Aims/hypothesis Diabetes increases the risk of premature death and reduces work productivity. We estimated the impact of diabetes in China in terms of mortality, years of life lost, and productivity-adjusted life years (PALYs) lost in the Chinese population. Methods Life table modelling was used with simulated follow-up of those with diabetes in the Chinese population of working age (20–49 years in women and 20–59 years in men) until retirement age (50 years for women and 60 years for men). Data regarding the prevalence of diabetes, as well as excess mortality, labour force dropout and productivity loss attributable to diabetes, were taken from published sources. Models were constructed for the cohort with diabetes and repeated for the same cohort assuming that they had no diabetes. The differences in number of deaths, years of life lived and PALYs lived between the two models reflected the impact of diabetes. The WHO standard 3% annual discount rate was applied to years of life and PALYs lived. Results In 2017, an estimated 56.4 million people of working age in China (7.1%) had diabetes. With simulated follow-up until retirement, those with diabetes were predicted to experience an estimated 4.1 million more deaths, the loss of an additional 22.7 million years of life (3.7%) and the loss of an additional 75.8 million PALYs (15.1%). This was equivalent to an average of 1.3 PALYs lost per person with diabetes. Based on gross domestic product (GDP) per full-time worker in 2017, the loss in PALYs equated to a total of Chinese¥ 17.4 trillion (US 2.6trillion)inlostGDPowingtoreducedproductivity,withanaverageof¥307,925(US 45,959) lost per person with diabetes. Conclusions/interpretation Our study demonstrates the significant cumulative impact of diabetes on productivity across the working lifetime in the Chinese population, highlighting the potential economic benefits of diabetes prevention in the longer term.