Environmental protection is a central pillar of Xi Jinping’s domestic agenda. The EEC (Ecological and Environmental Code) was adopted on 12 March at the 14th NPC (National People’s Congress). Only the second PRC statute designated a code after the Civil Code of 2020, the document consolidates over 30 laws, more than 100 administrative regulations and upwards of 1,000 local rules into over 1,200 articles across five parts.

The same drafting process that tidied four decades of fragmented environmental statute also quietly blunted some of its sharper teeth.

By the time drafting began, PRC environmental law had grown into a patchwork of often overlapping or conflicting provisions. Enforcement officers faced the task of triangulating across statutes rather than applying a single rule, notes Zhao Ke 赵柯 MEE Department of Regulations and Standards director-general.

Set to take effect 15 August 2026, the EEC adopts a moderate codification approach. Laws related to environmental protection are fully absorbed; those classified as economic or resource laws will be partially incorporated, with existing laws revised and updated accordingly. The approach provides a framework for addressing protection and development together, one not usually adopted in environmental legislation, notes one of its lead drafters, Lyu Zhongmei 吕忠梅 14th NPC Environmental Protection and Resources Conservation Committee.

The EEC also lays a foundation for future legislation in areas where gaps currently exist, not least in responding to climate change. Ecological Civilisation principles, the environmental doctrine Xi Jinping elevated to a core component of his political thought in 2018, underpin the entire document, notes Peng Feng 彭峰 Shanghai Academy of Social Sciences Environmental Law Office.

tightening the framework

The EEC’s final version makes key changes to environmental governance that go beyond absorbing and codifying existing legislation. The most far-reaching is expanding governance from end-of-pipe pollution control to the entire pipeline of production and consumption, argues Wang Canfa 王灿发 of China University of Political Science and Law. Giving green and low-carbon development its own standalone part is the most visible expression of this shift. Dual carbon goals, carbon markets and product carbon footprints are elevated into binding legal instruments rather than left to policy documents, he adds.

Climate change is integrated into systemic governance rather than addressed in isolated provisions, filling a legislative gap where no standalone climate law yet exists. The EEC lays the legal groundwork for future law in this area while embedding mitigation and adaptation obligations directly into the Code.

Circular economy rules are extended to cover EV, battery and solar waste, industries that barely existed when earlier environmental laws were drafted. Ecological compensation, where governments pay individuals or units for protecting the environment, is formalised in a standalone chapter. The central government is required to compensate according to the type and importance of the ecosystem being protected; local governments are encouraged to build their own schemes.

Ecological protection is expanded to historically under-protected spaces: rivers, lakes and deserts now receive dedicated coverage alongside forests and wetlands. Specific articles cover graded protection for wild flora and fauna, fishing quota systems and measures to prevent desertification.

With Beijing expanding its carbon market and rolling out product carbon footprint reporting, the quality of emissions data is under growing scrutiny. Penalties for fraud: third-party falsification of monitoring data can now draw more severe fines.

Pollution prevention is extended to cover solid waste, noise, chemicals, electromagnetic radiation and light, with a risk management approach to new pollutants, including organic compounds from industrial chemicals, pesticides and plastics.

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where the ambition narrows

In some areas, the drafting process weakened rather than strengthened environmental governance. This is most pronounced in EPIL (environmental public interest litigation). Since 2015, qualified environmental organisations have been able to bring public-interest suits based on potential harm, a tool used to prevent ecological damage before it becomes irreversible. The EEC preserves the scheme in name but adds evidentiary requirements that bar preventive litigation: plaintiffs must now demonstrate that damage has already occurred and quantify restoration costs at the time of filing.

Elsewhere, an article that in previous drafts mandated the use of recycled materials in industry has been changed to ‘encouraged’. Without a binding requirement, manufacturers have little incentive to use recycled inputs when virgin materials are cheaper.

The Code references the public’s ‘environmental rights and interests’ but stops short of codifying a public right to a healthy environment. The distinction is important. Interests can be weighed against competing claims; rights constrain how far those trade-offs can go.

Ambiguity remains on how partially absorbed laws will be revised and updated to sit coherently alongside the EEC. Legal scholars have questioned which instrument prevails when provisions conflict, and others have pointed to a seemingly arbitrary distinction between natural resources designated for sustainable use and ecosystems designated for protection. Ambiguity at the level of statute tends to surface in enforcement.

from statute to practice

The sheer size of the EEC and its moderate codification approach mean much will depend on how it is put into practice. Effective enforcement requires timely legal revisions, adjustments across enforcement and judicial systems and development of relevant expertise, notes Lyu. Around 30 existing statutes must be revised to sit coherently alongside the EEC before August 2026, an ambitious schedule in which delays will recreate exactly the ambiguity the Code was designed to eliminate.

How effectively the Code can reshape behaviour will depend on whether all parties pull in the same direction in the coming months.

the coders

Lyu Zhongmei 吕忠梅 | 14th NPC Environmental Protection and Resources Conservation Committee deputy director and Chinese Peasants and Workers Democratic Party member

The Code represents the institutionalisation of Xi Jinping Thought on Ecological Civilisation, notes Lyu, who led the NPC Standing Committee drafting group. The Code translates core principles into legal systems, codifies practical achievements into legal norms and advances the PRC legal system by forming a new branch of law covering ecology and the environment, argues Lyu. The ‘moderate codification’ model keeps the Code adaptable and reflects legal reality, while introducing two major innovations: a priority rule where the Code applies by default if no further provisions exist in specific laws, and an adaptive governance rule which stipulates that if environmental governance is reformed in the future, the new system will apply. The biggest challenge lies in truly understanding the Code.

Leading environmental and resources law scholar, Lyu has contributed to major legislative projects, including the Environmental Protection Law and the Air Pollution Prevention and Control Law. She was named one of the ‘top ten influential women’ in 2003 and elected vice-chair of the 17th Central Committee of the China Peasants’ and Workers’ Democratic Party in 2022.

Wang Canfa 王灿发 | China University of Political Science and Law professor

After more than 40 years of environmental law, the Code represents a historic shift toward a unified legal system and offers a PRC model for global environmental governance, notes Wang. In addition to addressing everyday concerns, the EEC anticipates future challenges, including recycling regulations for emerging industries, provisions for nuclear fusion-related pollution, strengthened climate adaptation systems and measures addressing extreme weather risks. The section on green low-carbon development also provides a legal foundation for climate action, integrating circular economy, energy transition and climate governance. To avoid becoming a ‘toothless tiger’, it grants greater enforcement powers to local authorities, imposes stricter penalties for environmental assessment fraud and standardises fines under the principle of proportionality.

Environmental law expert Wang has led the drafting of many environmental laws, including the Water Pollution Abatement Law. In 1998, he set up CLAPV (Centre for Legal Assistance to Pollution Victims), tasked with providing free legal consultations to victims of pollution. In 2001, he rolled out a program to provide training for judges and lawyers on environmental law. He is a long-term supporter and participant in the development of the EEC, co-authoring a 2019 paper proposing a moderate codification approach and publishing the expert Draft Proposal on the EEC in 2021.

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Beijing’s bid to host the BBNJ permanent secretariat in Xiamen is a claim to sit at the centre of global ocean governance for the next century.

Adopted in 2023 and in force since January 2026, the BBNJ (Agreement on Biodiversity Beyond National Jurisdiction), is the first binding framework to govern the 64 percent of oceans that fall outside national jurisdiction. As the third agreement under UNCLOS (UN Convention on the Law of the Sea), it marks a shift from what marine affairs scholars describe as the ‘tragedy of the commons’ to more systematic co-governance of the high seas.

The treaty seeks to halt the rapid degradation of the high seas and ensure the sustainable use and equitable sharing of its biological wealth. More than 60 percent of marine ecosystems are already degraded, ocean temperatures have broken records for nine consecutive years, and 11 million tonnes of plastic enter the ocean annually, says Pan Xinchun 潘新春 China Ocean Development Foundation secretary-general.

The treaty brings direct changes in three areas notes Zheng Miaozhuang 郑苗壮 China Institute for Marine Affairs

• future exploration and extraction activities will require public disclosure of basic information

• high-seas MPAs (marine protected areas) will have a solid legal basis for the first time, anchoring conservation efforts in international law

• infrastructure projects such as submarine cable-laying will be required to integrate ecological protection from the outset

Operations across shipping, fishing, and seabed mining, all overseen by pre-existing bodies, will feel its reach.

The Secretariat will administer three technical pillars

• CHM (Clearing-House Mechanism): to exchange scientific data and technology via an open-access platform

• ABSC (Access and Benefit-sharing Committee): to guide management of marine genetic resources including digital sequence information

• STB (Scientific and Technical Body): to review environmental impact assessments and proposals for area-based management tools, including MPAs

China Institute for Marine Affairs fellow Zhang Haiwen 张海文 describes the treaty as reshaping how the world implements the UNCLOS principles of the ‘freedom of the high seas’ and the ‘common heritage of humankind’, moving from a power-oriented system dominated by traditional maritime states to a rule-oriented order driven by science and democratic decision-making. Beijing championed the Kunming–Montreal Global Biodiversity Framework, which set the 30-by-2030 ocean protection target at COP 15 (the UN Biodiversity Conference). Having shaped the target, it now wants to shape how that target is delivered.

why Beijing is bidding

For PRC advisors, the economic and security stakes are considerable. Beijing is the most consequential user of the high seas. The PRC holds the highest number of deep-seabed exploration licences from the ISA (International Seabed Authority) and operates the world’s largest distant-water fishing fleet, frequently criticised for operating in legal grey zones. That fleet functions in part as an integrated maritime militia capable of grey-zone surveillance, while its oceanographic research vessels provide dual-use data for undersea domain awareness and submarine navigation.

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Hosting the secretariat would allow it to present itself as custodian rather than user, a reframing that serves its interests in the South China Sea and beyond. Beijing’s consistent approach in multilateral bodies has been to work from within, shaping norms and definitions over time. This bid is that strategy applied to ocean governance.

With the US outside UNCLOS, and therefore outside the BBNJ framework, and Russia’s ratification unlikely, Beijing sees a structural vacuum it is well placed to fill without direct institutional pushback from Washington. Ratification stands at 88 countries as of April 2026, with key G7 and maritime states including Canada, Germany, Australia and India still working through domestic legislation. COP 1 (the first Conference of the Parties), which will select the Secretariat’s seat by a two-thirds majority, must convene by January 2027.

Three cities are in the running. Brussels offers institutional density: 180 diplomatic missions, established marine databases through the Flanders Marine Institute, and day-one operational readiness built on decades of hosting international bodies, though its scientific depth is thinner than its diplomatic footprint. Valparaíso carries the Latin America flag: Chile has over 4,200 kilometres of coastline and credible university infrastructure. Beijing, which entered its bid in January 2026, is attempting to outflank both by combining the deepest scientific capacity of any candidate with a funding offer calibrated to win developing-country votes.

what Beijing brings

Driven by its strategic focus on the ‘three deeps’ (deep space, deep earth, and deep ocean), Beijing has built an expanding network of specialised research institutions, technical agencies and trained professionals. More than 40 universities teach and research deep-sea technology, underpinned by national laboratories dedicated to ocean and polar research. Behind the bid sits a brains trust of 12 major research institutes ready to serve, says Liang Liming 梁鸽明 China Society of the Law of the Sea president.

On hardware, the PRC operates the largest research and survey fleet globally; fields manned submersibles capable of dives beyond 10,000 metres; has completed over 200 dives into hadal waters (ocean trenches deeper than 6,000 metres); and is the only country conducting continuous manned deep-sea research in ice-covered arctic waters. In 2023, it completed the maiden voyage of the ultra-deepwater drilling vessel Mengxiang, designed to drill to 11,000 metres and penetrate the Earth’s crust. A manned seafloor laboratory intended to operate at 2,000 metres is under design, with a 2030 target.

In mid April 2026, the Ministry of Natural Resources published the PRC’s first atlas of seabed chemical elements in its eastern waters, charting the location and concentration of dozens of elements including rare earths, iron, manganese and copper. State media described it as a ‘master navigation map’ for marine development.

international footprint

Over the next five to ten years, the aim is to develop a new generation of intelligent deep-sea exploration equipment, map deep-sea biodiversity and propose a ‘China Solution’ (Xi Jinping era term for its model of global governance) for global marine governance, say marine geologists Wang Pinxian 汪品先 and Jian Zhimin 翁知渿 National Key Laboratory of Marine Geology.

Internationally, Beijing leads ten initiatives under the UN Decade of Ocean Science, running training courses for professionals from other nations. Among other initiatives, it has expanded its footprint through the Global Deep-Sea Exploration Program, uniting researchers from New Zealand, Russia, Chile and others to study plate subduction, the marine carbon cycle, and deep-sea life.

A 2025 Nature report from the program detailed abundant chemosynthetic life at 9,533 metres in the Aleutian and Kiril-Kamchatka Trenches, redefining scientific understanding of biological limits in extreme environments. Another is the Digital DEPTH program, which brings together 64 institutions across 35 countries to map deep-sea habitats. At the 2025 Xiamen International Ocean Week, researchers unveiled DePTH-GPT, an AI model integrating large language models and computer vision to simulate deep-sea environments.

Xiamen pitch

The Xiamen bid rests on proven technical competence. Xiamen University hosts the State Key Laboratory of Marine Environmental Science and COMI (Coastal and Ocean Management Institute), a pioneer in integrated coastal management. The city’s TIO (Third Institute of Oceanography), directly under the Ministry of Natural Resources, manages one of the PRC’s largest repositories of marine microbial strains and operates parts of the deep-sea survey fleet, giving a Secretariat tasked with tracking benefit-sharing from genetic resources immediate proximity to the bio-banking infrastructure needed to do it. Chen Bin 陈彬 TIO deputy director-general notes Xiamen’s ability to translate data into governance, arguing that the city’s zoning-based management is a model for the BBNJ: protecting core habitats generates spillover effects that balance conservation with sustainable use. For Beijing, this is the template, proof that the two goals are not in conflict.

Qingdao provides the back office. The Laoshan Laboratory’s National Deep Sea Centre is currently constructing a Deep-Sea Sample and Gene Bank that will centralise genetic resources currently scattered across its departments, creating a unified system for gene tracing and benefit-sharing in anticipation of the treaty’s entry into operation.

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In domestic discourse, Xiamen is the birthplace of China’s modern coastal governance and demonstrates Beijing’s case that economic development and environmental protection can go hand in hand. Xi Jinping’s tenure as vice mayor from 1985 to 1988 included the restoration of the heavily polluted Yundang Lake. The city maintains a 70-square-kilometre national nature reserve alongside its operations as one of the world’s largest ports; mangrove forest area has grown fivefold over the past two decades.

pay what it takes

Presenting the bid, Vice Foreign Minister Hua Chunying 华春萓 noted that the Asia-Pacific region hosts no UN headquarters despite accounting for the majority of global population, PPP-adjusted GDP, and over 75 percent of global marine economic growth.

Willing to pay what it takes, Beijing’s total package is valued at some US$70 million, according to Li Shuo, Asia Society Policy Institute. It covers reduced operating costs, utility waivers for the Secretariat, and contributions to the treaty’s various funds, in addition to the US$3 million set aside to bring developing-country delegates to future meetings. The contrast with Belgium’s offer, €600,000 in rent relief over five years and €70,000 to the voluntary trust fund, underlines how seriously Beijing is treating the bid, notes Li.

Tang Dongmei 唐冬梅, director of the China Ocean Affairs Administration, acknowledges one gap: while PRC leads the world in deep-sea survey technology, it trails the US and Japan in commercial deep-sea applications. Hosting the Secretariat would help close that gap by aligning scientific leadership with administrative authority to secure a position in the emerging deep-sea bio-economy.

what Beijing wants

Beijing is seeking what its strategists call 话语权, discourse power: the ability to have its framing and vocabulary carry weight in international fora. Terms like ‘ecological civilisation’, ‘common heritage of mankind’ and ‘high-quality development’ would carry the same gravitational pull as ‘freedom’, ‘democracy’ and ‘rules-based order’ have long carried for the US.

Zhejiang University’s Shi Yubing 施余兵 envisions the Secretariat acting as coordinator-in-chief, repairing the disconnect between BBNJ and adjacent regimes, including deep-sea mining and polar governance. Nankai University’s Bai Jiayu 白佳玉 adds a further dimension: with ITLOS (the International Tribunal for the Law of the Sea) affirming in 2024 that greenhouse gas emissions constitute marine pollution under UNCLOS, and the ICJ (International Court of Justice) establishing in July 2025 that states have binding obligations to protect the climate system, the Secretariat will sit at the front line of a significant legal battle.

Beijing’s interest is in ensuring new environmental obligations balance conservation with the industrial development needs of developing countries rather than hardening into punitive constraints.

More to the point for Beijing, Zhang Xinjun 张新军 Tsinghua University Centre for the Law of the Sea, contends that the secretariat’s real power lies in the discretion to operationalise ambiguous rules: what counts as an MPA, how benefit-sharing from marine genetic resources is defined, which proposals for area-based management tools pass review. Whoever shapes those operational definitions shapes the treaty, he concludes.

the hard questions

The hardest test ahead may be designating MPAs in zones subject to overlapping claims, including parts of the South China Sea. This would put Beijing’s role as treaty steward in direct conflict with its position as a claimant state. How a Xiamen-hosted Secretariat navigates that tension will determine whether the bid’s conservationist framing survives contact with geopolitical reality.

