China is the No. 6 customer for U.S. corn exports, reflecting growing demand both in China’s livestock sector and, more surprisingly, in China’s corn-processing industry.

Interest in Chinese processing dropped after 2007, when the government halted growth in the production of corn-based ethanol. But while corn-based ethanol production is still restricted, corn processing for other uses has grown rapidly.

About one-fourth of China’s corn now goes to industrial processing, and processing use is a bigger factor than livestock demand in narrowing the gap between corn production and domestic consumption, according to a USDA-ERS study.

In 1985, China processed fewer than 80 million bushels (mbu) of corn. Then, in the 1990s, the government began promoting processing as a solution to depressed domestic corn prices and a means of economic development.

In 2000, processing was singled out as a key industry for government support under China’s five-year plans, and by 2001, corn use for processing topped 400 mbu. Industrial use doubled by 2004 and doubled again by 2006, reaching almost 1.6 billion bushels.

“There seems to be an increase in industrial use this year after China’s recovery from the world recession in 2008,” says Fred Gale, lead author of the ERS study. “Industrial uses continue to be robust and growing, and on the livestock side demand has been fairly robust.”