China Issues Major Policy to Elevate Traditional Chinese Medicine
Implications for U.S. Practitioners and the Global Supply Chain
At first glance, the Chinese herb market in 2025 appears to have finally settled, with prices falling sharply across many categories. As we’ve reported previously (see Herb Supply & Sustainability Update – Mayway Herbs), a wave of speculative investment shifted from China’s real estate sector into commodities, including herbs, resulting in large-scale stockpiling in cold storage. These herbs were intended to be sold at peak prices, but many investors who borrowed in 2023 now face repayment deadlines. As a result, inventory is being liquidated, often at a loss, creating downward pressure on pricing.
To compound this situation, despite weather-related setbacks in some regions, widespread overplanting has resulted in a record harvest. Combined with the release of previously hoarded stock, this has created a glut in the market. Currently, China’s total herbal cultivation spans nearly 20 million acres, yielding more than 5 million tons annually. Inventory overstock is estimated at 35%, and the prices of key varieties like Ginseng (Ren Shen 人参) and Panax Notoginseng (Tian Qi 田七) have fallen by more than 50%.
This abundance, however, is misleading. Much of what is available is not compliant with Chinese Pharmacopoeia (CP) Standards. It's estimated that fewer than 70% of herbs in circulation meet CP requirements, primarily due to uncontrolled sourcing, high levels of heavy metals and pesticide residues, and widespread adulteration. For instance, Panax Notoginseng (Tian Qi 田七) has accumulated inventory of over 80,000 tons, but less than 40% meets Pharmacopoeia standards. Similarly, more than 85% of Astragalus root (Huang Qi 黄芪) on the market has been found to have active ingredient levels less than one-third of CP-certified products. It is important to remember that herbs not meeting Pharmacopoeia standards are illegal to sell as medicine in Chinese hospitals or as ingredients in TCM granules.
Yet while the general market has slumped, demand for high-quality herbs remain strong, particularly for hospital use and the production of legal, legitimate products. Herbs that meet CP standards continue to fetch significantly higher prices- sometimes double those of non-compliant equivalents. One striking example is Ophiopogon japonicus (Mai Men Dong 麦门冬), where compliant batches command prices up to 100% higher than conventional stock.
Much of the current volatility stems from a lack of standardization and accurate information. Many small-scale farmers, who account for over 70% of herb cultivation, make planting decisions based on online speculation rather than understanding government requirements and reliable demand forecasts. The overwhelming majority are not even aware of, much less follow Good Agricultural Practices (GAP), resulting in inconsistent quality and widespread failure to meet Pharmacopoeia benchmarks.
In response to these systemic issues, China’s State Council has issued a sweeping new policy: “Opinions on Promoting the High-Quality Development of the Traditional Chinese Medicine Industry.” This directive represents the most comprehensive national plan to date aimed at modernizing, regulating, and internationalizing the Traditional Chinese Medicine (TCM) industry. The policy sets in motion a broad series of reforms that will have significant impacts across the global herbal supply chain.
Significantly, central to the policy is a commitment to “quality first.” This includes promoting scientific innovation and standardized cultivation practices, while introducing institutional reforms to improve both the safety and consistency of raw herbal materials and finished TCM products. Resource conservation is also a priority, with efforts focused on protecting endangered medicinal plants and animals and enhancing traceability through digital monitoring systems.
From cultivation to processing, the supply chain is undergoing some exciting transformation. The government is investing in the development of high-quality seed banks and encouraging eco-friendly farming practices, stricter pesticide regulations, and green pest control methods. New reserve and processing facilities are being expanded to help stabilize both supply and pricing over time. Manufacturers are expected to modernize operations through the use of digital technologies, intelligent automation, and environmentally sustainable practices. Full traceability from seed to shelf is a key focus, ensuring accountability and transparency throughout the production chain.
The policy also emphasizes clinical research and the adoption of evidence-based evaluation methods to better assess the efficacy of traditional formulas. Research will be prioritized in areas such as chronic disease management, pediatrics, and emerging public health challenges. On the regulatory side, China plans to strengthen national standards covering raw materials, excipients, and packaging, while also streamlining product approval procedures.
Another major goal is global expansion. China is increasing efforts to register TCM products abroad, while also seeking a greater role in the establishment of international standards for herbal medicine and TCM practices. To support this global vision, investments are being made in professional education and training programs to cultivate a more skilled and knowledgeable workforce.
For practitioners and herbal businesses in the United States, this policy has immediate and long-term implications. In the near term, we expect to see rising demand and therefore higher prices for herbs that meet Pharmacopeia standards. Shortages of high-quality herbs may persist as production slowly adjusts to meet these stricter requirements. At the same time, non-compliant herbs will likely continue to drop in price, which could create temporary confusion in the market due to wide price disparities between similar-looking products.
Practitioners would be wise to get reassurances from their suppliers regarding sourcing, quality and testing. Suppliers should be able to provide certificates of analysis (CofA) that demonstrate correct species verification, any required chemical assays, and safety parameters consistent with Pharmacopeia monographs.
Long-term, we view these changes as a positive step. Once cultivation and processing catch up with regulatory demands, the result should be more consistent quality and more stable global supply of herbs and pricing. This modernization effort also enhances the credibility and therapeutic value of TCM products in the global healthcare landscape.
As your trusted supplier, we are actively monitoring these policy developments and maintaining close relationships with our certified, GAP-compliant partners in China. Our commitment remains unchanged: to deliver safe, authentic, and fully compliant products that meet both U.S. and Chinese standards at fair prices.
On a related note, we’d also like to update you on recent trade policy news. The Trump administration has suspended additional tariffs on Chinese goods for another 90 days, with the current suspension set to expire on November 10, 2025. Current tariff rates on TCM products range from 37% to 61%, and we are watching for any updates that may further impact herbal imports.
We appreciate your continued trust and will keep you informed as the global herbal market continues to evolve.
References
- https://www.politico.com/news/2025/08/11/trump-china-trade-tariffs-truce-bessent-00503898?utm_source=chatgpt.com
- China releases US$77 million relief fund as casualties mount in Beijing floods | South China Morning Post
- https://www.chinairn.com/news/20250506/154056397.shtml
- https://www.gov.cn/zhengce/zhengceku/202503/content_7014717.htm
- https://m.baidu.com/bh/m/detail/ar_8883931859215076188