Several practical questions remain unresolved ahead of COP 1

• the Secretariat’s degree of autonomy within the UN system

• the balance of power in financial committees

• Indigenous representation, and observer participation rules for NGOs and civil society.

Western nations and civil society groups will likely press for guarantees on open internet, unrestricted access, and expedited visas for international participants. Beijing’s record on distant-water fishing and regional maritime disputes will intensify that scrutiny.

The two-thirds majority threshold makes Beijing’s strategy viable. It does not need to win over every sceptic. It needs to consolidate enough votes, most plausibly by rallying developing nations and regional blocs, backed by secretariat commitments and the US$3 million fund. Former lead negotiator Gou Haibo 苟海波 frames a Xiamen-hosted Secretariat as promoting mutual respect and equal consultation over the unilateral pressure associated with Western-led regimes. That framing is aimed squarely at the vote bloc Beijing needs.

Whether or not Xiamen wins, the bid confirms that Beijing has decided the era of shaping global governance from the outside must change.

the deep end

COOA (China Deep Ocean Affairs Administration) 中国大洋事务管理局

COAA and COMRA (China Ocean Mineral Resources R&D Association) are a single entity with dual identities. Set up in 1990 as COMRA to secure pioneer investor status with the ISA (International Seabed Authority), the organisation gained a formal government framework in 2013. Following the 2018 restructuring, it became a bureau-level institution directly under MNR (Ministry of Natural Resources). As COAA, it drafts regulations, manages domestic exploration permits and organises deep-sea surveys. As COMRA it holds ISA exploration contracts and fulfils the PRC’s obligations under international conventions on the high seas and seabed.[people title=”

Zhang Haiwen 张海文 I China Institute for Marine Affairs fellow and China Society of Ocean Law executive vice president

Zhang views the BBNJ as a paradigm shift from a system dominated by traditional maritime powers to a rule-oriented order driven by science and democratic decision-making. She argues that ocean governance must move beyond sectoral silos to integrate natural sciences, legal regimes and public policy, and that capacity building and technology transfer are the foundation of an equitable ocean order. She acknowledges the obstacles: jurisdictional tensions with existing bodies, uncertain financing, and a deficit of political will among major powers. The PRC, she argues, should lead the implementation phase by refining scientific rules and promoting what she calls a ‘Maritime Community with a Shared Future’.

Zhang is one of the PRC’s foremost legal scholars on ocean governance, with three decades of experience advising the government in bilateral and multilateral maritime negotiations, including the South China Sea dispute with the Philippines and the BBNJ negotiations. Former director-general of the China Institute for Marine Affairs, the Ministry of Natural Resources’ top ocean policy think tank, she remains a fellow there and serves as executive vice president of the China Society of Ocean Law.

Shi Dalin 史大林 I Xiamen University Vice President & State Key Laboratory of Marine Environmental Science director

Shi argues that the BBNJ agreement and the UN Ocean Decade are strategic imperatives that should dictate the direction of marine science. PRC marine research institutions, he contends, must align their foundational research with these international agendas. The BBNJ agreement, in his view, acts as a compass for top-tier marine biogeochemical research, defining where effort should be directed to produce internationally relevant climate and conservation outcomes. Organising research around these frameworks, he argues, will enhance the PRC’s scientific contribution and voice in global ocean governance.

A marine biogeochemist with a PhD in Earth Sciences from Princeton, Shi serves as vice president of Xiamen University and director of the State Key Laboratory of Marine Environmental Science, which also functions as the National Key Laboratory of Marine Biogeochemistry. His research focuses on marine ecophysiology and the role of trace metals in carbon, nitrogen and phosphorus cycles.

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An unusual cluster of commitments on a single theme features in the 2026 Government Work Report. For the first time, Beijing has pledged to enshrine its unified market campaign in statute. Alongside this, the report calls for two national lists that explicitly define what local governments may and may not do to attract investment. It also calls for deeper procurement and bidding reform, capacity controls, standard-setting, and quality regulation to tackle ‘involution-style’ competition across overcapacity sectors.

These commitments share a common thread. They all target how local governments behave, not merely what they report.

compliant on paper

The agenda addresses a problem that has accumulated over decades of fiscal decentralisation. Local governments, dependent on land sales and investment attraction for revenue, built an elaborate architecture of local protectionism: hidden barriers to cross-provincial factor flows, preferential treatment for local champions, and subsidy regimes that distorted resource allocation.

Almost every industry, new and traditional alike, was being built simultaneously across dozens of provinces, each shielding its own entrants. Industries requiring sustained cross-regional coordination, advanced semiconductors being the obvious case, were starved of both capital and scale. Calling out this practice Jiang Xiaojuan 江小涓 China Society of Industrial Economics president, argued in 2024 that at China’s current scale, growth means deploying what already exists more efficiently, not building more of the same. Such growth requires consistent rules, fair competition, and firms that can actually fail. Local protectionism and endless bailouts rule out all three.

Beijing’s April 2022 ‘Opinions on accelerating the construction of a nationally unified market’ diagnosed this directly and moved to dismantle it. What followed was concerted activity: roughly 690,000 local policy measures were reviewed, 4,218 identified as problematic, a ‘Fair competition review regulation’ enacted, and the market access negative list trimmed.

What was actually happening told a different story. Explicit preferential policies disappeared from official documents; their effect did not. Public vehicle fleet renewal favoured locally-produced brands. Government informatisation contracts flowed to locally-established state-backed platforms that outside firms could not contest. Explicit subsidies, prohibited under the 2022 rules, re-emerged as industrial guidance funds taking equity stakes, or local state entities building factories and leasing them back to target firms. None required a policy document or fell within the scope of fair competition review.

The Party’s own verdict came in the July 2024 Third Plenum communiqué: local protectionism and market segmentation, it acknowledged, ‘persist despite repeated prohibitions’—lǚ jìn bù zhǐ (屡禁不止).

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The consequences were not long in coming. With land revenue collapsing and no alternative fiscal model in sight, competition for the remaining pool of attractive investment intensified. As the economy matured, local governments had stopped competing in ways that drove growth and started competing in ways that undermined it. They were hoarding resources, duplicating industries, and undercutting each other in a race to the bottom, in the view of Zheng Yongnian 郑永年 Chinese University of Hong Kong (Shenzhen). More than 80 NEV (new energy vehicle) production bases spread across 27 provinces, loss-making local brands sustained by provincial procurement mandates, and with capacity running at 20–30 percent. Solar module capacity reached multiples of global demand of 450–500 GW; prices fell over 60 percent from 2022 peaks; the industry fell into collective loss. Beijing labelled it ‘involution’: a word that had migrated from social commentary into official economic diagnosis.

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Through a series of high-level meetings in 2025, culminating in the Central Economic Work Conference in December, Beijing shifted from ‘accelerating’ to ‘deepening’ unified market reform, formally embedding anti-involution measures and overcapacity reduction within the framework.

NEV production units of each province

from campaign to statute

Three sets of measures are central to Beijing’s approach to the problem: the legal foundation, the closure of loopholes, and the assault on involution.

The reform has always lacked a legal foundation. Prior cycles operated through policy documents that local governments could nominally comply with while adapting around. Enshrining the campaign in statute changes the calculus. Violations become legally actionable rather than administratively negotiable.

Prior rules consistently left loopholes open. Banning explicit subsidies without specifying their replacement redirected local creativity toward functionally identical alternatives. Two national lists, one defining permitted and prohibited investment promotion, the other updating the market access negative list, close the substitution space that local governments have exploited since 2022 by defining instruments explicitly rather than by category. The ambition is to narrow the room for local workarounds. For too long, distorted incentives have fuelled a race to the bottom, and fixing the underlying structures that drive this destructive competition has now become a necessary condition for restoring prices, profits and confidence, argues Zhang Jinjie 张金杰 Chinese Academy of Social Science Institute of World Economics and Politics and Committee for Economic Affairs.

The assault on involution is the most operationally ambitious

• NEVs: capacity controls and standard-setting targeting the provincial procurement mandates that have kept loss-making local brands alive

• PV: price enforcement and quality regulation across a sector whose collective losses have made it the starkest example of involution in action

Clearing the chronic backlog of overdue payments to enterprises runs across both sectors and beyond.

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reclaiming authority

The 2026 measures aim to reclaim authority and set the rules to enforce it. Beijing has directly assumed industrial policy decision-making power that previously resided with local governments. New projects in strategic sectors, NEVs, solar, energy storage, and semiconductors, now require central approval from NDRC; local governments no longer hold autonomous approval rights. Since late 2025, over 100 projects with combined investment exceeding C¥500bn have been halted by central authorities.

Statistical reform moves toward recording economic activity where it occurs rather than where firms are registered, removing the incentive for localities to poach registrations from places where the actual work happens.

Local governments are being repositioned from architects of industrial policy to implementers of centrally-determined priorities, from ‘development-driven government’ to ‘service and maintenance agencies.’

a structural reckoning

If Beijing sustains the current trajectory, the likely outcome is structural divergence. Localities with real industrial depth will consolidate their advantages as capital and talent concentrate where returns are highest. Those without, the majority of inland and lower-tier cities, will settle into their natural role: what the official framing calls ‘guaranteeing basic livelihoods, wages and operations’, sustained by central transfer payments that reached C¥10.42tn in 2025, with some western provinces already drawing over 70 percent of fiscal resources from the centre. Central transfers, in effect, become their development model.

The reform repositions local governments as service providers, a role the centre is now, for the first time, explicitly endorsing. In large economies, population and resources tend to concentrate where productivity is highest. The institutions Beijing is now building point in the same direction. It is also building the regulatory and credit infrastructure to back this up.

Beijing is promising to dig deep into its pockets. Through a unified national social security system, expanded transfer payments and ultra-long-term special treasury bonds, the centre is building a cross-regional safety net to ensure baseline public service provision, absorb local fiscal stress and contain the social stability risks that come with provinces settling into their natural floor.

The practices Beijing is now moving to outlaw, subsidy races, provincial protectionism, ruinous capacity competition, are the same ones that turned PRC exporters into a force global markets are still absorbing. The 2026 reforms are a bet that the country has outgrown the model that built it.

market experts

Zheng Yongnian郑永年 | director The Chinese University of Hong Kong, Shenzhen Advanced Institute of Global and Contemporary China

Zheng argues that the main barrier to building a unified national market lies in administrative fragmentation rather than in firms. He says the PRC’s dense, multi-layered administrative structure has produced segmented internal markets, explaining why the economy is often described as ‘mayor-led’ rather than market-led. To address this, he calls for deeper administrative reform: reducing redundant layers, cutting policy-induced barriers, and shifting government from direct economic intervention toward rule-based regulation and service provision. In his view, building a unified market ultimately depends on giving firms greater room to operate across regions under more consistent rules.

He also links this agenda to broader high-level opening, arguing that the PRC should better align with international rules and standards while expanding its own role in rule-setting. At the same time, he suggests market integration is likely to proceed gradually, with regional common markets serving as stepping stones toward a fuller national market.

Zheng has built a distinguished academic career spanning China, the US, and Singapore. After a stint as a lecturer at Peking University (1988–90), he began his long affiliation with Singapore, first as a Research Fellow at the East Asian Institute from 1997 to 2005. He then briefly served as the Founding Research Director of the China Policy Institute at the University of Nottingham (2005–08), before returning to lead the EAI at the National University of Singapore as its Director from 2008 until 2020. Zheng is recognised as an influential scholar and public commentator on PRC governance and geopolitics. He holds an MA in Political Science from Peking University and a PhD in Political Science from Princeton University.

Lu Ming 陆铭 | CPPCC National Committee member, Shanghai Jiao Tong University Antai College of Economics and Management professor

Lu’s core insight is that the economic case for market integration strengthens as an economy matures. In later stages of development, regional integration delivers meaningful gains, raising GDP and welfare, supporting structural transformation and deepening the division of labour across regions. But as producer services become more sophisticated and more deeply embedded across sectors, the benefits of nationwide integration begin to outpace those of regional arrangements. As sectoral linkages multiply and deepen, the cost of market fragmentation rises with them. For Lu, this dynamic gives the push toward a genuinely unified national market, increasing urgency the further China’s economy develops, making it a condition for sustaining growth.

Lu is a distinguished professor at Shanghai Jiao Tong University’s Antai College of Economics and Management and executive dean of its China Development Institute. His research spans urban and regional development and labour economics, with a particular focus on applying spatial political economy to questions of domestic market integration and long-term growth.

Sun Jin 孙晋 | Wuhan University Law School professor

Sun argues that involutionary competition is a compound problem: state distortions and market dysfunction reinforce each other, pushing firms into cycles of low-price, low-quality rivalry and redundant production that delay the industrial upgrading the PRC needs. The root cause, in his view, is institutional. That is where the fix must begin. Correcting it requires disciplining government behaviour and ensuring local policies align with national priorities, rather than pulling against them. He calls for a dedicated legal framework: new legislation on building a unified national market, a revised Price Law, and more muscular antitrust enforcement.

The logic is that without a rules-based foundation, administrative instructions alone will not hold. Looking to 2026, he argues that progress depends on both ends moving together, government restraint creating the space for market forces to function, and market forces rewarding quality over volume. The destination, in his framing, is an economy that competes on upgrading rather than on scale.

A professor at Wuhan University Law School, Sun is director of its NDRC-affiliated Competition Law and Competition Policy Research Centre and executive dean of the Institute of Network Governance, where his research spans competition law, competition policy and internet governance. He has held practice-facing posts as vice dean of Xinjiang University Law School and at Zhenjiang Intermediate Court, and was a visiting scholar at UC Berkeley Law. Sun is vice chair of the China Commercial Law Research Association and a prominent voice on fair competition review and market regulation.

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For the first time, the 2026 GWR (Government Work Report), delivered at the Two Sessions, includes an income growth plan for urban and rural residents. When the PRC enjoyed decades of double-digit growth, rising household income was a byproduct. With growth now roughly half that pace, lifting incomes means actively slicing the pie differently.

Yet in the contest for official attention, income growth is at a structural disadvantage. It lacks a clearly designated lead agency, its results materialise slowly, and the push for ‘new quality productive forces’ in AI and advanced manufacturing risks displacing the very jobs the income growth plan is meant to protect.

consumption staggers

PRC household disposable income at 60 percent of GDP in 2022 was slightly above the 58 percent average observed across 38 middle to advanced economies globally, according to research by Lu Zhe 芦哲 and Zhan Shuo 占烁 from Soochow Securities.

The real anomaly lies in spending. Propensity to consume was just 62 percent, far below the 38-country average of 92.3 percent and around 90 percent in Japan and South Korea. This gap is mainly due to a troubled property market, weak social security, an investment-biased tax system, and heavy state-led investment, all of which suppress household consumption, according to Lu Zhe 芦哲 Soochow Securities.

A nation’s wealth is spread across households, businesses and the state. Raising the household share means taking a larger slice from one or both of the others, either through tax cuts or higher wages. Neither is straightforward. Both involve economic trade-offs and policy constraints.

Enterprises account for some 21 percent of PRC national disposable income, four percentage points above the global average, while the state accounts for ~19 percent. Households get what is left. Low wages were identified as the main culprit in a 2021 report by the NDRC (National Development and Reform Commission) Macroeconomics Research Centre. A 2025 NDRC Party Committee article was direct: raise the share of household income in national income, and raise the share of labour in primary distribution.

misplaced priorities

Weak consumer demand traces directly to how the state spends its money, according to one of the PRC’s foremost economists on income distribution, Wang Xiaolu 王小鲁 NERI (National Economic Research Institute). Overall public spending broadly matches advanced economies, but the mix is strikingly different: the state devotes more than double the OECD average to investment, while spending on education, healthcare and social security at some 14 percent of GDP lags well behind the 24 percent average among comparable economies.

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Shifting fiscal priorities from state-led investment towards social spending and winding monetary policy back to neutral would cut the need for precautionary saving and put money directly in households’ hands.

Low-income groups offer the biggest consumption payoff. Low-income households spend a greater share of their income than high earners, making them the most effective channel for boosting consumption, as argued by Lin Yifu 林毅夫 CPPCC Standing Committee. Moreover, every one percentage point rise in the urbanisation rate, that is, more people moving to cities, adds more than C¥200 bn in annual consumer demand, according to Zheng Bei 郑趓 NDRC deputy head.

changing incentives

Beijing’s response works on three fronts. First, it is changing what officials are rewarded for, moving away from investment-heavy vanity projects towards household income growth and emerging industries and thus promoting what the Party considers ‘a correct view of political achievement’.

The 2025 Central Economic Work Conference explicitly called for income growth plans, and the 2026 GWR lists keeping incomes in step with overall economic growth as a main annual target. Incomes are now one of seven headline indicators in the 15th 5-year plan, alongside employment, education, healthcare and aged care, with KPIs for officials to follow.

Second, accountability. The Central Commission for Discipline Inspection has expanded beyond anti-corruption work into broader enforcement, verifying whether officials are genuinely carrying out set priorities, including income-related targets in the 15th 5-year plan.

Third, macroeconomic design. The 2026 GDP growth target of 4.5–5 percent, set as a range for the first time with a floor below the politically symbolic 5 percent mark, gives officials room to pursue broader governance goals without chasing a precise number through short-term stimulus.

