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Reactive nitrogen (N) is a requisite nutrient for agricultural production, but results in greenhouse gas and air and water pollution. The environmental and economic impacts of N fertilizer use in China are particularly relevant, as China consumes the largest amount of N fertilizer in the world to meet its soaring food demand. Here, we use an agro-economic land system model (MAgPIE) in combination with a difference-in-differences econometric model to provide a forward-looking assessment of China’s fertilizer policies in terms of removing fertilizer manufacturing subsidies and implementing measures to improve agricultural nutrient management efficiency. Our model results indicate that enhancing soil N uptake efficiency and manure recycled to soil alongside fertilizer subsidy removal can largely reduce N fertilizer use and N losses and abate N pollution in the short and long term, while food security remains largely unaffected. Enhancing soil N uptake efficiency appears to be decisive to achieving China’s national strategic target of zero growth in N fertilizer use. This study also finds that improving agricultural nutrient management efficiency contributes to higher land productivity and less cropland expansion, with substantial benefits for the environment and food security.