22 Dec 2025 | By YGG
Within the global plant extract supply chain, China’s position as the undisputed core supply source means that any subtle fluctuation in its domestic policy environment creates ripples in the cost, risk, and strategic planning of international buyers. For those prioritizing certainty and manageability, understanding Chinese policy has transcended general business environment scanning to become the core module of supply chain risk management. This article, structured around the core concerns of global buyers and incorporating the latest policy dynamics from 2024-2025, provides a systematic analysis of the compliance landscape, security challenges, and strategic opportunities they face.
I. Market Access and Compliance Alignment: Bridging the “Dual Standards” Divide
The primary anxiety for global buyers lies in “dual compliance”: products must simultaneously satisfy Chinese export regulations and their own country’s import laws. Recent policy developments are profoundly shaping the complexity and clarity of this process.
Dynamic Harmonization and Potential Conflicts in Pesticide Residue (MRL) Standards:
The core challenge for buyers is the synchronization and divergence between China’s national standards (GB 2763) and those of the Codex Alimentarius Commission (CAC), the EU, and the US. In 2025, China’s Ministry of Agriculture and Rural Affairs, jointly with multiple departments, issued the Pesticide Residue Limit Standard Optimization Work Plan, aiming to systematically align with international standards and accelerate standard-setting for characteristic crops[1]. This is a significant boon for buyers, indicating that the pesticide residue compliance of Chinese raw materials will become more internationally applicable in the future. However, during the transition period, a “grey area” may still exist between China’s dedicated residue limits for characteristic ingredients like goji berries, ginseng, and honeysuckle and the default standards in markets like the EU. Buyers must conduct precise “bridging analysis,” relying on suppliers to provide authoritative test reports that comply with both Chinese and foreign standards.
The Strategic Value of the “Medicine-Food Homology” Catalog and “New Food Ingredient” Approvals:
The “Substances that are Both Food and Traditional Chinese Medicine” catalog (known as the “Medicine-Food Homology” catalog) and the “New Food Ingredient” approvals managed by China’s National Health Commission (NHC) serve as a golden reference for global buyers to assess the legal status and scientific safety of ingredients. In 2024, Dendrobium officinale (Tie Pi Shi Hu), Ganoderma lucidum (Lingzhi), and Gastrodia elata (Tian Ma) were approved for pilot management as “medicine-food homology” substances in several provinces, a key signal for their potential future inclusion in the national catalog[2]. For buyers, this signifies a significant expansion of the domestic application scenarios for related extracts from drugs/health supplements to ordinary foods, greatly enhancing the economies of scale and cost advantages of their supply chains. Furthermore, China’s safety review conclusions for an ingredient carry substantial weight as supporting scientific evidence when applying to the EU (for Novel Food) or submitting an NDI notification to the US FDA.
Upgraded Export Supervision and Authorized Economic Operator (AEO) Mutual Recognition:
The General Administration of Customs’ (GAC) ongoing “Smart Customs” initiative uses big data to enhance inspection precision. For compliant companies, this means improved clearance efficiency; for poorly managed suppliers, the risk of being targeted for inspection increases, potentially causing delays. More critically, China’s AEO mutual recognition agreements with major trading partners (e.g., the EU, Singapore) continue to deepen[3]. Buyers who partner with suppliers holding China Customs’ Advanced Certification (AEO) enjoy lower inspection rates and faster clearance in their home ports, directly translating into predictable logistics timelines and optimized total supply chain costs.
II. Supply Chain Security and Traceability: From “Documentary Compliance” to “Data Trust”
Policy drivers are transforming supply chain transparency from an optional marketing story into an indispensable hard requirement.