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tricky pie to slice

Beyond raising minimum wages and enforcing labour rights, the state cannot directly dictate what private businesses pay, and the sector employs 80–90 percent of PRC workers. Beijing must skilfully slice around the edges while trying to grow the pie.

On wages, Beijing is subsidising companies to cover portions of employees’ social security contributions, upskilling young graduates through training in areas like AI, NEVs (new energy vehicles) and the low-altitude economy and building a lifelong skills-learning culture.

With obvious concern about the impact of AI on employment and with 2026 graduates projected at 12.7 million, the Ministry of Human Resources and Social Security has promised an AI employment impact assessment this year. The Private Sector Promotion Law and accompanying Opinions aim to break down market barriers and promote fair competition, creating conditions for profits and, eventually, wages to rise.

On assets, broadening access to property and investment income offers a supplementary path for middle-income households. Stabilising equity and property markets and giving households more financial products to choose from are practical ways to build this income stream.

On the social floor, a monthly increase of C¥20 in the basic pension for rural and non-working urban residents provides paltry support. Given the tiny, incremental rises in pensions over the last two years, it at least keeps expectations steady while bigger reforms are studied. It is unrealistic to increase rural pension all together given fiscal constraints, but Beijing should consider improving compensation for farmers aged 70+ first, said Zheng Gongcheng 郑功成.

Local officials work under thousands of overlapping and often contradictory mandates. Trade-offs are inevitable: officials prioritise tasks based on which targets are most actively monitored, which carry the strongest institutional backing and which are easiest to demonstrate as achievements. The result is formalism, the appearance of compliance rather than the thing itself.

plans versus practice

It all comes down to whose slice gets trimmed. How this plays out hinges on whether the Central Commission for Discipline Inspection moves to make examples of officials who neglect income-related mandates, and whether those who do prioritise household income growth are recognised and rewarded.

Dominant players like ByteDance, BYD and CATL have the financial strength to raise salaries, but for most firms, the near-term reality is to chase profits in a sluggish economy awash with young people seeking work. Translating Beijing’s intent into practice at the firm level is the real challenge at the heart of this reform.

On tax, Beijing has committed to a fairer system in the 15th 5-year plan, but the only reform delivered so far is a technical VAT cleanup. Everything that would genuinely shift money from the wealthy to ordinary people, taxing capital gains, property and inherited wealth, is either still being ‘studied’ or has been quietly shelved. The gap between what is planned and what is being done is still wide.

pie cutters

Li Shi 李实 | Zhejiang University Institute for Common Prosperity and Development dean

Two broad objectives frame Li Shi’s approach. For expanding middle-income groups, he proposed three pathways: stabilising existing earners on C¥100–200,000 (~US$15–30,000) annually by reducing burdens in education, healthcare and aged care through greater public investment; identifying roughly 20 percent of low-income earners (particularly migrant workers whose individual incomes meet middle-income thresholds but fall short on a household per capita basis) as candidates for upward mobility within three to five years; and pursuing industrial upgrading alongside human capital investment to generate skilled employment.

For raising living standards among the 800-million-plus low-income population, three institutional dimensions guided his thinking: expanding compulsory education to 12–13 years, subsidising rural teachers, providing free children’s healthcare and infant nutrition support, and setting up subsidised lifelong learning; eliminating hukou restrictions and discriminatory employment and education systems while reforming rural land arrangements to enable asset monetisation; and strengthening transfer payments and social welfare coverage, including substantially lifting rural elderly pension standards, which he criticised as woefully inadequate.

A senior professor of economics at Zhejiang University and dean of its Institute for Common Prosperity and Development, Li is widely regarded as the PRC’s foremost authority on income distribution. He has advised the State Council on poverty alleviation and thrice won the Sun Yefang Economics Award, the PRC’s highest honour in theoretical economics.

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Wang Min 王敏 | Peking University’s National School of Development associate professor

Despite years of reform to how local governments are assessed, with greater weight now given to livelihoods, poverty alleviation and environmental protection, economic growth remains the dominant benchmark by which local officials are judged, said Wang.

A key structural factor compounds this bias. The PRC calculates local GDP using the production method rather than the expenditure method, meaning local leaders can only boost their headline numbers by expanding output and investment; household consumption does not count.

Fiscal incentives reinforce this distortion. In 2023, value-added tax and corporate income tax from businesses accounted for 40.7 percent and 17.2 percent of local tax revenues, respectively, making local governments heavily dependent on enterprise activity.

Together, these pressures create a systematic incentive for local governments to favour business investment and production over policies that would lift household consumption. Reversing this will ultimately require tax reform that gradually rebalances the system away from investment and production towards consumption. Wang acknowledges this is unlikely in the short or even medium term, but argues it remains the critical long-run direction.

An associate professor at Peking University’s National School of Development and deputy director of its Centre for Environment and Energy Economics, Wang holds a PhD in economics from Iowa State University. His research spans

Lu Zhe 芦哲 | Soochow Securities chief economist

Of the two key drivers of household consumption, Lu argues that propensity to consume matters more than income’s share of GDP, and that the PRC’s long-standing model of favouring investment over consumption has structurally suppressed it.

Lu notes that the flip side of consumption propensity is the savings rate. In the early stages of economic development, he explains, institutional arrangements typically tilt towards investment and capital accumulation, producing higher savings rates and a lower propensity to consume. Japan and South Korea followed the same pattern during early industrialisation, with consumption propensity declining as investment-oriented policies dominated.

The turning point came later, as both economies transitioned from investment-driven to consumption-driven societies. Rising household incomes, improved leave entitlements, stronger social security systems and better consumer environments all contributed to a sustained recovery in consumption propensity, a trajectory Lu argues the PRC must now deliberately pursue.

Chief economist and managing director at Soochow Securities and a council member of the China Chief Economists Forum, Lu is a former World Bank economist specialising in macroeconomics and fixed income research. He ranked first in New Fortune’s fixed income research rankings in 2019 and 2020, has published in leading international journals, and won the Deng Ziji Finance Research Award.

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Beijing built its export economy on Special Economic Zones. Now it is applying that same model to the carbon problem that those zones helped in part to create.

The March Two Sessions confirmed zero-carbon industrial parks as a national priority, with the ensuing 15th 5-year plan targeting 100 parks by 2030, with the first 52 already announced.

Industrial parks account for roughly 31 percent of the nation’s total CO2 emissions and 60 percent of total energy consumption, making them the critical testing ground for the PRC’s 2030/2060 dual-carbon goals.

renewable power centres attract green industrial parks

Twenty of the 52 parks are in the west (Inner Mongolia, Xinjiang, etc.), designed to tap strong wind and solar resources for direct green power supply, cutting waste from long-distance transmission.

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Historically, all power had to go through the State Grid. New 2026 rules allow industrial parks in the West to link renewable plants directly to industrial loads. This cuts out grid transmission fees and could make green power 20–30 percent cheaper than coal for factories in these regions.

‘build first, before breaking’

Following a guiding principle of Xi-era reform, the strategy avoids blindly ‘attacking fortresses’. Instead, most parks adopt a ‘park-within-a-park’ model, building new systems before dismantling old ones, initially focusing on smaller, clearly bounded sections before scaling up. Hard-to-abate sectors like steel and chemicals are allowed a five to ten-year window for technologies to mature rather than forcing early, costly retrofits. As with coal power, the PRC is set on building new infrastructure before retiring the old.

Zero-carbon is a long-term ambition. The first goal is to drive emissions down to one-tenth of the national average per unit of energy, according to Jiang Yi 蒋毅 NDRC Policy Research Office.

The initiative targets systemic change through five pillars

• energy transition: boosting renewables, demand-side management, and clean heating

• industrial decarbonisation: high-efficiency processes and low-carbon product life cycles

• regional coordination: moving energy-intensive industries to the resource-rich West (where green power is abundant) to reduce transmission losses

• global trade alignment: building traceable energy systems to bypass international barriers like the EU’s CBAM (carbon border adjustment mechanism)

• replicable modelling: creating a ‘toolbox’ of successful examples for different regional contexts

The core innovation of the parks lies in ‘source-grid-load-storage’, according to Yang Lei 阳蕾 Peking University Energy Research Institute. Where the old model focused on generation and transmission, the load (the factory or user) now sits at the centre of the system. Factories have become flexible participants, adjusting production in response to real-time energy availability. Action should focus on advancing direct green power supply and local consumption, while demonstrating integrated zero-carbon tech in parks with high-carbon industries, argues Wang Jinnan 王金南 MEE, Chinese Academy of Environmental Planning.

certification benchmarks

To be certified at the national level, parks must meet several technical benchmarks

• carbon intensity limit: for parks consuming 200k to 1M tce (tons of coal equivalent): ≤0.2 tCO2/tce, for parks consuming > 1M tce: ≤0.3 tCO2/tce

• renewable energy ratio: a target of ≥90 percent clean energy consumption

• direct green power: at least 50 percent of electricity must come from direct renewable sources (avoiding long-distance grid loss)

• circular economy: industrial solid waste recycling must be ≥80 percent

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on the ground

Zero-carbon parks are one of three parallel green industrial initiatives. MIIT leads on green factories, NDRC on zero-carbon parks and factories, and MEE on eco-industrial parks. Green factories focus on operational efficiency and resource recycling, near-zero factories reduce emissions through internal measures, while zero-carbon parks can draw on cross-regional carbon offsets. All three agencies tightened or updated their criteria this year, a sign of both growing ambition and interagency competition that could hamper coordination in practice.

The 21st Century Business Herald analysed a sample of 15 parks from the first batch of 52 candidates. Their findings suggest most parks have not yet released detailed roadmaps, timelines or core carbon intensity data. Only a few parks, such as Tianjin and Beijing, have shared partial data on clean energy use or waste recycling. Three industries dominate these early zones: automotive, focusing on the full lifecycle from batteries to vehicle assembly; clean energy manufacturing of solar, wind and storage equipment; and biomedicine and IT, lower-energy sectors where the transition is more straightforward. Recent ‘Guiding Opinions’ on zero-carbon factory development note that the initiative will expand to harder sectors to decarbonise, like steel, petrochemicals and building materials, after 2030.

Several institutional barriers remain, notes Wang. Direct green power supply reforms are constrained by a lack of cost-sharing and imperfect price mechanisms, while projects struggle to scale due to the absence of predictable incentives. Insufficient policy coordination and limited emission reduction tools also hinder the management of greenhouse gases and other pollutants.

making it pay

The strategy is ‘using green energy to produce green products’, creating a systemic shift rather than just swapping out a few lightbulbs. The goal is to make decarbonisation profitable. Subsidies act as a starter, with the market expected to take over as green power becomes cheaper than coal, which it already is across much of China’s Western regions.

Zero-carbon parks can currently access three financing streams: ultra-long-term special treasury bonds, central budget investment for energy conservation and carbon reduction, and new policy-based financial instruments, each targeting different stages of park development. Treasury bonds will give priority support to projects in the Central and Western regions, with support ratios up to 60 and 80 percent respectively.

Three bottlenecks remain, according to Wei Yiming 魏一鸣 Beijing Institute of Technology: a mismatch between power supply and demand, with generation concentrated in the Northwest and most industrial parks located in the Central and Eastern regions; high construction costs driven by the systemic nature of projects; and insufficient coordination across agencies and levels of government.

The longer-term bet is that verified low-carbon products, from batteries and EVs to electronics, will command a price premium in global markets sufficient to cover the cost of transition. By 2031, Beijing aims to have a ‘menu’ of replicable decarbonisation models, ranging from high-tech microgrids to heavy industry hydrogen hubs, ready to export to Belt and Road partners and beyond.

One early example is taking shape in Suzhou, where the Taicang High-Tech Zone and the German Agency for International Cooperation are jointly developing a zero-carbon park focused on green certification and carbon reduction. The project is designed explicitly to be replicable and scalable, a model for what Sino-foreign cooperation on decarbonisation could look like.

Suzhou Park

SIP (Suzhou Industrial Park), a flagship China–Singapore cooperation project, also in Suzhou, has moved well beyond its origins as a manufacturing hub. While most of the 51 other national pilots are adopting standards, SIP is writing them. In a high-density urban environment where large-scale wind generation is not an option, SIP’s approach is institutional and digital.

• The Carbon Neutrality Service Centre: scaled in early 2026 to coincide with the EU’s CBAM, the centre provides real-time carbon accounting for exporters, ensuring products are certified green before they leave the park

• virtual power plant orchestration: SIP has integrated source-grid-load-storage across more than 80 industrial users, who can adjust energy usage based on real-time solar availability and battery storage levels

• circular bio-nexus: SIP pioneered an energy-waste-water loop, with a solar-topped sewage plant and a system transforming food waste into biogas, turning the park’s waste streams into energy inputs

Zero-carbon parks are still in their early stages; the gap between ambition and execution remains wide. But the direction is set. With 100 parks targeted by 2030, standards constantly evolving and financing mechanisms in place, Beijing is betting that industrial parks can become the labs for testing solutions for the zero-carbon future.

green engineers

Jiang Yi 蒋毅 | NDRC (National Development and Reform Commission) Policy Research Office director

These parks are intended as practical, long-term and systemic projects driving high-quality green transformation, meaning construction must avoid rushed, oversized or symbolic projects, warns Jiang. Each of the five guiding indicators has clear, rigorous requirements and cannot be achieved casually. Local governments, industrial parks and enterprises must tailor projects to local conditions, with realistic technologies and feasible funding. NDRC will support selected parks with pilot policies, institutional reforms and major project investment. This signals a shift in green transition from isolated innovation to systemic change, aiming to lead both industrial decarbonisation and global climate governance.

Jiang is director of the NDRC Policy Research Office, tasked with drafting major policy documents and organising research on key issues related to socioeconomic development, reform and opening up.

Wei Yiming 魏一鸣 | Beijing Institute of Technology Carbon Neutrality System Engineering Lab director

Zero-carbon parks represent a complex systems project where practical application of carbon neutrality technologies still faces major challenges, argues Wei. The data foundation, particularly in older industrial parks, is weak due to diverse equipment, fragmented systems and inconsistent standards. Existing low-carbon technologies are mostly general-purpose, but major differences across industries make them difficult to replicate. Clear rules for leadership, investment and operation, emissions accounting and benefit sharing are also lacking. Strengthening the connection with carbon markets and pricing mechanisms can enhance long-term stability.

Wei’s research has long focused on engineering systems for carbon neutrality, with his team developing the C3IAM model and the Energy Dual Carbon Large AI model to provide systematic support for planning and operating zero-carbon industrial parks.

Wang Jinnan 王金南｜MEE, Chinese Academy of Environmental Planning director

PRC industrial parks face common challenges such as carbon-intensive energy structures, path dependence in industrial development and low system efficiency, notes Wang. Coupled with ever more complex international climate politics, the task of transformation remains formidable. At present, the focus is on setting up national and provincial-level demonstration systems, with national projects setting top-tier benchmarks under strict standards and limited quotas, while provincial projects remain more flexible. The next phase will turn to scaling up, adding new parks and expanding from sub-zones to full zero-carbon park coverage, laying the foundation for larger zero-carbon clusters and eventually zero-carbon cities.

A doctor in environmental science from Tsinghua University, Wang has worked with MEE’s Chinese Academy of Environmental Planning since 2003. He became a member of the Chinese Academy of Engineering in 2017.

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The 2026 Two Sessions confirms a shift in Beijing’s fiscal thinking. After the sharp expansion of 2025, the question is no longer how much to spend but how to spend it wisely. The deficit ratio holds at 4 percent, general public budget expenditure edges up to C¥30 tn, and local special bonds are broadly flat at C¥4.4 tn. After a sharp step-up in 2025, they are now on a high plateau. What has changed is the logic governing which projects get funded and whether the money actually gets out of the door.

fiscal toolkit stepped up in 2025 and held at a high plateau in 2026

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from more spending to structured delivery

Beijing is not stepping back from investment-led support in 2026, but nor is it simply reverting to the earlier model of fragmented, locally driven expansion.

This shift builds on dynamics already visible in 2025. The package looked expansionary on paper, but general public budget expenditure fell short of the target, and both total fixed asset investment and private investment were in contraction by year-end. That helps explain why policymakers do not appear to view a further increase in headline fiscal numbers as sufficient to generate a broad or durable upswing.

What stands out in 2026 is a reworked delivery model. The centre is taking on a greater stabilisation role, with local budgets held broadly flat and a deliberate rebalancing of who bears the fiscal weight. At the same time, the investment universe is widening: the 2026 Government Work Report links ‘effective investment’ not just to traditional infrastructure but to new productive forces, new urbanisation and human development.

Three funding channels; three distinct jobs

• central budget investment of C¥755 bn plugs gaps and supports weaker-return project

• C¥800 bn in special long-term bonds ring-fenced for nationally strategic and security-critical projects

• expanded C¥800 bn policy-finance tool acts as project capital, crowding in matching finance and social capital

The real shift in 2026 is how support is structured and delivered, consistent with the lower, more flexible GDP target set for the year. In this sense, the 2026 fiscal stance is not only about scale, but about better-targeted spending and stronger fiscal-financial coordination, notes Luo Zhiheng 罗志恒 chief economist and Chao Yunxia 晁云霞 macro analyst, Yuekai Securities.

