China’s fertilizer subsidy policy has rapidly evolved. From 1940-1984, the Chinese government controlled prices of the national fertilizer industry – from input prices to transportation prices, and even retail prices. Then, from 1985-1997, China implemented a dual-pricing system, allowing surplus fertilizers to be sold at market prices. Despite inherent differences in policy rationales, the dual-pricing system closely resembled Africa’s targeted subsidy program. Not surprisingly, a widening price-gap in China led to the same “diversion effect” between commercial and indirectly subsidized fertilizer. It was during that time that China therefore changed its approach and began to (1) replace the dual-price system with market-driven prices plus a maximum profit cap of 7%, and more strategically, (2) introduce a comprehensive fertilizer subsidy program.