The move means the lucrative Chinese market has opened its doors to products which are made in the UK but contain milk sourced from elsewhere.
International Trade Secretary Liam Fox announced the deal last week whilst in China attending a meeting of the UK-China Joint Economic and Trade Commission (JETCO).
The deal is said to be worth £240 million over five years for the UK dairy industry.
Announcing the deal, Dr Fox said: “It is very important for Northern Ireland where milk is often sourced from south of the border. We estimate this could be worth a quarter of a billion pounds for the first five years.
“Lakeland Dairies is a very large employer in Northern Ireland and will likely be the main beneficiary of this deal. It is very good news indeed.
“This is my fourth visit to China this year and I’m delighted to see the completion of this deal, bringing significant benefits to dairy producers across the UK at a time when British food and drink exports are at a record high,” he added.
The agreement is said to increase flexibility in the supply chain, effectively meaning that dairy producers in Northern Ireland will be free to export products made using milk from the Republic of Ireland.
Environment Secretary Michael Gove added: “Our world-class dairy producers already export £1.7 billion worth of produce per year.
“This milestone will help to unlock the UK food and drink industry’s full potential forging new trading relationships around the globe.
“This step shows we can be a truly outward looking Britain outside the European Union.”
Ulster Unionist agriculture spokes-person Robin Swann MLA has welcomed the news as a sign of confidence in the local dairy sector.
He said: “China, with its population of 1.4bn people, is currently experiencing a surge in demand and consumption of dairy products. Yet fortunately for the global dairy market, it simply has not got the capacity to meet that demand itself.
“Whilst China already is a major importer of British dairy products, the news that the UK will now also be able to export products containing third party milk is a major step forward and a sign of confidence for the local dairy market.
“The agreement is estimated to be worth £240 million over five years to the UK, and Northern Ireland will likely receive a good proportion of that.
“As we are little more than six months away from Brexit these major trade deals are worth their weight in gold.
“Dairy farmers and processors, especially those with a lot of movement back and forth across the Irish border, understandably are nervous about what the future may hold for them post Brexit. Deals therefore such as this Chinese agreement will come as a major relief to them.”
