The Chinese government recently indicated that the expected ethanol production will be 4 million tons (1.2314 billion gallons) per year for the next five years. Current ethanol production in China stands at 2.1 million tons (0.646 billion gallons) per year.
To achieve this goal, the Chinese government is planning to invest another 18 billion yuan (about 2.8 billion dollars) and it indicates several possible ways. First, China may plant more cassava and sorghum in waste areas, like saline-alkali land. Second, China will invest vigorously in the development of fiber ethanol, such as producing ethanol from cellulosic fiber, which uses the non-edible parts of plants. Third, China intends to use its storage corn to produce ethanol.
This plan has some ramification for the U.S. ethanol and co-product market. The most important being the one with using storage corn. If China is going to use a large amount of corn to produce ethanol, they will be producing a lot of DDGS at the same time. Assuming Chinese DDGS are of good quality, the future global market for DDGS will be dramatically influenced.