Policy coordination matters as much as scale. The goal is coordinated division of labour across channels, built around a common project pipeline to cut fragmentation and accelerate delivery.

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A new C¥100 bn fiscal-financial coordination fund for domestic demand adds a further layer. The NDRC pre-allocated funding for 2026 projects at the end of 2025, with the explicit aim of accelerating starts and forming physical workload sooner.

2026 effective-investment support toolkit (C¥ bn)

note: These channels do not map one-for-one into infrastructure capex, as local special bonds are also used for debt management and clearing arrears.

The logic of this shift reflects what the 2025 investment data had already begun to show. There was no broad-based infrastructure boom. Utilities, network and system segments held up, but strip those out and infrastructure investment fell over the full year. The cycle is tilting toward equipment-intensive, network-oriented, system-upgrading projects and away from concrete-heavy expansion.

2025 fixed-asset investment growth by sector

This also helps explain the role of private capital. Policy language still points to broader participation, but the realised pattern of investment suggests that the near-term buildout remains more state-led than that rhetoric implies.

With private investment weakening through 2025 and state-backed projects holding up, the likely carriers of the next buildout are the parts of the state system with funding capacity, planning authority and implementation reach—not a broad private revival or local spread.

where future projects lie

The 15th 5-year plan draft, released on 4 March, provides a clearer framework for the more differentiated delivery model emerging in 2026. One of the notable signals is the emphasis on the ‘six networks’: water, power, computing, new communications, urban underground utility and logistics. In transport, the focus is on strategic corridors and nodes, the ‘eight vertical and eight horizontal’ high-speed rail grid, national expressways, major port clusters and airport groups.

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This points to a shift in the logic of infrastructure: away from broad locally driven buildout and towards national networks, resilience and coordination, with favoured projects being those that strengthen these national networks, raise system resilience, support industrial upgrading or ease visible public-service bottlenecks.

The project universe is also becoming more concrete. The plan’s 109 major projects include 23 under modern infrastructure systems. Investment in integrated transport, low-altitude infrastructure, AI+, education and medical facilities and related fields in 2026 is preliminarily estimated at more than C¥7 tn, according to Zheng Shanjie 郑栅洁 NDRC director.

Better coordination, phased rollout and alignment between digital and physical infrastructure systems, not overbuilding, is what ‘appropriately ahead of demand’ means in practice, notes Zhang Haiyi 张海懿 CAICT (China Academy of Information and Communications Technology) DG.

The C¥7 tn-plus figure spans fiscal, quasi-fiscal and state-led channels, and should be read as a policy-guided investment universe rather than a narrow fiscal-spending line. Central SOEs completed C¥5.1 tn of fixed asset investment in 2025 alone; State Grid plans roughly C¥4 tn over the 15th 5-year plan period. The current buildout is increasingly a state-system capital spending story, not a budget story.

The clearest hard anchors sit in energy and digital infrastructure

• around 100 GW of new pumped-storage capacity

• offshore wind above 100 GW

• nuclear operating capacity around 110 GW

• west-to-east power transmission above 420 GW

• 1 mn 50G PON ports and 500,000 5G-A base stations

selective pool of 109 national projects outlined in 15th 5-year plan

Beijing has stopped reaching for bigger numbers. The 2026 bet is that a tighter, more centralised investment regime can do what headline expansion could not. Scale had its moment. Now what is needed is discipline and centre-local joined-up thinking.

macroecon experts

Han Wenxiu 韩文秀 | Central Financial and Economic Affairs Commission deputy director

Han is less a sector specialist than a representative voice to understand how the current leadership is framing the 15th 5-year plan as a whole. In his March 2026 remarks, Han presented the plan as a longer-term framework centred on deeper integration between technological and industrial innovation, stronger domestic demand and a clearer hierarchy of strategic tasks and major projects. His comments are useful for showing how infrastructure is being repositioned inside a broader national development agenda rather than treated as a stand-alone stimulus lever. In that sense, Han’s role is to signal priorities, sequencing and political intent more than to debate individual instruments.

Veteran economic researcher and policymaker, Han started as an editor at a Peking University Journal, rising through a series of roles at the National Development and Reform Commission. He served as a Deputy Director of the State Council’s Research Office and later became a Deputy Director of the Central Financial and Economic Affairs Commission Office. He is a member of the 20th CPC CC, Principal Deputy Director of the Central Financial and Economic Affairs Commission Office, and the Director of the Central Rural Work Leading Group Office.

Luo Zhiheng 罗志恒 | Yuekai Securities chief economist

Luo is one of the clearest ‘structure-first’ voices in the PRC fiscal debate. He argues that the core problem is not debt size in itself, but debt structure, maturity mismatch, funding efficiency and liquidity pressure. This framing runs through his work on local government finance, LGFV reform and central-local fiscal relations and helps explain why he reads macro policy less through headline totals than through how liabilities, incentives and transmission channels are being reorganised.

Extending this logic to 2026, he sees the current fiscal stance as one of ‘expansion in force, optimisation in structure and innovation in tools’, with greater emphasis on coordinating fiscal spending with policy finance. He warns that without improving transmission, additional fiscal support may not translate into sustained demand, underscoring the importance of aligning funding channels with viable project pipelines and real economic returns.

Luo took a doctorate in economics at the MoF-affiliated Chinese Academy of Fiscal Sciences. He is now chief economist at Yuekai Securities and a frequent commentator on fiscal reform, local government debt and macro stabilisation. He regularly advises the central leadership and joins roundtables organised by central agencies like NDRC and MoF.

Zhang Haiyi 张海懿 | CAICT Technology and Standards Research Institute director

Zhang translates ‘new infrastructure’ from slogan into system design. She frames it in terms of network quality, standards, optical transport and industrial application. In her 2026 works, she addresses how themes such as ‘city-level millisecond computing access’, ‘network-strengthening computing’ and ‘all-optical transmission’ are ways to embed AI and digital infrastructure within a broader modern industrial and infrastructure system. Infrastructure in these crucial areas to be built ‘appropriately ahead of demand’ should not be equated with broad capacity expansion or overbuilding. Instead, she emphasises coordinated and phased deployment in digital and communications infrastructure, where timing, standards and interoperability are critical.

Zhang leads the technology and standards research institute at China Academy of Information and Communications Technology (CAICT). Working at the intersection of telecoms policy, standards and industrial strategy, she is a leading voice for understanding how Beijing expects digital infrastructure to connect with manufacturing upgrading, network coordination and the broader push for new productive forces.

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context

22 Mar 2026: Han Wenxiu highlights investment space in urban renewal and new infrastructure at China Development Forum 2026

12 Mar 2026: NPC closes and approves the 15th 5-year plan draft outline, and the 2026 fiscal budget plan

12 Mar 2026: National Development Planning Law adopts the 14th NPC

06 Mar 2026: NDRC press conference highlights ‘six networks’ and estimated C¥7 tn infrastructure buildout in 2026

05 Mar 2026: NPC approves 2026 Government Work Report set C¥755 bn budget investment and C¥800 bn ‘two major’ bonds

04 Mar 2026: CPPCC opens, beginning the formal Two Sessions process for the first year of the new plan period

27 Feb 2026: Politburo reviews the draft Government Work Report and draft 15th 5-year plan outline ahead of the Two Sessions

22 Dec 2025: MoF briefing on 14th 5-year plan fiscal outcomes signals stronger fiscal macro-control and reform in the next plan period

09 Jan 2026: central financial mouthpiece stresses ‘policy integration’ as a core macro task for 2026

23 Dec 2025: Central SOEs meeting stresses role in strategic infrastructure and supply chains

22 Dec 2025: State Council meeting on 15th 5-year plan emphasises major projects

11–12 Dec 2025: Central Economic Work Conference sets the macro policy tone for 2026 and calls for a good start to the 15th 5-year plan period

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Aviation and aerospace was elevated at the Two Sessions to a ‘pillar industry’—a step up from its previous classification as an emerging sector. For the first time, the 15th 5-year plan (2026–30) explicitly sets the goal of building China into a space power by 2030.

The 5-year plan prioritises reusable launch vehicles, large-scale satellite constellations, and the commercialisation of space applications, with cost reduction cast as central to long-term viability. Satellite internet has been earmarked for rapid development as part of broader ambitions around integrated space-air-ground connectivity. A new ‘Space+’ framing suggests that satellite infrastructure is being treated as part of the broader industrial system, with growing interest in on-orbit computing rather than communications alone.

Already in 2025, commercial space launches accounted for 54 per cent of total missions. Three mega-constellations are gearing up to fill low Earth orbit. Beidou (China’s satellite navigation system) underpins over two billion devices. A crewed Moon landing is targeted before 2030, with major hardware in flight test as of February 2026.

Execution is real, and the pace is building. But the sector still runs on patient state capital—a funding model that has enabled rapid scaling while deferring any serious test of commercial viability. No domestic launch provider has yet turned a profit, and closing the cost gap with SpaceX on reusable rockets remains the industry’s central challenge.

The domains below—commercial launch, navigation, satellite internet, crewed lunar exploration—are not parallel tracks. Launch capacity is a brake on constellation deployment. Constellation deadlines drive demand for reusable rockets that do not yet work at scale. Beidou and satellite internet are complementary, but only if both reach global coverage. Each domain tells a different story.

Space infrastructure is clearly advancing. But can the gap be closed before Starship (SpaceX’s fully reusable heavy-lift launch vehicle) rewrites the cost curve?

commercial launch

CNSA (China National Space Administration) now has a dedicated commercial space department and a national development fund. Its November 2025 two-year action plan opens state TT&C (Telemetry, Tracking and Command) stations to commercial operators, with a target of high-quality commercial space development by 2027. In 2025, 50 commercial launches placed 311 satellites into orbit. The Wenchang commercial launch site (a spaceport in Hainan province) completed nine launches in its first year of operation.

Volume has not yet translated into profitability. Chinese launch companies remain in a pre-profit growth phase—a reality tacitly acknowledged by the CSRC’s move to relax listing requirements for firms on the STAR Market (Shanghai’s Science and Technology Innovation Board) that fall short of conventional profitability thresholds. State-backed capital accounted for 54 per cent of sector funding in 2024, up from 20 per cent in 2018. This reflects a deliberate policy choice: build capacity now, let market returns follow. It is a typical PRC acceleration strategy, not a sign that private capital has failed to materialise.

2026 is shaping up as a pivotal year, with new-generation reusable rockets from both private and state-owned firms due to debut and begin flight validation. Wenchang plans to double its launch pads from two to four by end-2026, targeting more than 60 launches annually—with each pad aiming for a rate of one mission every week to ten days. A sea-recovery vessel is also under construction to support a launch-recover-reuse operating model. The plan also points to ‘airline-style’ operations as the model for driving down costs.

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Comparing launch costs requires some care. On advertised prices, Chinese rockets are broadly competitive with SpaceX’s Falcon 9. But SpaceX’s real advantage is that Falcon 9’s first stage is routinely recovered and reflown, with some boosters now used up to 30 times. That drives internal costs far below anything an expendable rocket can match.

China is working to close that gap. Two reusable rocket programs attempted recovery flights in December 2025; both fell short. There is progress, but the technology is not yet proven. And the target itself is moving—if SpaceX’s Starship delivers on its promise of dramatically lower launch costs, the bar rises again, and the gap widens before it narrows.

Infrastructure is becoming the next constraint. By mid-2025, 18 commercial launch pads were operational with seven more under construction. Pad capacity and turnaround times are now limiting flight rates, and that bottleneck is slowing constellation deployment.

beidou

Navigation is the one domain where China has arguably pulled ahead. Beidou, its GPS equivalent, now operates more satellites than GPS and, by some measures, delivers better accuracy—the US government’s own navigation advisory board acknowledged in 2023 that GPS had fallen behind. For everyday users, the difference is modest. But for precision applications, Beidou’s edge is critical, and within China it reaches centimetre-level accuracy.

Beidou also has a feature GPS lacks entirely: users can send short messages via satellite when ground networks are down. It is a small but meaningful capability, and one reason Beidou is now built into 98 per cent of smartphones sold in China.

The longer game is geopolitical. The PRC is pairing Beidou adoption with Belt and Road investment across the Global South, positioning it as the default navigation infrastructure for a large share of the global economy. GPS modernisation, meanwhile, is running behind schedule. The contest is now about which system becomes embedded in the infrastructure of countries that will matter most in the decades ahead.

satellite internet

This is where the gap with SpaceX is most visible. The PRC has three planned mega-constellations, each designed to rival Starlink in scale—and each planned to exceed 10,000 satellites. But as of late 2025, the largest had just over 100 satellites in orbit. Starlink had nearly 8,000—roughly 35 times as many—already serving more than 100 countries.

Getting from a few hundred satellites to a functional global network requires a sustained launch pace that China’s current infrastructure cannot yet support. Filing for satellite frequencies with international regulators—which Chinese operators have done in large numbers—secures a place in the queue, but it is not the same as putting hardware in orbit.

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The timelines are tight. International filing commitments require meaningful deployment within a few years, and meeting those targets would demand a major step up in launch frequency, manufacturing output, and rocket reliability. All three remain works in progress.

Starlink, meanwhile, has a large and growing head start in the market that matters most—affordable broadband for underserved regions across the Global South. Chinese constellations may eventually compete there, but they are years from offering comparable coverage, and the window may not stay open indefinitely.

crewed lunar program

Of all the programs tracked here, the crewed lunar effort looks most on schedule—and recent milestones suggest it may be running ahead of it.

In February 2026, China conducted the first flight test of the Long March-10 rocket and its Mengzhou crew capsule at Wenchang. Both the capsule and the rocket’s first stage were recovered from the sea—a first for the program, and a significant one. The planned sequence from here is methodical: an uncrewed Mengzhou flight in 2026, a lander test in 2027, joint testing through 2028–29, and a crewed lunar landing around 2030.

NASA’s Artemis moon exploration program, by contrast, continues to slip. Artemis II—a crewed lunar flyby, not a landing—is scheduled for April 2026 after multiple delays. The first American crewed lunar landing has been pushed back to Artemis IV, now targeting 2028 at the earliest. China’s program, built on a single integrated plan for over three decades, is largely insulated from the political disruption that has repeatedly reset US ambitions. Whether that consistency delivers an earlier landing remains to be seen—but on current form, the hardware is ahead of schedule.

China’s space station, Tiangong, is running steadily alongside all of this, hosting more than 265 science and application projects carried out in orbit. This year’s mission manifest connects routine station logistics directly to the lunar program—the same hardware and systems that will eventually support a Moon landing are being tested and verified in the process.

now the hard part

In navigation, the PRC has built a system that rivals or exceeds America’s GPS. In satellite internet, it is years behind Starlink with the hardest part—getting thousands of satellites into low Earth orbit at sustainable cost—still ahead of it. These are not the same challenge: navigation satellites sit high enough that a few dozen can cover the globe, while internet constellations need thousands of low-orbit satellites to deliver usable coverage. Leading in one does not translate to the other.

China is building infrastructure at scale—and has secured its regulatory place in the queue. But holding that place requires actually launching, and launching at scale requires affordable, reusable rockets. The Two Sessions named the ambition. The 5-year plan—with its ‘Space+’ framing and its pillar industry designation—set the terms. Whether Chinese rockets can get there before SpaceX’s Starship resets the cost floor, and before Starlink’s head start becomes insurmountable, is the star Beijing is shooting for.

space expertnauts

Yang Changfeng 杨长风 | Beidou Navigation Satellite System chief designer, Chinese Academy of Engineering academician

Beidou’s BDS-3 is not the finish line, says Yang. The next-generation system, designed around precision, ubiquitous access, and intelligent networking, will deliver metre-to-decimetre-level real-time positioning from indoor spaces to deep space. Yang has laid out a tight development roadmap: key technology validation completed by 2025, three pilot satellites launched around 2027, constellation deployment beginning in 2029, and full system completion by 2035. He is notably candid about remaining challenges, acknowledging that sustained development requires stronger policy frameworks, institutional reform, and workforce investment. Yang highlights Beidou’s unique two-way short message capability—unmatched by GPS, GLONASS, or Galileo—as both a civil resilience tool, proven during the 2008 Wenchuan earthquake, and a foundation for integrating Beidou with 5G, IoT, and AI-driven infrastructure across the Global South.

Yang spent his career in China’s satellite navigation program, joining the Beidou effort at its 1994 inception and succeeding Sun Jiadong as chief designer in 2014. He was elected to the Chinese Academy of Engineering in 2024.

Zhang Changwu 张昌武 | LandSpace founder, chairman and CEO; Beijing Municipal CPPCC member

China’s commercial launch sector is a decade behind SpaceX—and the gap may widen before it narrows, Zhang warns. Even after Zhuque-3 achieves first-stage reuse, per-kilogram costs could undercut SpaceX’s Falcon 9. But with SpaceX’s Starship entering service in parallel, he estimates a full order-of-magnitude price gap will persist between 2026 and 2030. Zhang frames the US–China competition not as a technology race but as an efficiency contest: regulatory approvals, launch licensing speed, and pad access matter as much as propulsion engineering. He is equally blunt on the commercial side, publicly targeting breakeven by no later than 2026—a deadline now codified in LandSpace’s IPO filings. He has called reusable rocketry the sector’s ‘iPhone moment,’ arguing it will determine which firms survive consolidation and which become irrelevant.

