures from the UN FAO are showing a decrease in hunger globally, but consistent rises in most regions of Africa and in western Asia. A healthy diet is becoming more accessible, with a decrease in the number of people able to afford one (from 36.9% in 2020 to 31.9% in 2025).

Because of the increasing food production, we argued that narratives around alternatives have also struggled.

Food security is becoming increasingly geopolitical

Food security remains a top priority for Indo-Pacific nations, making strategic foreign aid contributions a critical component to soft power. Cuts to USAID and the Food for Peace program are coming as Beijing has committed more resources to agricultural support (e.g. the China-Africa Agricultural Science and Technology Innovation Alliance)

Similarly, our team has tracked the rise of fertiliser nationalism both in terms of limiting access and creating home grown alternatives to import. Many countries are building sovereign fertiliser capability.

For decades China has prioritised food security, making remarkable progress. China has accelerated production of pork, leaving a notable vulnerability in their supply chain of having the inputs to feed Chinese pigs.

China’s biggest agricultural import is soybeans, but the supplier has shifted from the US to Brazil; the US share of Chinese imports has plunged from 40% to 18% in the past decade. China’s command of the world soybean market entails that the shift away from the US encourages other producers to boost their output. This drops global prices and US farmers will take the hit. So, China’s commitment to food security is moulding the international environment.

Biomanufacturing is seen a booster to food security, not a contradiction.

China has committed to both food security and biomanufacturing.

We publicised a plan to use non-feedstocks in biomanufacturing, something the US has failed to do. In 2023, a collection of six government departments headed by the Ministry of Industry and Information Technology launched the “Three-Year Action Plan for Accelerating the Innovative Development of Non-Food Bio-Based Materials”. We noted in our analysis that modest progress has been made towards all goals set out. This has given China the edge over the US, and a potential follow-up to this plan in 2026 should be on people’s radars.

The crossover between food and biomanufacturing continued on the outputs side. Food additive companies were the largest group of companies listed in a new plan to build 43 biomanufacturing facilities. Biomanufacturing is seen a booster to food security, not a contradiction.