The Party’s top priority | The weekly recap

It was another breathless week for those keeping an eye on all things China.

If you were asked to pick a highlight, you could easily land on Xi Jinping’s diplomatic doubleheader on Wednesday:

• First, a video call with Russian President Vladimir Putin to sketch out a new blueprint for strategic integration.
• Then, another call with US President Donald Trump, shoring up the trade truce ahead of Trump’s planned April visit.

Not bad for a day’s work.

Yet, for us, perhaps the most consequential signal of the week came with much less fanfare, in the form of the Party Central Committee’s first policy document of the year – the 2026 No. 1 Document.

It’s the 23rd straight year the Party’s first policy paper of the year has focused on agriculture, farmers, and rural development – to signal how highly the leadership prioritizes rural issues.

• So, business as usual, right?
• Nope.

This year’s doc reveals a massive rethink in the state’s approach to the rural economy.

• And the implications extend well beyond the countryside.

TL;DR: Simply put, food production – and thus food security – is being industrialized, while support for farmers is being socialized.

That needs some explaining to properly draw out – but we think the juice is worth the squeeze.

• So let’s get squeezing.

It’s no secret that Party policy documents like these can be hard to read – and this year’s No. 1 Doc is no exception.

• It rattles off 27 vague to-dos across six thematic areas, steeped in Party-speak.
• Plus, if you haven’t read the last few of them, it can be hard to decipher which agendas are new, which are evolving, and what are just routine box-ticking.

So what changed in this year’s version that piqued our interest?

For years, the No. 1 Doc has placed the topic of direct state support to farmers (like subsidies, crop insurance, and state-set price floors) in its very first section, which is – and this is crucial – focused on agricultural production.

• But in the 2026 version, all mention of these direct support measures has been moved to a different section, focused on raising farmers’ incomes.

We know. Crazy, right?

• No, seriously – it is.

Here’s the backstory: For decades, top leaders believed ensuring China’s food security required getting a massive number of tiny smallholder farmers to grow enough grain.

• To get there, Beijing relied on a combination of subsidized inputs, guaranteed prices, and subsidized insurance to absorb downside risk and entice farmers into planting staples.
• Top leaders viewed production as dependent on these incentives – and they were probably right, given the tiny farm sizes, low mechanization rates, lack of infrastructure, and frequent natural disasters that plagued the farming economy.

That’s why the shift in the 2026 No. 1 Doc matters.

• Moving these direct incentives from the “agricultural production” section to the “farmers’ income” section suggests the Party is decoupling its approach to food production from direct rural support.

This structural shift points to a new, more industrial vision of agricultural production, and by extension, food security:

• Agricultural production has been reframed as an industry like any other, shaped by capital, technology, and infrastructure, with a focus on increasing production capacity and efficiency.
• Direct support for farmers, meanwhile, has been reconceived as a tool for stabilizing farm income and achieving rural development outcomes, not the primary driver of agricultural output.

Just look at what the leaner, meaner “production” section (right at the top of the Doc – the top priority) is now focused on:

• Improving crop varieties
• Adopting modern farm equipment
• Upgrading irrigation systems and bolstering disaster resilience
• Improving the scale, standardization, quality, and efficiency of farming

Boom! That’s basically a call to raise total factor productivity (TFP) in the farming sector – right in line with the broader obsession with productivity (and NQPF) across national policy.

But this doesn’t mean that direct fiscal support to farmers and agribusinesses is about to evaporate.

• On the contrary, we expect subsidies, insurance, and targeted interventions in farm pricing to expand this year.
• (December’s Central Economic Work Conference made rural (and urban) income growth and avoiding food price deflation priorities for the year.)

But the reconceptualization of farming as an industry like any other will enable working-level officials to reshape how farms are operated in pursuit of Beijing’s 10-year goal of becoming an agricultural superpower. 

• Doing so could reshape not just the rural economy, but national income and growth trajectories, and influence global commodity markets.

While we don’t have enough time to dig into all this here, we’ll leave you with a couple of optimistic takeaways.

First, food and agribusinesses operating in China should rejoice: By reframing agriculture as a critical industry, top leaders have given working-level officials more freedom to push for modernization, consolidation, and scale; to use subsidies to manage social stability rather than targeted output volumes; and – over the longer run – to reduce reliance on blunt price intervention.

• All of that should translate into substantial improvements in the business environment.

It’s also good news for global commodity interests: China is signaling that it wants markets to work, modernization and technology to drive supply, and the state to step in only when farmers’ incomes and social stability are under threat.

• That should translate into a more confident policy posture even when markets are volatile, with intervention primarily on the downside, creating more space for traders to operate.

If you want to dig deeper into this or any other part of China’s ag sector, please reach out.

• We’re one of very few advisory firms that watch this space, which is all but ignored in most analyses of where China’s economy is headed, despite being the Party’s long-stated and well-established top priority.

