Cannabis has been cultivated in China for millennia, except for a brief period – similar to the prohibition in the United States – when cultivation was banned from 1985 to 2010. Yet, in just 11 years, China has become the world’s largest producer of hemp, even though it still has a strict ban on THC. Perhaps more surprisingly, while it is the world’s biggest producer, China also exports almost all of its hemp, mostly to the United States.
China produces 70% of global hemp fiber in two of its provinces (hemp in the north and hemp in the south). While exact data on the size of China’s hemp market is hard to come by, a report by the USDA’s Foreign Agricultural Service in 2018 estimated that the country’s fiber market accounted for $1,2 billion in sales in 2018, and it’s only gotten bigger since.
Historically, most of China’s hemp has been used for textiles, but in recent years, the country has also begun to enter the CBD market. In fact, hemp production acreage devoted to CBD has increased by 300% between 2018-2020.
At first, the Chinese government showed support for their huge CBD industry. The Yunnan government opened a business park for domestic hemp companies in September 2020, and CBD was allowed to be sold in cosmetics. The domestic market grew quickly. But then, this month, the government suddenly banned CBD flowers, extracts and oils in cosmetics, leaving no legal way for Chinese consumers to get CBD. With domestic demand banned, an oversupplied CBD market in the west, and no big legal markets nearby, Chinese CBD companies are having a hard time staying profitable.
In response, China seems to be shifting its hemp industry more towards fiber, with a focus on textiles and bio-composites. China’s 13th five-year plan says they want to grow 3.2m acres of fiber hemp in textiles by 2030. The shift is being driven by the Chinese government’s ambition to replace cotton with crops that are less environmentally taxing, as part of its plan to surpass the United States and European Union in achieving net zero carbon emissions.
China’s early support and investment in hemp fiber has placed it at the cutting edge of innovation, and is responsible for 70% of the country’s hemp fiber market share. As governments, businesses, and entrepreneurs strive to develop and deploy carbon neutral technologies, it is likely that China will remain a key player in the ongoing growth of the global cannabis industry.