Zhang left investment banking at HSBC and Santander to found LandSpace in 2015. The company launched the world’s first methane-fuelled orbital rocket in 2023 and filed for a C￥ 7.5 bn STAR Market IPO in late 2025, targeting a C￥ 75 bn valuation.

Zhang Xiaolan 张晓兰 | Deputy director, Policy Simulation Laboratory, Economic Forecasting Department, State Information Centre (under NDRC)

China’s commercial space sector completed a leap from follower to peer competitor in roughly a decade, Zhang notes, but the harder transition—from scale to sustainability—is just beginning. The market grew from 376 billion yuan in 2015 to over 2.3 trillion yuan in 2024, with three industrial clusters now anchored in the Yangtze Delta, Pearl River Delta, and Beijing-Tianjin-Hebei corridor. Yet structural weaknesses persist: reusable launch technology remains unproven at operational scale, capital intensity strains private firms, and international competitive pressure is mounting. Zhang calls for ‘patient capital’—government-led funds with long horizons and concessional lending for reusable rockets and low-cost satellites—alongside STAR Market listings to broaden financing. She frames this as a narrow window, urging coordinated state-enterprise-research action before the sector’s golden opportunity closes.

Zhang is a macroeconomic policy researcher at the NDRC-affiliated State Information Centre, specialising in economic forecasting, policy simulation, digital economy, and industrial policy. She publishes regularly in the Economic Daily and the centre’s internal Economic Forecast Analysis bulletin.

context

22 Oct 2025: PRC commercial space race seeks a business model

09 Oct 2025: Beidou application international summit

04 Aug 2025: capital markets back ‘hard tech’: commercial space firms race for IPOs

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Beijing’s landmark new National Development Planning Law was adopted at the Two Sessions on 12 March. At its core, it’s about centralising power. Discretion once held by local governments and ministries to tweak plans is being pulled back to the centre and bound by law.

The aim is to curb long-standing flaws: plans that shift with staff changes, leadership churn, and vanity projects driven by single ‘boss’ officials. Short-term political gain typically trumps planning. This results in off-book projects and heavy borrowing that can become major sources of hidden local debt. The law seeks to rein this in by locking down how plans are made and changed.

Framing this centralisation with formal institutions, the law’s primary function is to lock down rigid procedures. The mandatory top-down sequence runs: CPC Central Committee advice → State Council drafting → National People’s Congress approval → public rollout.

This binds the lifecycle—drafting, approval, implementation, supervision, and adjustment, eliminating procedural loopholes for local or agency policy capture. Major strategic layout and public policy are strictly subordinated to national development plans.

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Across sectors, the law cuts through turf wars. Land-use, transport, industry, and environmental plans drawn up in silos often clashed in the past. A single national plan now sits above all others. Local and sector plans must align with it before they are drawn up. This mplies a shift from a patchwork of plans to a unified frame, with the central plan wielding the greatest legal heft.

from bottom-up trial to top-down control

A shift in governance paradigm is in view. Earlier in the reform era, the central government made top-down plans (e.g. the 5-year format) while urging bottom-up experiments and initiatives. Localities could decide what to test, how and on what scale to test it; Beijing typically approved and formalised outcomes after the fact.

The thrust is now unmistakably more top-down: Beijing dictates the master plan, localities execute it. Scope, boundaries, policy tools, and risk limits of local pilots are strictly predefined. Local experiment is no longer an autonomous innovation: it serves to roll out, refine, and fine-tune top-level design. Monitoring, evaluation, oversight, and accountability are instrumentalised and codified into law. Failure to execute, or arbitrary execution, now carry legal penalties.

holding officials to the long-term

The change is political and touches how officials are assessed. In 2026, Beijing channelled its ‘correct view of political achievement’ into a Party-wide campaign, first targeting leaders at county level and above. This was timed for year one of the 15th 5-year plan, with both drafting and rollout keyed to a ‘correct’ performance lens. Read together, the campaign and the National Development Planning Law serve one aim. The law tightens control over planning power; the campaign reshapes the incentives and conduct of the officials who carry it out.

‘Merit’ is redefined. Officials must (not for the first time) act on facts rather than impulse, follow explicit rules rather than political ambition, create results for the people rather than for personal advancement, and prioritise long-term, durable achievement over short-term, high-visibility gain. Official language invokes ‘for the people,’ ‘through solid work,’ and outcomes that ‘withstand tests of practice’, ‘public opinion’, and ‘history’. Local governance is to exit debt-fuelled visible expansion in favour of disciplined development aligned with macro strategy.

The Planning Law and the campaign on the ‘correct view of political achievement’ are two sides of the same coin. One pulls planning power back to the centre and locks decision-making into a formal legal process; the other tries to rewire how officials think about success—shifting the measure of a good political career away from flashy projects and leverage-driven growth, toward fidelity to central strategy, long-term sustainability, and results that hold up.

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building the paradigm

This pivot can be traced back to the Third Plenum of the 18th Central Committee in 2013, when the incoming Xi regime mainstreamed ‘top-level design.’ The trajectory since then has been methodical

• 2014 pilots for ‘multi-plan integration’

• 2018 institutional reforms (merging land, urban-rural, and functional zoning plans under the Ministry of Natural Resources)

• 2019 rollout of the territorial spatial planning system

• 2021 launch of a ‘law-based’ governance, and ultimately, the promulgation of the Planning Law

It aligns with the all-round shift in the PRC governance paradigm over the past decade. A stronger central hub is required to allocate resources, anchor priorities, and uniformly streamline the execution chain. The rhetoric of a ‘new whole-of-nation system’ 新型举国体制 is its policy expression.

a capstone, not the end

The law marks an institutional milestone, but it arrives with gaps. The mechanisms linking planning to budgeting remain underdeveloped. Procedures for resolving cross-departmental conflicts are still being worked out. Accountability standards for unauthorised adjustments lack the specificity needed to bite. Until implementing regulations and judicial guidance follow, the law remains a framework in search of its operating rules.

planning experts

Zhou Guangquan 周光权 | deputy director of the NPC Constitution and Law Committee

A proponent of institutionalised macro-governance, Zhou argues the newly passed National Development Planning Law serves to effectively translate the Party’s propositions into binding state will and unified social action. To counter disjointed regional policies, he notes the legislation sets up a rigid hierarchy that strictly subordinates local and sector-specific plans to the national blueprint. By codifying the drafting, approval, and monitoring processes into statutory mandates, Zhou believes this legal framework will effectively curb arbitrary local deviations and ensure sweeping strategic consistency across all levels of government.

Zhou received his JD from Renmin University of China and was a visiting scholar at Japan’s Meijo University. He has held two consecutive terms as vice chair of the Constitutional and Legal Committee of the 13th and 14th National People’s Congress and has served as dean of Tsinghua University Law School since 2022. Specialising in criminal law, Zhou is currently also the vice president of the Chinese Society of Criminology, invited consultant of the Supreme People’s Court and invited supervisor of the Supreme People’s Procuratorate.

Zhou Li’an 周黎安 | Peking University Guanghua School of Management deputy director

Zhou examines how China’s ‘political tournament system’ has evolved under the imperative of high-quality development. He notes the traditional scramble for economic growth has mutated into a complex, multi-objective contest where environmental and safety failures now act as absolute vetoes. This mounting pressure has caused a stark divergence among cadres: while some emerge as ‘all-around champions,’ others ‘lie flat.’ Warning that such administrative inertia threatens economic momentum, Zhou stresses the need to reconcile multifaceted governance with effective competition. Internationally, he views this top-down bureaucratic rivalry as a uniquely Chinese phenomenon, noting that while foreign central governments might utilise targeted project incentives, the broader hierarchical tournament remains largely unreplicable in democratic systems.

Zhou is an influential applier of the ‘political tournaments’ framework (pioneered by Peking University sociologists), which explains official incentives and their use in central governance. Under tournaments, competition for promotion based on simple numerical criteria may energise official action on high-profile issues, but sideline all other issues. An economics doctorate from Stanford in 2002 preceded Zhou’s teaching career in political economy at Peking University, taking in industrial economy and economic transfer. He has been dean of applied economics since 2011 and deputy director of Guanghua School of Management.

Ma Huaide 马怀德 | President of Renmin University

Reviewing this year’s Government Work Report, Ma highlights its robust focus on building a law-based government. He notes the rhetorical progression from ‘deepening’ this initiative in the 2025 summary to ‘strengthening’ it for the 2026 agenda. For Ma, zeroing in on key operational issues—such as enterprise-related law enforcement and streamlined ‘one-stop’ administrative services—reflects a broader push to enhance both administrative efficacy and social governance. Ultimately, he argues that building law-based governance will serve as an essential safeguard for the successful implementation of the 15th 5-year plan.

Ma was appointed president of Remin University in November 2025. The first administrative law LLD in the reform era, and China Administrative Law Society chair, Ma advises government on corruption and administrative reforms. Advocating restructuring the anti-corruption system, he targets inefficiency and evasion of supervision. Ma has helped draft crucial legislation including Administrative Penalty Law, Administrative Licence Law and State Compensation Law.

context

23 Mar 2026: National Development Planning Law: centralising planning authority and shifting towards rule-based governance

16 Mar 2026: Beijing launched a political campaign on practising a correct view of political performance

8 Jan 2026: Poliburo meeting stresses on the implementation of the new 5-year plan

25 Dec 2025: Politburo sets 2026 anti-corruption agenda to guarantee 15th 5-year plan execution

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Services exports are gaining ground within the composition of PRC trade. Premier Li Qiang called for ‘cultivating the ‘China Services’ brand’ in the Two Sessions’ Government Work Report. The aim is to build a globally competitive brand through standardised, high-value services like tech, finance, logistics, and consumer-facing services. This ties into Beijing’s broader goals of fusing advanced manufacturing with modern services, boosting investment, and supporting opening up in telecom, biotech, and digital sectors.

Services still account for only a small share of total trade (some 15 percent), and the country currently runs a trade deficit (some C¥ 800 bn). But in 2025, total services trade reached ~US$1.12 trillion, up 7.4 percent year-on-year, outpacing growth in goods trade.

PRC services exports growing faster, imports still leads

A broader theme at the Two Sessions was Beijing continuing moves to externalise parts of its economic ecosystem—above all PRC firms exporting supply chains, digital infrastructure, e-commerce platforms, cloud services, smart logistics systems and fintech—often bringing with them technical standards, regulatory practices and data infrastructure that reflect the PRC domestic governance model.

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Shanghai leads the country in services exports (taking some two-fifths of the national total). Its municipal 5-year plan has set bold targets for 2030, a 20 percent jump from the latest figures. The plan highlights key export areas, including emerging sectors like medicine and digital services. A closer look at recent moves in the city reveals two trends that echo and advance broader national goals: guiding firms into higher-value services segments and helping PRC firms branch out abroad.

upgrading services

Promoted as a growth driver in the 5-year plan, ‘balanced development’ of services exports is urged across goods/services and exports/imports. Strong terms like ‘vigorous promotion’ signal that more policy to boost the sector is coming. Ample room remains for growth, says Shen Danyang 沈丹阳 State Council Research Office, who proposes cross‑agency action in the sector.

Aligning with broader upgrading goals, lifting trade up the value chain is a priority in the 15th 5-year plan. Growing services exports advance this by supplying high-end intermediate services and solutions key to the global supply chain, explains Liu Bin 刘斌, China (Shanghai) Pilot Free Trade Zone Research Institute. The push rests on the belief that innovation and high-quality growth bolster economic resilience—a view that gains traction amid geopolitical headwinds. The US is driving decoupling efforts in high-tech sectors like semiconductors and AI, with potential extension to biopharma and new energy, warns Zhang Yansheng 张燕生 Academy of Macroeconomic Research. Services and related know-how in these advanced sectors are just as vital as the physical goods themselves.

Beijing’s upgrading drive is channelling more support to its higher‑end champions, while areas already thriving or seen as lower priorities may receive less backing. Shanghai’s 2025 services trade guidance catalogue reflects this shift: an umbrella ‘services outsourcing’ category covering ITO, BPO and KPO (information technology outsourcing, business process outsourcing, knowledge process outsourcing)—broadly typical ‘outsourced back‑office’ functions—has been dropped from core support areas. This is while pharmaceutical and biotech R&D, previously listed under the same category in 2024, have been carved out and reclassified as a standalone line under ‘Professional Service Trade’. A new focus has been added on building leading global firms in these areas with strong research and innovation capacity.

The change underscores Beijing’s push to build cutting-edge, independent and high‑value professional services rooted in homegrown innovation, rather than just supplying mid-tier outsourcing for foreign firms. This move also aligns with priorities listed in a recent action plan from the centre, which called for advanced Eastern regions to focus on higher-end outsourcing services, while less-developed central-western regions are to take on more offshore and onshore outsourcing services. The regions are to align their focus with their comparative strengths. The guidance catalogue also dropped some numerical finance and export targets and pivoted to more qualitative metrics, suggesting Beijing now recognises that services export firms take time to build strength and innovate.

Policy attention is also shifting to digital cultural exports, with ‘internet culture services’ added as a support category to boost exports of online literature, video, art and other content. Digital trade products with independent intellectual property, strong branding, and an ‘international communication’ focus are now in the spotlight. In 2024, these were mentioned only briefly as general internet services, but they now stand as a distinct priority.

New funding support for firms in international service outsourcing, tech exports, and key service imports shows up as a new tier in Shanghai’s 2025 services trade guidance fund. Eligible firms may receive up to C¥5 million in interest subsidies—the largest amount under any category—showing Beijing’s focus on these emerging sectors. To boost medical services, the qualifying threshold for trade support has been lowered: medical institutions now need to serve only 4,000 patients a year, down from 5,000.

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go abroad and diversify

The 15th 5-year plan notes ‘guiding supply chains abroad’ and ‘linking trade with investment’. Both priorities call for more overseas investment, with PRC multinationals expected to take on larger roles as they move not just individual factories but entire industrial chains overseas. Services exports are not a siloed sector, but a vital process embedded in these ventures, tasked with linking and easing goods trade, overseas investment, and risk management.

This shift is notable in Shanghai’s updated support for services trade. International freight forwarders are urged to become global supply chain providers capable of consolidating worldwide resources, under a newly highlighted category for support. For the first time, the policy offers direct financial backing for firms to set up overseas outlets or branches, with higher subsidies for those launched in BRI countries. A new support priority has also been introduced for e-commerce firms to set up an overseas presence, encouraging them to acquire foreign platforms and offer services to both overseas merchants and consumers. Stronger logistics and e‑commerce services are not only exports in their own right but also help PRC goods and investment expand abroad–underscoring Beijing’s ‘multiplier’ policy approach.

Facing stronger external headwinds, Shanghai’s 2025 guidance fund added new aid for overseas market research, consulting, and promotion provided to services trade firms. Once limited to equipment and maintenance, funding now extends to work that helps firms manage rising risks abroad. A separate heading on legal services (commercial mediation services) has also been added as a priority area, backing organisations that provide cross-border arbitration and mediation for overseas businesses and institutions. As PRC firms move deeper into global supply chains, disputes could rise, making support infrastructure such as mediation and arbitration more important.

Beijing’s approach shows services exports are being developed strategically rather than broadly, focusing on high-value sectors like biotech, digital, and professional services. Still a modest share of total trade, they are becoming a critical tool for supporting global expansion, upgrading the PRC economy, and building resilience amid rising external pressures.

services trade voices

Shen Danyang 沈丹阳 | State Council Research Office Leading Party Group secretary

Shen says the 15th 5‑year plan’s call for ‘innovative development of trade’ points to closer coordination between goods and services. Services, he notes, are taking a larger share of global trade but still account for only a small part of PRC trade, leaving ample room to expand. The PRC should keep moving its trade toward higher value‑added and more tech‑intensive output, he adds. To boost services exports, Shen suggests that Beijing strengthen policy support, further open markets, build more demonstration zones and lead standard‑setting efforts.

An economist and senior PRC official working on international trade, services economy and China’s development, Shen now leads the State Council Research Office, a research and consulting arm for the country’s top leaders. He has built his career at the overlap of trade policy and research, with senior posts in the State Council General Office, the Xiamen and Hainan governments and MofCOM. In a 2026 commentary, he set out his reading of ‘innovative development of trade’, a priority spotlighted in the 15th five‑year plan.

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Liu Bin 刘斌 | China (Shanghai) Pilot Free Trade Zone Research Institute director

Services exports are central to the PRC’s push to become a strong trading nation, says Liu. They cut dependence on goods trade and move the PRC up the global value chain, deepening its role in international labour. Liu calls for leveraging the PRC’s edge in the digital economy to lift services exports—by linking digital tech with culture, healthcare, finance, manufacturing and tourism, and speeding up the digital transformation of traditional trade.

