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In China, government subsidies in the agricultural sector have played an important role in increasing grain production and supporting farming incomes. However, agricultural intensification has also led to concerns about environmental harm, especially on the North China Plain. In this study, life cycle assessment (LCA) was used to assess environmental impacts relating to the winter wheat-summer maize rotation system in the high-yielding and intensively cultivated Huantai County. Over the period 1996-2012, energy depletion potential, global warming potential, acidification potential and eutrophication potential all decreased both per t grain produced and per ha production area. However, water resource consumption, human toxicity potential, aquatic ecotoxicity potential and terrestrial ecotoxicity potential increased. The weighted environmental index, integrating all eight indicators into a single score, suggested that overall environmental impact had decreased by 15.2% pert of grain produced and 11% per ha cropped, largely as a result of improved management of N fertilizers as EP was identified as the most important environmental impact category. When human health impacts of emissions (assessed in DALYs) were monetarized, the life cycle environmental costs of both winter wheat and summer maize were also found to have decreased over time. Taking both the increased grain production and the reduction in life cycle impacts, the total life cycle environmental costs of grain production in Huantai County were found to have fallen from 16.6 million RMB.yr(-1) to 12.8 million RMB.yr(-1), a decrease of 23.2%. These results suggest that production and welfare-oriented subsidies in the agricultural sector in China have generally brought about environmental co-benefits. Nevertheless, there is scope for ongoing environmental improvement, particularly in relation to pesticide use. With agricultural subsidies increasingly viewed as a means of achieving environmental goals, there is an ongoing role for LCA to evaluate the different types of environmental impacts. The coupling of LCA with monetarization tools also has potential for use in informing the design of environmental policy instruments in the agricultural sector.