Author:Trevor Yahn-Grode          5/27/2021            NFD

Hemp has been grown in China for thousands of years, except when – similar to its prohibition in the U.S.  cultivation was outlawed from 1985 until 2010. In 11 short years, however, China has established itself as the world’s largest hemp producer, despite maintaining strict prohibition of high-THC cannabis. Perhaps more remarkably, while being the largest global producer, China exports nearly all of it and primarily to the U.S.

Two of its provinces – Heilongjiang in the north, and Yunnan in the south – account for 70of total global hemp fiber production. Though accurate figures for the size of the country’s hemp market are difficult to confirm or calculate, a USDA report by its Foreign Agricultural Service projected that the Chinese fiber market was responsible for sales of up to $1.2 billion in 2018, having doubtless only increased since. While the vast majority of China’s hemp has historically been used for textile production, in recent years it has also entered the CBD market, increasing production acreage dedicated to that by 300% from 2018-2020.

Initially, the Chinese government was supportive of its expansive CBD industry. In September 2020, the Yunnan government announced the opening of the Kunming Economic Development Zone, a business park dedicated to domestic hemp companies. CBD was available for sale in cosmetics, and the domestic market grew with explosive abruptness. Fast-forward to this month, however, and reactionary forces in the government suddenly banned hemp flowers, extracts, and oils in cosmetics – leaving no legal avenue for Chinese consumers to obtain CBD. Between domestic demand outlawed, an oversupply of CBD glutting the West, and no large legal markets to be found nearby, Chinese CBD firms are struggling to remain profitable.

As a response, China appears to be steering its hemp industry more heavily towards fiber, focusing specifically on textiles and biocomposites. China’s 13th Five-Year Plan lays out the country’s intention to cultivate 3.2 million acres of fiber hemp for textiles by 2030. That move is being fueled by a desire to supplant cotton with less environmentally taxing crops, part of the country’s ambitions to beat the U.S. and the EU in achieving net-zero carbon emissions. Early support and investment from the Chinese government has put the country at the forefront of innovation in hemp fiber, and is largely responsible for the country’s 70market share in the space.

As governments, companies, and entrepreneurs compete to create and implement carbon-neutral technologies, China is likely to remain a major player in the expanding development of the global hemp industry.