Focusing on financial technology, digital finance, financial opening up and PRC free-trade zone policies, Liu works on issues related to building Shanghai as an international financial centre. He has argued that digital RMB will play a greater role in RMB internationalisation and that Shanghai will assume a greater role as an offshore financial centre for PRC firms as they go global. He serves as a Standing Director of the Digital Finance 100 Forum, a prominent think tank in the PRC digital finance sector. Additionally, he holds advisory and expert roles, including as an expert at the Lujiazui FinTech Research Institute, Vice Secretary-General of the Intelligent Investment Research Technology Alliance, and is an industry expert for Huawei’s Global Financial Business Unit.

context

5 Mar 2026: The 2026 government work report announced new priorities for PRC services trade

15 Dec 2025: MofCOM announced an action plan to promote high-quality development of service outsourcing

30 May 2025: 2025 Shanghai Services Trade Guidance Catalogue released

09 Jun 2025: more details about the second batch of the services trade guidance fund released

30 May 2025: 2025 Shanghai Services Trade Guidance Fund application guidelines released

29 Nov 2024: pilot scheme for wholly foreign-owned hospitals initiated

28 Nov 2025: State Council released Opinions to boost digital services

02 Sep 2024: State Council released Opinions to plan new priorities for services trade

21 Jul 2024: The Third Plenum Resolution emphasised further opening in services and focusing on ‘innovation and upgrading’

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The Two Sessions amplified the agricultural message delivered in the 2026 No. 1 Document. Five years of short-term fixes—ag policy ‘whac-a-mole’—will now transition to a more systematic forward-looking vision. This new cycle, like much in the upcoming 5-year plan, is to be underpinned by ‘new quality productive forces’. For agriculture, this means AI, drones, and biomanufacturing are set to become core tools.

Policies centred on ‘tackling three tasks together’ and ‘fitting in with population change’ signal that rural governance can no longer be managed through isolated interventions. The next phase requires coordinated action across production, land, income, and demographic pressures at once.

what’s new in the No. 1 Central Document

Our earlier brief on the 2026 No. 1 Document discussed how the text now elevates the ‘Big Food’ concept from broad aim to core daily operations. In other notable policy moves, the 2026 text references sannong 三农 (three rurals: agriculture, rural areas, and farmers) principles of the early 2000s. These are now framed as together advancing

• yield and capacity

• production and ecology

• output and income

By framing these objectives within a unified approach, Beijing seeks to move towards ‘modernising’ rural work and away from the pattern in which agencies responded to emergencies largely within their own silos.

Four main themes emerge from the latest No 1 Document.

new ways of working: ‘tackling three tasks together’ replaces single goals

Policy in 2022, 2023, 2024 and 2025 aimed to raise output. This risked pumping too much groundwater and contaminating from excessive fertiliser. Yet protecting land reduced output, leading to continuing tension between grain security and raising farm incomes.

Bringing policy full circle to the tenets of sannong, planners will not focus solely on grain output over the next five years. They are expected to consider whether capacity is adequate, land is healthy, and farmers have better incomes. This brings the three goals into a single frame and reduces the tendency for agencies to mind only their own patch.

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new time frames: ‘normalising targeted aid‘ (常态化帮扶) moves to the fore

The five-year transition of the 14th plan (2021–25), which provided special, temporary support to lift people out of poverty (a policy described as ‘put them on the horse and see them off’), has formally ended.

The 2026 document signals this shift by introducing ‘normalised targeted aid’. This means

• the transition is over: targeted aid is no longer a short-term fix

• it is now permanent: rural subsidies are to be folded into the broader revitalisation drive and become a permanent fixture of rural policy

Support must now look beyond just the old poor, argues Jiang Changyun 姜长云 National Development and Reform Commission. Risks are everywhere. A middle-income farm family could fall below the poverty line because of a serious illness or extreme weather. ‘Normalising’ does not mean ‘doing less’. It means building structures to monitor and support all rural people. This turns the fight into a ‘long-term war‘, notes Southern Daily. It relies on daily checking and steady financial support to hold the line. Beijing wants to keep central support funds steady to avoid the need to suddenly curtail programs.

new drivers: ‘new quality productive forces’ move from ideas to the field

The 2025 document first spoke of ‘developing new quality productive forces based on local needs’. At that stage, it was largely a call to set a new course. The 2026 document gives it substance. It calls for high-end smart farm tools and more use of drones, IoT (Internet of Things), and robots. It also wants to speed up bio-manufacturing.

But research does not always translate into actual use, and small farmers find it hard to participate. The 2026 document indicates special subsidies and roll-outs will follow. The document links reform in research, farm tech, and schooling to fix the whole chain, notes Zhang Zhaoxin 张照新 Chinese Academy of Social Sciences.

new income logic: ‘consumption’ joins the loop

In the past, farmers made money in three ways: developing rural industry, wage labour, and subsidies. If incomes rise but there are no services or other consumption on which to spend money, more pay does not lead to a better life.

The 2026 document suggests ‘lifting rural consumption’ and building new outlets like farmer’s markets, craft shops, and camping. Zhang Zhaoxin and others believe this closes the loop between income, spending, and industry. More income leads to more spending, which helps local services and creates more jobs. A case in Kaiping shows this: old granaries turned into bookshops and old buildings into guest quarters, giving farmers new income streams.

what the Two Sessions added

The Two Sessions clarified several parts of the No 1 Document. In particular, they added firmer benchmarks, sharper delivery tools, and a broader set of risk-management instruments.

firmer grain benchmarks: from target-setting to stress-testing

The No. 1 Document set grain output at around 700 million tonnes. The Government Work Report then reiterated this as a core 2026 goal, lending the target greater political weight. Han Jun 韩俊 said at the Ministers’ Corridor on 9 March that grain output had reached 715 million tonnes in 2025, the second straight year above the 700 million mark. The signal is that Beijing is no longer treating grain stability as a one-off achievement. It is now presenting it as an expected deliverable, no matter what the pressure.

The same logic appeared in the new round of work to raise grain production capacity. Han Jun framed this around ‘good farmland, good seeds, good machinery and good methods’, while Qian Qian 钱前, a rice scientist and CAS academician, pointed to the technical route for raising yields in rice through better seedling systems, transplanting, irrigation, fertiliser placement, and pest control. The emphasis is now less on expanding sown area and more on improving the existing production system.

seed and land: from basic security to stronger foundations

The Two Sessions also added more detail on two of the system’s foundations: seeds and farmland. On seeds, Huang Sanwen 黄三文, head of the Chinese Academy of Agricultural Sciences, said domestically bred varieties now account for 91 percent of vegetables, 80 percent of livestock and poultry, and 86 percent of aquatic products. This suggests the policy question is shifting. The issue is no longer simply whether China has domestic substitutes, but whether it can produce stronger varieties through boosting innovation capacity.

On land, Cao Weixing 曹维星 CPPCC Standing Committee member and agriculture policy expert, argued that farmland protection should cover quantity, quality, and ecology. This pushes the debate beyond the familiar red line language. The implication is that protecting acreage alone is no longer enough. More policy action is likely to focus on soil quality, black soil protection, saline-alkali land treatment, and the restoration of degraded land.

delivery, not just invention: pushing technology into farm use

The No. 1 Document had already stressed the ‘last kilometre’ problem in agricultural technology. The Two Sessions gave this more practical shape. Huang Sanwen said technology now contributes more than 64 percent to agricultural growth, while mechanisation in crop farming has reached nearly 80 percent. Han Jun said China had more than 300,000 agricultural drones in use in 2025, covering 460 million mu of farmland. Nie Shoujun 聂守军 Heilongjiang Academy of Agricultural Sciences, called for more data-driven breeding and greater use of digital platforms.

Together, these signals suggest the bottleneck is moving. The question is no longer whether the PRC has enough pilot technologies. It is whether those tools can be deployed more widely, linked to real farm needs, and made affordable and useful for ordinary producers.

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machinery support is becoming more targeted

The same applies to farm machinery. Han Jun pointed to smart harvesting robots, irrigation robots, and AI laser weeders already entering agricultural use. Nie Shoujun also called for more support for high-end combine harvesters and smart transplanters, alongside quicker replacement of obsolete equipment. This suggests machinery policy is moving beyond broad equipment support towards more selective backing for higher-performance tools.

food security is widening beyond grain alone

The Two Sessions also reinforced the No. 1 Doc’s push for a more diversified food supply system. Han Jun pointed to strong domestic output in meat, eggs, dairy, aquatic products, fruit, and vegetables. This is less a claim of full self-sufficiency than a sign that Beijing is framing food security more broadly, beyond grain alone, under the ‘big agriculture, big food’ approach.

a broader governance toolkit is taking shape

Finally, the Two Sessions noted two agricultural policy tools that help explain how this next phase may be managed. The first is the fourth national agricultural census, which will use 31 December 2026 as its reference date and cover not only grain and farmland, but also technology uptake, diversified food supply, and other structural changes in the rural economy. The second is agricultural insurance. In 2025, premiums reached RMB 155.55 billion, providing RMB 5.32 trillion in risk coverage. Policy support is moving further towards full-cost insurance and planting income insurance for major crops.

Both point in the same direction. Beijing is not relying only on targets and mobilisation. It is also building a more regular policy toolkit based on better data, earlier risk identification, and stronger ex ante protection.

shifts in recent Central No. 1 Docs (2023–26)

The graphic below illustrates policy weight across recent No. 1 documents. Scores are based on three factors: where the theme appears in the document, whether it has a dedicated section, and how densely it is supported by concrete measures. Higher scores indicate greater policy weight.

changing priorities: No. 1 Docs 2023–26

This policy transition underscores the evolution in agricultural and rural priorities.

Grain focus is no longer on annual output volumes and stable land area but on building sustainable capacity, quality, and resilience—balancing production with ecology and farmer income to sustain long-term land productivity (e.g., targeting ~700 million tons while advancing per-unit yields).

PRC grain supply and demand (2000–24)

Farmer incomes have graduated from direct top-down support (tax cuts since 2004, grain floor prices around 2009) to market-driven growth, with 2026 highlighting county-level industries, tech/green/quality/brand farming, tourism, e-commerce, processing, and diversified earnings beyond state aid alone.

Rural construction has transitioned from broad infrastructure upgrades to targeted, adaptive planning—fitting layouts to population decline, land functions, and disaster risks, prioritising viable villages and avoiding waste in depopulated areas.

This reflects a broader push toward high-quality, sustainable, and market-oriented rural modernisation.

what to watch

The end of the ‘five-year transition’ will test county budgets. As support shifts from households and resettlement to industrial and county-level programs, the question is whether counties can manage the transition without households that were supported in the past falling through the cracks.

Cross-provincial grain compensation is rising up the agenda. The idea goes beyond fiscal transfers and may also cover industry shifts and land-right swaps between grain-rich and grain-poor provinces. Its appearance in 2026 provincial budgets would show that Beijing is starting to act.

Counties are now a main focus for new policy. The No. 1 Document calls for more spending on cold-chain logistics, rural e-commerce, and related areas. But the main issue is who benefits. Smallholders may still lose out if returns flow to traders and platform firms. Lin Yuchan 林玉婵 South China University of Technology, warns that weak use of outsourced services and contract buying may deter private capital. That is a deeper problem than county planning can solve.

ag policy veterans

Wei Houkai 魏后凯 | CAAS Rural Development Institute director Chinese Academy of Agricultural Sciences

Sustainable agricultural modernisation demands a shift in worldview, says Wei. The old model—resource-intensive, land-constrained, and isolated from broader economic systems—is no longer viable.

Wei promotes the ‘big agriculture’ vision that integrates forests, grasslands, water systems, and urban spaces into a multifunctional, resilient agri-industrial system. Agriculture is reframed not just as production but as a provider of food, ecology, culture, and services, and is anchored in systems thinking and regional adaptation.

In this model, green change goes hand in hand with structural reform—bringing land use, tech, and supply chains into line across zones and scales. The challenge is to build up the systems that link smallholders, the foundation of rural communities, together.

A strong advocate for rural revitalisation, Wei has been vocal about the importance of bridging the digital divide between urban and rural areas, advocating for increased investment in rural IT infrastructure, and promoting the development of smart villages. He emphasises the need to integrate smart ag, smart tourism, and rural e-commerce to drive economic growth and improve the livelihoods of rural residents.

Wei is a prominent figure in PRC rural development policy circles. He has served as Chinese Academy of Social Sciences Rural Development Institute director since 2015 and is a distinguished professor.

His work focuses on rural development, regional economics, and urban-rural integration. Wei has specific interests in urbanisation, agricultural and rural development, rural revitalisation, regional economic theory and policy, enterprise relocation, foreign direct investment location, and industrial clusters.

Cheng Guoqiang 程国强 | Renmin University professor and National Food Strategy Institute director

Indirect subsidies promise to promote sustainability and efficiency, yet it is imperative to ensure that small-scale farmers are not left behind, cautions Cheng. Limited information about new subsidy programs, their eligibility criteria, or application procedures places smallholders at greater disadvantage than larger, better-resourced farmers. Smallholders often lack the finances, technical expertise, or managerial capacity to make effective use of indirect subsidies. The benefits from these programs to smallholders are limited, and ag sector inequalities may worsen.

Cheng argues that clear and accessible information must be disseminated in formats easy for smallholders to assimilate. While offering training and extension services for skill and know-how development, further financial support should be provided where necessary to ensure that smallholders take part. Inclusive policy design and targeted support measures are vital to ensuring an equitable transition that benefits all stakeholders.

In addition to his vice-director role at the China Grain Economy Association, an organisation of scholars working on socialist economic models of food security provision, Cheng is a professor at Tongji University and a regular contributor to China Economic Times and Farmers Daily. A long career working on agricultural trade and WTO issues at State Council Development Research Centre (DRC) culminated in the position of DRC director general. He continues to hold a special affiliation there.

Wu Hongyao 吴宏耀 | Central Rural Work Leading Group Office deputy director MARA (Ministry of Agriculture and Rural Affairs) Party leadership group member

Food supplies and farmers’ income are eternal themes for rural work. Growth will depend on new ag operators incorporating small farmers into their operations, says Wu. For those agreeing to leave the land, smoother transfer protocols are needed to enable moderate-scale modern farms. Service and production outsourcing are solutions for those remaining on the land, ensuring efficient and mechanised operation. The No.1 Document lists ways to activate idle rural assets, such as leasing, providing service and equity participation with assets to increase collective incomes.

Wu has worked at the Central Rural Work Leading Group Office since 2007. He was appointed Central Rural Work Leading Group Office deputy director in 2017 and MARA (Ministry of Agriculture and Rural Affairs) Party leadership group member in 2018. He is an active participant in drafting the No.1 Documents and speeches for high-level leaders and is also an active policy commentator in the mainstream media.

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Eight years after banning waste imports, Beijing is seeking to reduce, reuse, and recycle more of its own domestic solid waste.

Highlighting the scale of the challenge, a three-year nationwide campaign against illegal dumping, launched in 2025 by environmental and legal authorities identified 9,000 illegal sites and close to 30,000 infractions.

At the same time, Beijing is stepping up its push to use more recycled materials. An Action Plan launched on 31 December sets out steps to lift demand for recycled inputs. Now, a separate plan on solid waste, co-signed by NDRC (National Development and Reform Commission) and 25 central agencies, aims to tighten control across the whole chain—from cutting waste at source to transfer, collection, use, treatment and final disposal.

Referred to as ‘Ten Measures’, it signals a new era of full-chain solid waste governance, notes Wen Zongguo 温宗国 Tsinghua University School of Environment. Taken together with curbs on air, water and soil, it rounds out Beijing’s policy framework in its fight against pollution, he adds.

targets for 2030 include

• achieving notable results in special rectification areas

• reaching 4.5 bn tonnes of annual bulk solid waste utilisation

• reaching 510 million tonnes of annual renewable resource recycling

• effectively controlling historical solid waste stockpiles

Rectification campaigns will launch to target illegal dumping, environmental risks at municipal landfills, and the remediation of historical and phosphogypsum stockpiles.

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why now?

The PRC generates 11 bn tons of solid waste per year, making it one of the world’s largest sources.

Solid waste can be divided into industrial, hazardous, household, construction, and agricultural categories, as well as municipal sludge.

Industrial solid waste makes up the bulk. Mining, aluminium smelting and power generation churn out coal gangue, fly ash, gypsum, red mud and tailings. As growth in traditional infrastructure has slowed, stockpiles have swelled. Official estimates put accumulated industrial waste at 33 bn tonnes, spread across thousands of square kilometres.

Solid waste not only takes up scarce land; it also causes grave harm if not handled and disposed of with care. Unlike air or water pollution, it is harder to tackle. Its sources are scattered, its make-up complex, and the risks it poses are often hidden. For example, solid waste pollutants leach into soil, water, or air, affecting both ecosystems and public health. They are less visible than other forms of pollution.

Solid waste governance has been weak, even as air and water quality have improved, says Li Gao 李高 MEE (Ministry of Ecology and Environment) vice-minister. While overall reuse of bulk industrial solid waste has reached nearly 60 percent, historical stockpiles show no signs of shrinking and gaping holes in governance remain. Illegal dumping of construction, household, and industrial waste has not been curbed, leading to both ecological damage and black-market profits, Gao adds.

changing logic of solid waste

Beijing’s latest Action Plan attempts to address these gaps, while advancing three major strategic shifts, according to Liu Zhengang 刘振刚 Chinese Academy of Science Research Centre for Eco-Environmental Sciences.

The plan outlines transitions from

• end-of-pipe passive disposal to whole-process management

• fiscal subsidies to market-driven mechanisms

• traditional pollution control to integrated reduction of both pollutants and CO₂ emissions

Solid waste governance is to be fully integrated into the PRC green low-carbon agenda.

