China's dairy industry faced severe challenges in 2024. Raw milk prices plummeted to historic lows, resulting in widespread losses for dairy farms, particularly impacting independent farms. While overall milk production saw mixed trends of increases and decreases, the oversupply situation persisted. Dairy product consumption also declined significantly. Looking ahead to 2025, import volumes are expected to rebound, further contributing to the oversupply in the domestic market. The dynamics of raw milk production and supply-demand balance will depend largely on the production adjustments made by dairy processors within their own and controlled farms. As a large number of independent farms exit the market, the profits enjoyed by processors due to low raw milk prices will diminish significantly, reducing their incentive to maintain the oversupply and low prices. To facilitate the recovery and high-quality development of the dairy industry, the primary task is to address the core contradiction and promote a swift rebalancing of supply and demand. The bottom line is to protect the survival of independent farms, reinforcing the livelihood aspect of the dairy sector. Relaxing processing market entry regulations to weaken monopolies, forcing the establishment of benefit-sharing mechanisms, and actively exploring diverse models of farmer-led processing are crucial steps forward.