Source Governance of Chinese Medicinal Materials and the “High-Quality Genuine Regional Medicinal Materials” Evaluation System:
The National Medical Products Administration’s (NMPA) ongoing promotion of the “Good Agricultural Practices for Chinese Medicinal Materials” (GAP) and its incentivized implementation policies, combined with the Ministry of Agriculture’s “Green Planting-Breeding Circular Agriculture Pilot,” aim to control medicinal material quality at the source[4]. For buyers, the key value of these policies lies in creating a gradient for screening. They can prioritize suppliers sourcing from “GAP bases” participating in “Genuine Regional Medicinal Materials” standardization projects. Such suppliers can provide standardized cultivation archives (e.g., seed source, pesticide/fertilizer use records), which serve not only as quality assurance but also as preliminary evidence for “due diligence” requirements under emerging regulations like the EU’s Deforestation-Free Regulation.
The Expanding Trend of Digital Traceability Becoming a De Facto Legal Responsibility:
While not yet universally mandatory, the traceability requirements under the Pharmaceutical Administration Law of China for drugs and the advocacy for edible agricultural product traceability under the Food Safety Law are spreading upstream through local pilots and industry standards. For instance, in major producing regions like Gansu (Angelica, Astragalus) and Yunnan (Panax notoginseng), blockchain-based traceability platforms established through cooperation between local governments and leading enterprises are moving from demonstration to practical application[5]. For buyers, suppliers integrated with these platforms mean that the certificates of origin, processing timelines, and test reports they provide come with a higher degree of tamper-resistant credibility. This significantly reduces the complexity and cost for buyers to conduct their own supply chain audits, building “trust” on verifiable technical code.
The “Normalization” of Pressure from Environmental, Energy, and Safety Production Policies:
Environmental inspections and the “dual control” policy on energy consumption against the backdrop of the “Dual Carbon” goals have become normalized and refined. In 2024, some regions where extract industries are concentrated introduced stricter local standards for Volatile Organic Compounds (VOC) emissions and wastewater treatment. This leads to two direct consequences: first, the continuous internalization of environmental compliance costs may drive price increases but also phases out backward capacity, consolidating the supply chain around better enterprises; second, the risk of production suspension due to environmental rectification becomes a factor that must be assessed for supply disruption. Buyers need to incorporate suppliers’ environmental ratings and clean production certifications into their qualification assessments—this is no longer a corporate social responsibility option but a necessary measure to ensure supply continuity.
III. Trade Facilitation and Cost Structure: Efficiency Reshaped by Policy
Policies affecting logistics and financial costs directly determine buyer competitiveness and profit margins.
Cross-Border E-Commerce and the New “Bonded R&D” Model:
The policy dividends from China’s Cross-Border E-Commerce Comprehensive Pilot Zones have extended from consumer goods to industrial intermediates. For R&D procurement needs involving small batches and multiple orders, importing plant extract samples or small-batch raw materials via the cross-border e-commerce (B2B) model allows for simplified customs procedures. More cutting-edge is the “Bonded R&D” policy introduced within the Free Trade Pilot Zones in cities like Shanghai and Shenzhen for the biopharmaceutical industry. This allows overseas buyers to ship raw materials into the zone duty-free for formulation and application research by domestic R&D institutions, with finished products then exported or sold domestically as needed[6]. This provides buyers with a highly flexible and cost-effective “front shop, back factory” model for innovative collaboration.
The Stability and Precision of Export Tax Rebates:
Plant extracts benefit from the Value-Added Tax (VAT) export rebate policy, with rates remaining stable in recent years. The key point lies in the efficiency and transparency of implementation. The “contactless” tax handling and paperless export rebate procedures promoted by the State Taxation Administration accelerate cash flow for compliant companies. For buyers, this means healthier cash flow for their Chinese partners, leading to greater stability in price negotiations and order fulfillment. Simultaneously, the precise crackdown on tax fraud by tax authorities using big data purifies the market, further highlighting the advantages of legitimate, high-quality suppliers.
IV. Industrial Upgrade and Standard Building: Defining the Future “Rules of the Game”
Forward-looking buyers are shifting from passive adaptation to actively leveraging China’s industrial upgrade policies to lock in future advantages.
