Abstract: Under the condition of free trade, China's soybean industry presented a trend of overall atrophy. How to get rid of this situation and realize advancement was a problem that must be solved immediately. The paper analyzed the development issues existed in the China's soybean industry from the aspects of the supply and demand of the soybean market，the standardization of production and processing, and farmers' systematization, etc. It concluded that the recession of China’s soybean industry resulted from the low degree of industrial organization, the lack of unified soybean quality and safety standards, testing and certification systems, and furthermore, the mismatch between scattered peasant economy and the requirements of the modernized agricultural mass production, leading to the low international competitiveness, whereas, the liberalization of international trade just highlighted the problem described above. Simultaneously, another important reason was the highly subsidized soybeans dumping to China. The paper deemed that Chinese government should restrict the imports of transgenic soybeans, internalize some market transactions, and reduce market transaction costs, so as to reduce the costs of agricultural modernization.