The plan puts forward clear guidelines for source reduction, process control and resource use, notes Zhou Haibing 周海兵 NDRC (National Development and Reform Commission). At the same time, by developing a circular economy and fully tapping the resource potential of solid waste, it shows that it is possible to turn waste into value and harm into benefit, he notes.

This is reflected in the plan’s mention of securing high-value renewable resources both at home and abroad, including rare metals derived from the growing waste from ‘new three’ products (i.e., batteries, solar panels, and electric vehicles).

Such efforts are likely to be headed by the recently launched central state-owned enterprise for resource recycling, set-up to spearhead national recycling initiatives.

This SOE, China Resources Recycling Group, has said it will focus on building a circular economy in wind, solar PV, energy storage and thermal energy. The goal is to become a global leader in the recycling and reuse of new energy components. But key challenges remain: chief among them is the enormous technical and economic cost of recycling complex goods.

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who pays?

While the PRC has adopted a polluter-pays principle, the reforms seek to outline both carrots and sticks. Extended producer responsibility (making producers responsible for the entire lifecycle of their products) will apply to electronics and batteries, signifying a push for greater environmental compliance.

Fiscal support will continue alongside more green finance vehicles and a new pricing mechanism to boost greater private investment.

Transforming waste into ecological assets is a priority. Green procurement of recycled products by the state will grow, while clearer product carbon footprint certification and emissions cuts linked to voluntary carbon trading will also be explored for recycled materials.

One major innovation is a rule that local governments allocate at least 1 percent of industrial land for resource recycling and reuse. This would provide much-needed land for circular economy development and unlock a common bottleneck, says Guo Yungao 郭云高 All-China Federation Energy and Environment Committee secretary general. But how feasible is this for cash-strapped local governments?

Large-scale resource recycling should proceed with caution, contends Chang Jiwen 常纪文 State Council DRC. He recognises the economic pressures local governments face. Cases in point are the falling demand for recycled building materials due to the real estate downturn, which has led some firms to resort to illegal dumping. In some regions; coal gangue reuse firms have low technical standards and poor management, leading to significant air pollution, Chang notes.

towards a zero-waste system

Under its ecological civilisation banner and its action to build a ‘Beautiful China’, solid waste governance is laying the foundations for a zero-waste system.

New circular economy models are being piloted at the city-level through zero-waste city initiatives. Solid waste indicators are also part of green and zero-carbon factories.

At the firm level, businesses should form zero-waste groups to minimise waste and standardise disposal, notes Wen. Zero-carbon factories will then be the key unit for driving innovation, backed by advanced tech-enabled monitoring, he adds.

Yet the PRC solid waste pile—11 billion tonnes generated annually, 33 billion tonnes already stockpiled—represents an environmental challenge of colossal proportions. Dramatic improvements in air and water quality have already been delivered, but closing the loop on Beijing’s solid waste challenge will not respond to ambitious targets and institutional reform without sustained investment and enforcement over decades. Beijing is serious about tackling the problem—but can the scale of action match the scale of the challenge?

recycling experts

Wen Zongguo 温宗国 | Tsinghua University Circular Economy Industry Centre director

The new measures mark a new phase in full-chain solid waste governance, Wen notes. Together with policies targeting air, water and soil, they complete the PRC’s anti-pollution framework. The circular economy is emerging not only as a systemic pathway to higher resource efficiency, but as a critical lever for cutting emissions in hard-to-abate sectors.

As conventional mitigation approaches its limits, resource circulation offers fresh decarbonisation potential. Yet challenges include a high volume of solid waste-related legal cases and persistently low recycling rates across several waste streams.

In response to new trends such as slowing urbanisation, increasingly complex waste composition and rapid growth of retired renewable energy tech, solid waste recycling must shift from scale expansion to quality enhancement. Wen identified three key tech-enabled pathways

• strengthening regulation and monitoring through ‘space-air-ground’ integrated sensing system combining satellite remote sensing, unmanned drones and ground based censors

• improving recovery efficiency of low-value recyclables through AI-enabled terminal sorting and shifting sorting capacity to downstream facilities

• advancing multi-type solid waste treatment and utilisation through shared park-based facilities and energy-material coupling

Advising state agencies on major green policies, Wen has led national and local research, including Suzhou’s circular economy technology. He helped draft several plans for rolling out low-carbon and ecological civilisation industrial bases and circular economy demo cities.

Chang Jiwen 常纪文 | State Council DRC (Development Research Centre) Institute of Resources and Environment vice director

Solid waste resuse should advance in a prudent and phased manner, Chang argues. For waste streams that are currently difficult to process or lack economic viability, interim solutions such as sanitary landfilling or ecological disposal—including mine or pit backfilling—may be appropriate, with resource recovery revisited as technological and market conditions improve.

From a regulatory perspective, technological innovation and deployment are pivotal. Intelligent, data-driven systems must be leveraged to ensure full-process traceability and control—from source generation and transport to treatment, disposal and recycling.

A legal authority, Chang has helped draft over thirty environment and resource laws, including the 2011 Air Pollution Prevention and Control Law and the 2013 Climate Change Abatement Law.

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China faces two countdowns: an economic transition that needs high-tech talent now, and a demographic collapse that will deplete university classrooms by 2040. The latest enrolment expansion tries to beat both clocks—turning out AI engineers and chip designers from a youth cohort that will not exist a generation from now.

Expanding higher education has re-emerged as a policy priority. At the 2025 Two Sessions, the Government Work Report called for advancing quality undergraduate expansion. The Central Economic Work Conference in 2025 urged a reorganisation of educational resources, including adding capacity in regular high schools and broadening access to quality undergraduate programs.

Unlike the mass expansion of 1999, when university admissions doubled within a single year, the 2025 initiative is measured and selective, focused on ‘double first-class’(top) institutions and disciplines aligned with PRC strategic industries.

innovation and consumption

Gaokao (university entrance exam) registrations have topped 10 million each year from 2019–24, reaching ~13 million in 2024. Still, the undergraduate admission rate has dropped from some 41 to 34 percent, while ‘double first-class’ quotas have barely grown. Quality undergraduate places remain scarce and highly contested.​

gaokao registration & admission data (2015–24)

The pattern repeats from the 1990s. China faces no financial crisis, but transitioning to a high-tech, consumption-led economy takes time, complicated by the aftermath of COVID. Expanding enrolment injects spending into universities and surrounding businesses while postponing job-market entry for unemployed youth. Vocational schools, meanwhile, upskill technical workers.

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As of 2025, Beijing calculates that since the early days of the People’s Republic, over 250 million have graduated from university; expansion has built a large, high-quality workforce that underpins scitech innovation, economic growth and social progress, remarked Ding Kuiling 丁奎岭 Chinese Academy of Sciences.

targeted expansion

This round has a sharp focus. Earlier expansion essentially lifted total enrolments without much regard to majors; ‘quality undergraduates’ now signals a quantitative and structural shift, argued Wang Feng 王烽 National Institute of Education Sciences. Beijing frames the current round as a marginal adjustment, not a full-scale ‘enrolment expansion’.

Quality undergraduate places make up about 15 percent of all tertiary enrolments (including vocational schools), and most of them have only grown between 1-5 percent since 2024, noted Chu Zhaohui 储朝晖 National Institute of Education Sciences. This is designed to fine-tune the talent mix rather than flood the market with new graduates.

Unsurprisingly, the expansion this time is aimed at foundational disciplines, interdisciplinary work and emerging fields.​ Future talent investment must rise in AI, integrated circuits, new energy and biomedicine to meet innovation and industrial upgrading needs, urged Ding Jianning 丁建宁 National People’s Congress and Yangzhou University.​

expansion priority

With its focus on ‘specialised majors + priority fields’, this round centres on two main themes​

• development trends in ‘emerging engineering disciplines’, industries and business models

• interdisciplinary studies and skilled workforce cultivation

In 2025, top universities, such as Tsinghua University, Peking University and Shanghai Jiao Tong University, each added 150 undergraduate places, mainly in emerging engineering fields like AI, integrated circuits and new energy. These specialisations serve national strategy and align with emerging industries in many cities.

Humanities places are being cut: Fudan is reducing the liberal arts share of its intake from 30–40 percent to 20 percent.​ The backdrop is the declining share of science and engineering graduates, explained Ding Yanqing 丁延庆 of Peking University. STEM’s proportion of graduates dropped from some 67 percent to 48 percent between 1998 and 2019.

This near one-to-one balance between STEM and the humanities from around 2019 was never intended in a state that puts technology above all else, while weak economic alignment has left humanities graduates with poorer career prospects. From the standpoint of national strategy and market demand, raising STEM intake and cutting humanities places in higher education has become imperative, Ding argued.

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stretching the demographic dividend

Demography marks another major break with the 1990s. Continuing population decline, above all among younger cohorts, has led to primary school enrolment peaking in 2023, but the higher education school-age group will keep growing until about 2032. That gives higher education roughly ten more years of golden growth before a sharp decline. Some universities may face a survival crisis as the pool of applicants shrinks, Guangxi Normal University warned.​

Expanding STEM majors in top universities is also a race against time. Beijing wants to bring in as many young people as possible before numbers decline, locking them into disciplines that serve strategic sectors. The current expansion tries to catch the last train of the demographic dividend by reshaping who studies what, and where.

higher education age-eligible population from 2025–50

navigating expansion

Wang cautioned that enrolment expansion does not automatically lead to quality improvement, particularly in interdisciplinary and emerging disciplines, which require sustained investment in faculty, research teams and supporting infrastructure. Wang said expansion should proceed gradually, with improvements in quality keeping pace with, or exceeding, increases in scale, echoing the Government Work Report’s emphasis on ‘steady’ rollout.

Chu sees uneven enthusiasm for expansion across universities and argues they should play to their strengths instead of chasing headcount. In the AI era, universities must also resist setting up fashionable majors without clear teaching capacity, research depth or demand. He warned that blind imitation could leave students in overhyped fields with weak training and poor job prospects.

looking ahead

Beijing’s report on higher education fiscal allocation notes that the school-age population destined for higher ed will move through three phases—rapid rise, brief plateau and steep decline—which will be hard for policymakers to manage

• pre-peak challenges: heavy pressure for extra investment, as per-student funding, teaching facilities, student housing, staff, and other needs all rise together, while localities already report fiscal strain and difficulties securing funds for the coming years​

• post-peak challenges: fixed assets like teaching facilities risk low use as enrolment drops, while staff cuts are constrained by staffing quotas and other rules, making both blind expansion and large-scale downsizing unwise​

With enrolment set to peak around 2032 and then fall sharply by 2040, managing pre-peak shortages and post-peak idle capacity will be critical. Policy so far still lacks a systematic plan to smooth that arc, even as this round of ‘quality’ undergraduate expansion begins to reshape the talent pipeline.​

education experts

Chen Gang 陈刚 | Zhejiang University vice president

So-called ‘emerging engineering disciplines’ primarily relate to computer science. In AI, Zhejiang University’s School of Computer Science and Technology mainly collaborates with law schools, medical schools, education schools and economics schools rather than necessarily setting up dedicated majors.

For instance, the database course was not introduced because the field became popular—it was established 20 years ago. Beyond teaching database usage like regular institutions, we teach how to build databases. These skills are precisely what students require in today’s big data era.

In Chen’s view, Zhejiang University aspires to emulate Stanford University. Stanford’s relationship with Silicon Valley closely resembles Zhejiang University’s relationship with Hangzhou, he explained.

A Zhejiang University PhD, Chen specialises in cloud databases and real-time big data processing. He has served as Zhejiang University Computer Science dean and vice president, Zhejiang Key Laboratory of Big Data Intelligent Computing director and NetEase Hangzhou Research Institute founder, advancing academia-industry integration.

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Xiong Bingqi 熊丙奇 | 21st Century Education Research Institute deputy director

Some provinces are intensively expanding ‘double first-class’ universities to address higher education shortfalls, but this requires substantial funding and creates critical challenges.

An ‘expansion wave’ could dilute quality resources and exacerbate the degree of elitism, leading students and parents to chase prestigious institutions for status rather than educational quality. More critically, as the student population declines after peaking around 2032, expanded campuses built with billions in investment could become idle within a few years, triggering waves of closures at other institutions and creating a structural imbalance.

The PRC could achieve 100 percent undergraduate education by 2041, but degree devaluation and credential inflation would become pervasive problems. The solution requires moderate expansion of quality institutions while prioritising differentiated development, encouraging each institution to strive for distinct positioning, and building a sustainable, high-quality higher education system.

21st Century Education Research Institute in China deputy director, Xiong, promotes the importance of aligning educational practices with the evolving needs of society, particularly in light of technological advancements and demographic changes. Xiong is an expert in education policy and reform and has written extensively on issues such as educational reform, vocational education and the role of education in societal development.

Bao Xinhe 包信和 | University of Science and Technology former president and academician

This expansion addresses an approaching student wave—2016 births peaked at around 18 million, projecting a higher education enrolment surge around 2033. Currently, ‘double first-class’ and other top universities admit approximately six percent of students; without expansion, this proportion would decline substantially, limiting access to quality education for a larger population.

However, expansion, particularly in lab-dependent science and engineering courses, demands adequate infrastructure. Chemistry students require individual workstations and fume hoods for safe experimental training; physics students need access to large equipment. Increased enrolment intensifies equipment availability pressures and creates timing constraints for hands-on learning.

Universities must secure necessary facilities before expanding to maintain training quality. Moreover, these prestigious institutions will remain highly sought after even after the demographic wave subsides, thereby avoiding future recruitment difficulties or underuse of resources. The challenge lies in balancing immediate accessibility with long-term quality assurance through strategic infrastructure investment.

Chinese Academy of Sciences academician and University of Science and Technology of China former president, Bao Xinhe, champions innovative approaches to energy catalysis and carbon-neutrality research. He is a strategic scientist who pioneered the internationally recognised ‘nano-confinement catalysis’ concept. Bao is an expert in physical chemistry and catalysis, leading frontier research in quantum technology, AI and carbon-neutral solutions, whilst advancing elite university development and science-education integration as a National People’s Congress Standing Committee member.

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The PRC will launch a third major project in 2026 to survey and map agricultural resources nationwide, based on climate conditions. A large-scale, non-routine data haul across the nation, the initiative is part of larger action to improve weather services specifically for farmers.

The aim is to turn vague climate change threats into information and tools that farmers can use in day-to-day operational decisions.

taking stock

Divided into two connected parts, the initiative will take stock of resources and plan land use.

The resource stocktake records key climate data (sun, heat, water, wind), tracks how these elements change, and documents the frequency and location of droughts, floods, and heatwaves. The farm-side check then gathers specific, local details at the county level, such as planting and harvesting times, crop types, expected yields and quality, plant growth stages, exposure to pests and natural hazards, and associated costs and returns.

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The process uses all this collected data to create practical maps and zones enabling local agencies and firms to plan placement, manage risk, and enhance zoning. At the farm level it helps farmers understand

• areas best for given crops, with lower risk and stable yields

• areas most vulnerable to flood, drought, or frost, allowing preparation in advance

• areas most likely to produce high-quality crops, forming key regions

six maps, clear calls

Main maps for key crops will cover

• planting fit

• yield

• quality

• weather-hazard risk

• pest-disease climate risk

• farm profit (in some places)

The broad problem of ‘climate change’ thus resolves to specific, actionable questions with local solutions.

Maps are tailored to specific purposes

• planting and yield maps help decide the overall farm plan by showing

  • areas with reliable, stable results

  • areas where much can be gained (high-gain zones)

  • areas where planting needs change or shift (shift zones)

• quality and profit maps help increase the value of crops, identifying best farming regions and specialty areas

• hazard and pest-disease maps manage risks, showing priority protective measures and equipment needs

A common language may emerge, allowing teams at all levels to discuss standardised data. Lost opportunities due to divergent, incomplete data sets should be minimised.

why now?

Rollout has been gradual

• 2023: a new, broad-based national survey and zoning plan prioritised for agriculture and climate

• 2024: initial pilots ran in seven provinces to test how to collect data, match fields to their geographic coordinates, and connect climate readings with crop information; early tips from the maps were shared with local users

• 2025: pilots expanded to cover more locations and crops; official rules and instructions finalised, ensuring the project could be scaled up using a single, consistent model

The pilots confirm major shifts are already in train. Rising temperatures are extending growing seasons, pushing multi-crop zones further north and, in some areas, higher up slopes. Severe weather is more common; heavy rain, drought, and heat reduce crop yields and quality more than ever.

Pilot areas are now making early changes, adjusting crop mixes based on risk maps and alerts. Some such moves have already reduced the risk of loss and disease. Map data is now informing crop rotation and design for upgrading core zones.

2026 will see this approach roll out nationwide. A single, shared database will inform decisions about maintaining, changing, or developing new high-quality zones. This should ease the coordination of crop changes, risk management, and upgrades across regions, avoiding ad hoc measures.

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analysing by zone

Reports of PRC grain supply often contradict: extreme weather is highlighted (severe drought/floods) in media reports, yet official figures still claim ‘bumper’ or ‘record’ output.’

Though official figures may indeed be suspect, it’s also important to look past the headline totals: where did the gain come from, what grade it is, and what it will cost to store.

National census data should help break down ‘bumper’ harvests by location, quality, and final use

• yield maps show consistently high and stable production areas

• quality maps show where top-grade grain is most likely to be produced

• risk maps show areas where maintaining high output involves taking on greater weather-related risk

Merging such maps can reveal whether gains come from core, low-risk farming regions or from marginal land subject to climate swings, and whether the extra grain meets food-grain need or leans more to feed use.