Technology Roadmaps Under the Guidance of “New Quality Productive Forces”:
With “synthetic biology” designated as a frontier technology at the national level, funding and policy support for biomanufacturing projects across regions are fostering a new generation of suppliers. For example, projects utilizing synthetic biology to produce rare ginsenosides and resveratrol have entered the industrialization stage[7]. Buyers focus on such policies to identify and partner early with technology-driven partners capable of breaking natural resource constraints, achieving ingredient standardization, and ensuring sustainable supply from the source, thereby securing a commanding position in the future value chain.
The Shift from “Standard Taker” to “Standard Co-builder”:
The most strategically significant development is the launch in 2025 of the “Good Extraction Practice (GEP)” group standard and certification program, jointly promoted by Chinese and US industry bodies[8]. This transcends single product quality standards, representing a quality management system standard covering the entire industrial chain. For buyers, GEP certification acts as a pre-screening “trust label,” drastically reducing the cost of duplicative audits on supplier production systems. On a deeper level, it signifies that leading Chinese enterprises and global buyers are beginning to co-create and share a mutually recognized “quality language,” which will have a profound impact on global procurement practices and systematically lower the trust cost across the supply chain.
Conclusion: Building a Resilient Supply Chain Based on Policy Intelligence
In summary, for global buyers, the policy environment of China’s plant extract market has formed a complex, multi-layered matrix. The core trends are: compliance requirements are deepening from finished products to full-chain traceability; regulatory means are shifting from manual review to digitalization and intelligence; and industrial guidance is upgrading from scale expansion to green and technological innovation.
The most successful procurement strategy will no longer be simple price comparison but building “Policy Intelligence-Driven Supply Chain Resilience.” This entails:
Normalizing policy monitoring: Tracking real-time updates in Chinese regulations across agriculture, customs, ecology, health, and other domains, and assessing their ripple effects.
Using policy tools to screen partners: Proactively utilizing official or industry certifications such as GAP bases, AEO certification, GEP certification, and Green Factories as key filters for supplier tiering.
Participating in standard co-creation: Engaging with leading Chinese suppliers and industry associations to voice needs during the refinement and promotion of mutual recognition standards like GEP, integrating buyer requirements into future rules.
Ultimately, buyers who can penetrate the policy fog and transform China’s rigorous regulatory framework into supply chain transparency, compliance advantages, and sustained innovation capabilities will secure long-term initiative in the global plant extract competition. China’s policy net is simultaneously playing the dual role of “filter” and “catalyst,” and understanding and navigating this role is the ultimate art of globalized procurement.
References
[1] Ministry of Agriculture and Rural Affairs, National Health Commission, State Administration for Market Regulation. (2025). Pesticide Residue Limit Standard Optimization Work Plan. Nong Ban Ke [2025] No. 1.
[2] National Health Commission. (2024). Notice on Piloting the Management of Nine Substances Including Codonopsis pilosula as Substances that are Both Food and Traditional Chinese Medicine. Guo Wei Shi Pin Han [2024] No. XX.
[3] General Administration of Customs. (2024). Key Tasks for Comprehensively Deepening Customs Reform in 2024.
[4] National Medical Products Administration, Ministry of Agriculture and Rural Affairs, National Administration of Traditional Chinese Medicine. (2022). Good Agricultural Practices for Chinese Medicinal Materials. Announcement No. 22 of 2022.
[5] General Office of the Gansu Provincial People’s Government. (2023). Notice on Issuing the Development Plan for the Traditional Chinese Medicine Industry Chain in Gansu Province. Gan Zheng Ban Fa [2023] No. XX.
[6] Shanghai Municipal People’s Government. (2023). Shanghai Pilot Plan for Promoting the Import of Items for Biopharmaceutical Research and Development.
[7] National Development and Reform Commission. (2022). *The “14th Five-Year” Plan for Bioeconomy Development*.
[8] China National Institute of Standardization, China Chamber of Commerce for Import & Export of Medicines & Health Products, United Natural Products Alliance (UNPA). (2025). Joint Statement on the Co-release and Promotion of the “Good Extraction Practice (GEP)” Group Standard.