Even Pay, Director, Trivium China

What you missed

Econ and finance

Decades of “rush-to-the-city” urbanization have run their course, and the next phase of China’s urbanization will play out in its roughly 1,800 county towns (xiancheng) – built-up urban cores that sit between major cities and the rural countryside.

• Since 2022, officials have increasingly promoted county towns as an alternative pathway for rural migrants seeking urban residency.

• For many rural migrants, major cities no longer offer the same economic appeal as they once did, as job prospects disappear – especially in construction – even as living costs and residency barriers remain high.
• County towns – which are far cheaper to live in – are well positioned to absorb migrants leaving large cities.

On February 1, Qiushi – the Party’s flagship journal – published a commentary on China’s persistent deflationary pressures.

• The piece argues that China’s improving deflationary dynamics – including a recent uptick in consumer prices and a slowdown in producer price deflation – demonstrates: “The recent low price levels in China are temporary…there is no need for unwarranted concern.”
• The article makes clear that policymakers see inflation overshooting as a bigger risk than prolonged price weakness. For markets, this reinforces the view that policy easing will remain incremental – with any upside surprise in prices further reducing the odds of a near-term stimulus pivot.

Corporates

On January 30, Octopus Energy – the UK’s largest power utility – announced the formation of an electricity trading joint venture (JV) with Chinese distributed solar project developer PCG Power.

• The JV aims to combine Octopus’s industry-leading electricity trading software capabilities with PCG’s local market expertise to capitalize on investment opportunities in China’s increasingly liberalized power markets.
• On the same day, Schroders Greencoat – the renewables investment arm of asset management giant Schroders – signed a strategic MOU with battery heavyweight CATL.
• The two companies plan to jointly develop up to 10 GWh of battery energy storage projects across Europe in the coming years.

Tech

On Thursday, China’s cyberspace regulator (CAC) and 10 other government ministries jointly released guidelines on making China’s digital ecosystem easier for foreign visitors and residents to navigate, including:

• Ensuring that multi-lingual versions of important apps are available, particularly government services apps
• Making it easier for foreigners to get a local phone number
• Expanding support for more foreign digital wallets in China, and supporting foreign payment methods in transportation networks

On January 30, Reuters reported that DeepSeek has joined Alibaba, ByteDance, and Tencent in getting the green light to buy Nvidia’s H200 chips.

• The article states: “China has given its top AI startup DeepSeek approval to buy Nvidia’s H200 artificial intelligence chips.”
• But Nvidia CEO Jensen Huang said last week that the company hasn’t received any orders from Chinese customers, and that he hadn’t heard anything from Beijing regarding approvals yet.

Politics

On Tuesday, Taiwan Affairs Office Director Song Tao and KMT Deputy Chair Hsiao Hsu-tsen co-hosted the KMT-Chinese Communist Party (CCP) forum in Beijing – reviving the forum after a ten-year hiatus.

• Beijing launched the mechanism in 2006 as a vehicle to deepen engagement with the KMT and counterbalance the independence-leaning Democratic Progressive Party (DPP) government.
• It went dormant after 2016, when the DPP returned to power following a decade of KMT rule.
• At the forum, Hsiao emphasized a shared Chinese identity and the need to avoid confrontation: “The two sides of the Strait should cooperate rather than confront each other and allow other countries to exploit Taiwan.”

Foreign affairs

On Tuesday, the Hong Kong and Macao Affairs Office (HKMAO) denounced the Panama Supreme Court’s decision to void the contract of Panama Ports Company (PPC) – a subsidiary of Hong Kong-based conglomerate CK Hutchison – to operate the Balboa and Cristóbal ports on the Panama Canal.

• In a WeChat post, HKMAO labeled the ruling as “crude and heavy-handed,” framing it as a “shameful” surrender to foreign (read: US) pressure.
• It then warned that Panama would “pay a heavy political and economic price” if it fails to reverse course.
• According to a Reuters report on Wednesday, PPC has initiated international arbitration proceedings against Panama.

China’s commerce ministry (MofCom) is set to walk back steep provisional tariffs on European dairy products in its final ruling in the 18-month anti-subsidy probe.

• Sources at two European industry associations said they have been told final duties will top out at 11.7%, with “many” firms receiving a lower 9.5% rate (Reuters).
• If confirmed, it will be the third time Beijing has announced painful provisional tariffs on an EU product, only to offer relief in the final tariff schedule.
• MofCom followed the same playbook in probes into EU pork and brandy.

US-China

On Wednesday, Xi Jinping held a phone call with US President Donald Trump.

• Xi hailed recent progress: “In the new year, I hope to work with you to steer the giant ship of China-U.S. relations steadily forward…and accomplish more big things.”
• He also offered a (gentle) warning on Taiwan: “The Taiwan question is the most important issue in China-U.S. relations.”
• Trump was thrilled with the call, hinting at possible deals involving soybeans, oil, gas, and airplane engines.

As always, it was a busy week in China.

• Thank goodness Trivium China is here to make sure you don’t miss any of the developments that matter.