If successful, cross-checking against import data should reveal patterns

• imports of feed grains like corn and barley remaining high despite a bumper crop indicate a mismatch in quality or location relative to market demand, especially for animal feed

• imports falling as cultivation tightens and core regions consistently boost their output indicate a stronger and more resilient supply

Guiding production toward more stable and suitable zones should reduce the need to fill shortfalls with costly output from marginal land or imports.

livestock: feed cost pressure

Animal feed is where climate impact primarily harms the livestock sector. Supply and price of key feeds (e.g. maize and soymeal) fluctuate dramatically with the weather. The unit cost of raising animals and the pace at which herds are restocked rise, and profit margins fall.

This situation creates a difficult, long-term trade-off

• rising domestic production of feed and protein crops reduces the reliance on imports but can put stress on domestic land and water resources

• rising meat imports can save some local land and water, but increase dependence on the global supply chain, which conflicts with national food security policies

The census should provide the critical data to analyse this trade-off. Companies can also use this information for real-world investments and agreements. Large livestock companies can use the feed-risk maps to adjust farm location and manage feed purchases more effectively. Insurance companies can set more accurate, location-specific prices for coverage against feed cost fluctuations. Once this map data is integrated into pricing and contracts, it will begin to influence investment decisions.

The census delivers central and provincial agencies and firms a shared mapping system to plan crop placement and manage risks across regions, replacing ad hoc measures with a single, consistent framework. The real test will be whether these maps start to drive actual decisions on where to plant, where to change farming practices, and where to spend money to prevent crop loss.

If this census delivers, PRC farmers will soon be making planting decisions from a shared, nationwide risk map. It will no longer be a pilot—but a repricing of global agricultural risk.

ag climate experts

Jiang Zhaoli 蒋兆理 | Ministry of Ecology and Environment Climate Change Department deputy director

Increasingly, the new normal of weather extremes causes serious loss and damage, warns Jiang. Injuring the vulnerable, they contaminate water supplies and surrounding environments, leading to infections such as dengue fever. Hearts and lungs are at risk, pushing up mortality. This damage remains, no matter what is done to lower emissions: even after the global realisation of carbon peaking and carbon neutrality, adaptation is imperative. The ‘National Climate Change Adaptation Strategy 2035’ requires provinces nationwide to assess climate change impact and risk, with city-specific outcomes. The units of analysis are getting smaller, and the accuracy requirements are getting higher.

Formerly a deputy director of climate change at the National Development and Reform Commission, Jiang now serves as a deputy director of MEE’s Climate Change Department. He provides regular commentary on climate change matters, both domestically and globally, advising on climate change responses.

Cao Ying 曹颖 | National Centre for Strategic Research and International Cooperation on Climate Change Policy and Regulation Department deputy director

The ‘National Strategy for Adapting to Climate Change 2035’ emphasises impacts on crop phenology, regional suitability, and disaster risk, and treats safeguarding food security as a central adaptation objective. Cao argues that impact assessment is needed across all sectors, from infrastructure development to urban planning and agriculture. She calls for a long-term framework for climate adaptation.

A climate‑policy specialist, Cao’s recent work focuses on criteria for climate‑resilient city pilots—integrating climate monitoring, adaptive actions, and public awareness. She also contributes to EU–Asia and other global urban cooperation frameworks on low‑emission development, low‑carbon consumption, local low‑carbon development planning, climate‑change response assessment, and climate‑change adaptation.

context

26 Jan 2026: China Meteorological Administration: 2026 will fully roll out the third national agro-climate resources census and zoning, as part of building a new style of meteorological services for agriculture

14 Mar 2025: Ministry of Agriculture and Rural Affairs issues a 2025 work update confirming the expanded pilot scope for agro-climate census and zoning, with more pilot regions and more pilot crops added to refine methods and outputs

01 Apr 2024: A national pilot for the agro-climate resources census and zoning started across seven provinces/regions, with work focusing on building the database and trial zoning outputs that could be used locally while the pilot ran

14 Feb 2023: The State Council of the People’s Republic of China’s ‘No. 1 Central Document’ agenda ncluded a task to study and launch a new round of agro-climate resources census and agro-climate zoning work

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As the PRC faces dietary change at home and ever more uncertain food trade abroad, the 2026 Central No. 1 Document elevates the ‘Big Food’ concept from broad aim to core daily operations. It keeps the grain floor in place—output stays around 700 million tonnes—but promotes the food basket rather than just grain. It calls for greater supply across farming, forests, livestock and fisheries, with specific targets such as deep-sea farming, forest foods, and steps to lift dairy intake.

from ‘big grain’ to ‘big food’

The 2026 Big Food concept builds on Xi Jinping’s earlier ‘big grain’ view, which for the first time framed grain as part of a wider food agenda, not the whole agenda. In 2015, a central rural work meeting put this into national policy language, calling for a ‘big agriculture view’ and launching the Big Food concept. Cheng Guoqiang 程国强 National Food Strategy Institute, Renmin University, describes the concept as expanding the food base beyond arable land to include forests, grasslands, oceans, and microbes. In 2016, the Central No. 1 Document wrote it into farm work, urging a shift from a grain-only lens to food drawn from all land and seas.

From 2023 to 2025, the Central No. 1 Document sharpened the idea. 2023 stressed a broader supply mix across farming, forestry, livestock and fisheries, and flagged new sources such as under-forest output, deep-sea farming, fungi and algae. 2024 kept the focus but added a new task: tracking and counting the broader food basket, not just grain. 2025 made it more hands-on, with a clearer list—open ocean aquaculture, a larger ‘forest food store’, algae foods and bio-agriculture—plus more stress on healthy diets and less waste.

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In 2026, the link is now made to ‘new quality productive forces’. The Document calls for bringing AI into the field, rolling out more drones, sensors, and robots, and speeding and scaling up bio-production and bio-breeding. The thrust shifts from ‘find more sources’ to ‘use tech to turn sources into a steadier supply and better food’.

how 2026 doc changes the basket

The main breakthrough in the 2026 Document is that it moves a decade of often rhetorical build-up into a core part of everyday operations. The primary driver comes from the obvious shift in what people are eating in the PRC. Over the past 30 years of rapid change, Per capita grain intake fell from ~145 kg to ~97 kg, while meat intake has risen from ~20 kg to ~56kg, and edible plant oil intake from ~5 kg to ~26 kg. More of the food bowl is now meat, eggs, milk, fruit, veg and fish. That means food security can no longer mean ‘keep staples safe’—the literal translation of the Chinese term for ‘food safety’. It has to mean ‘keep the whole food basket safe’.

key food consumption in China 1991–2022

As Zhang Hongyu 张红宇 China Agriculture Risk Management Research Association, notes, 2026 is the first year of the 15th 5-year plan, so the Central No. 1 Document plays a linking role. It must lock in the gains from the earlier poverty alleviation campaign, while setting the tone for the next stage of building agricultural power.

The key message is: do not take more land from staple grain; rather, draw more calories and protein from forests, grasslands, oceans, and bio-tech.

draw from all land and sea

Based on dietary changes, the Document backs a shift in how the PRC sets its food mix. It calls for ‘drawing food from all land and sea space’. The PRC has some 2.3 million km² of forests, close to 3 million km² of sea, and 4 million km² of grasslands. For a long time, these had far less weight in the food supply than they could.

The ‘forest food store’ is now set to grow fast. The text calls for ‘active growth in the forestry and grassland cultivation’. There is hard data behind this. Output from economic forests is now about 2.2 trillion yuan a year, and under-forest work helps about 34 million farmers find work. Fujian gives a clear case. Under its ‘forest food store’ plan, it aims by 2030 to lift forest food output to 3.9 million tonnes and expand oil-tea area to some 16 million mu, while keeping both ecology and food supply in view.

agri-food output metrics: 2015 vs. 2024

At the same time, old crops are taking on new roles. In 2016, the PRC proclaimed the potato a ‘fourth staple’, but take-up ran into headwinds. Many buyers still treat it as a vegetable, and deep processing can cost more than wheat or rice. The 2026 Document’s call to lift farm tech results aims to clear such blocks. With better processing, potatoes can turn into buns and noodles and slot into everyday diets. This fits the point experts make that nutrition and health demands should encourage supply to upgrade.

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feed grain is weak link

The main weak spot in food security is in feed grain. Huang Jikun 黄季焜, Peking University China Agricultural Policy Research Centre, argues that soy security is, in fact, ‘protein security’. The PRC imports close to 100 million tonnes of soy each year, mainly to meet protein feed demand for livestock and poultry. Domestically grown protein feed sources provide only 19–21 percent of demand. Soy import reliance is above 80 percent, and 90 percent of that comes from Brazil and the United States. Maize imports are also tied to a small set of sources, and import links for barley and sorghum are tight, too.

trends in animal-source calories and feed grain sowing in China 1990–2020

The risk runs deeper than it looks. By a ‘land area need’ method, the PRC food self-supply rate fell from some 103 percent in 2000 to 68 percent in 2022. In effect, close to one-third of food supply now draws on farm land outside the PRC. That kind of risk is harder to manage than a one-off shortfall. As Cheng Guoqiang 程国强 stresses, a fall in local supply is not the key fear. The real fear is a skewed risk mix. A sound strategy is to keep staples fully safe, while still using global markets in a measured and planned way.

The No. 1 Document puts ‘protecting and lifting farmer will to grow grain’ as the first step in raising farm incomes. It aims to do so through jointly addressing prices, grants, and coverage. Qiu Huanguang 仇焕广 adds that the PRC should move from ‘grain security’ to ‘feed security’, and then to ‘protein security’, with protein supply as a top-line goal.

lift production at home, spread risk abroad

First domestic supply must be lifted. The text calls for shifting planting and farm tech in main grain areas towards higher-yield feed crops, to ease the ‘enough staples, not enough feed’ gap. It also links ‘new quality productive forces’ to three levers: bio-breeding, smart machines and digital tools. It adds a fresh angle on biomass. The PRC produces about 800 million tonnes of straw a year, much of which goes to waste. Firms are now turning it into bio-based goods and protein feed, pointing to a wider ‘future food’ pool.

Second, is to spread risk abroad. Beijing wants more import sources, wider Belt and Road links, and a shift from spot buying to deeper reach into global agri-food value chains, so the PRC is less tied to a few suppliers.

from pilots to wide roll-out

The path is set, but the work is hard. As Wei Houkai 魏后凯, CAAS Rural Development Institute, notes, the 2026 document lifts the aim from ‘farm modernisation’ to ‘rural modernisation’. This implies that cities and rural areas must be planned as one, and rural revitalisation must shift from dispersed pilots to wide roll-out. It also points to the hard parts of putting the Big Food concept into real work.

First, control of forests, seas, and grasslands is spread across more than one branch of the state, so goals do not align on their own. Next, farm grants were built over decades around the three staple grains, so widening the scope and shifting aim means a full redesign. Then, tech is still skewed, with most R&D in staples and clear gaps in forestry, fisheries, and microbial food. Last, local roll-out must avoid rush work and ensure farmers gain in real ways. That is a test of how well local cadres can plan, pace, and carry out the work.

forage variety gaps in major crops

These issues link together. They rule out quick fixes. Policy, tech, and funds must align. Only then can Big Food shift from paper to real food gains.

big food team

Ye Xingqing 叶兴庆 | Department of Rural Economy general director, Development Research Centre of the State Council

Boosting supply remains the core task, argues Ye, but securing it long term means system reform. Grain and livestock output must rise, but so too must resilience: from disaster readiness and input efficiency to trade-production coordination and food source diversification.

The current model has structural risks, including rising imports, volatile markets, and weak producer incentives. Reducing post-harvest losses and unlocking non-arable food resources, from forest oils to offshore aquaculture, will be key to easing pressure on land and cutting emissions at the margins. In a volatile climate and trade environment, Ye sees flexibility and coordination as the foundation of sustainable food security.

Ye focuses on agricultural trade policy, food security strategy, and rural reform. He has held visiting or adjunct positions at China Agricultural University and Jilin Agricultural University and serves several national agricultural and rural-economy associations. His policy work focuses on strengthening domestic production, improving the structure and resilience of agricultural imports, and shaping national strategies that balance openness with food security priorities.

Fan Shenggen 樊胜根 | China Agricultural University chair professor China Agricultural University

First mentioned in 2015, the ‘greater food strategy’ was little discussed until 2022, when it was frequently mentioned by senior officials after Xi Jinping invoked it at the 2022 Central Rural Work Conference. It was cited in the 2023 No.1 Document. The growing prominence of the strategy reflects significant changes in the national diet—from a grain-centric to one that includes diversified food sources, such as horticultural products and eggs, as well as aquatic and dairy products, suggests Fan Shenggen 樊胜根 China Agricultural University. The concept of ‘grain’ has also been broadened beyond staple crops to include a range of other plants like beans and coarse grains.

Fan maintains that such a dietary transformation could not only ease current food supply pressure but also improve the sustainability of the food system and utilise broader food resources by leveraging R&D capacity building. Non-farm food from grasslands, forests, wetlands and even deserts could become options, he argues, pointing out that future foods, including synthetic meat and microalgae, deserve attention at the national level.

Celebrated ag economist Fan spent over 20 years with the International Food Policy Research Institute, including as Director General for the ten-year period until his current appointment at China Agricultural University. Working at high levels with a range of stakeholders, Fan has dealt with agriculture, food, health, climate change, natural resource management and information technologies.

Chen Mengshan 陈萌山 | former Chinese Academy of Agricultural Sciences Party Secretary

The ‘greater food’ approach entails a thorough study of the state’s food supply potential and people’s food and nutritional demands, according to Chen. Priorities must also go to action to build resilient agrifood supply chains that facilitate distribution, he suggests. Grain subsidies fall short of international levels in the PRC, responsible for a mere 20 percent of farmers’ incomes. Those in the US, the EU, South Korea and Japan rely on subsidies for 40, 50 and 60 percent of their income. Central government transfer payments to granary counties, he added, should increase. On field trips to several counties, Chen found that while contributing 4 percent of the national grain output, they received a minute 0.1 percent of fiscal revenue.

Formerly Chinese Academy of Agricultural Sciences Party Secretary, Chen’s career was built in the agriculture ministry. He headed the Crop Production Department and was later chief economist. On retiring, he took up directing the National Food and Nutrition Consulting Committee and China Ag Tech Economic Society.

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When the Hainan FTP went fully operational as a separate customs zone in December 2025, Beijing hailed it as a milestone in its opening-up strategy. But this has sparked a sharper question: can Hainan’s new status ease Beijing’s tight control on cross-border data flows? For firms grappling with rising compliance costs under PRC data rules, the answer shapes daily operations and long-term strategy.

PRC data rules vs. Hainan flexibility

Outbound data transfers from the PRC have, since 2021, operated under a dense web of security assessments and reporting requirements; large companies must justify transfers via exhaustive documentation. The resulting compliance burden reshapes MNC management and ‘games of interest’ between headquarters and local PRC entities.

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Beijing responded with carefully bounded experiments. Following release in March 2024 of ‘provisions on promoting and regulating cross-border data flows’, (the new data export regulations), FTZ authorities are allowed to apply negative lists to control data export. Varying from place to place, this is more flexible than national-level audits: data not deemed ‘sensitive’ in the FTZ may flow freely; other categories are subject to review.

how is Hainan different?

In this set-up, Hainan’s ‘Cross-border data transfer policy’ commands attention. The island province is strategically positioned, an autonomous entity approaching the level of a special district. No standard port, it functions as a distinct locus of political and economic liberalisation.

Regulatory autonomy is undergirded by the Law of the PRC on the Hainan Free Trade Port. This legitimates exploring global data transfer region by region, and provincial pilots in data-related policy.

Hainan’s orientation toward ASEAN and RCEP markets comes into play, enabling seamless cross-border movement of logistics, supply chain, and management data. Insularity and weak linkage to core mainland industrial corridors make it well-suited for regulatory pilots. These traits allow Beijing to grant space for globally embedded firms, lowering systemic risks associated with data liberalisation.

Hainan’s negative lists

Hainan FTP officially issued its negative list for data exports in February 2025. Only data transfers in this list merit heightened cross-border compliance procedures (security assessment, standard contract filing, or certification), while other transfers remain subject to general data governance rules (including restrictions on important, core, and public-sector data, data collection obligation, etc). Specific domains (subdivided into 14 business scenarios) require prior approval and include clear definitions of data subcategories, attributes, scope, and management requirements.

deep sea

• resource and environmental data: regarding marine exploration, seabed minerals, exclusive economic zone surveys, and deep-sea environmental monitoring (hydrology, chemistry, ecosystems)

• infrastructure: operational data regarding subsea cables, communication networks, and navigation positioning

• exemption: for basic research data generated by scientific institutions, unless national security is at stake

aerospace

• remote sensing: high-resolution observation data of foreign territories, sensitive areas, or data received outside China.

• technical cooperation: data generated by international collaborations, e.g., tech parameters, reliability analyses, and experiment results.

seed industry

• genetic resources: data on crop/livestock germplasm, genetic sequencing, and molecular markers

• R&D and tech: proprietary data on new variety breeding, processing techniques, and storage technologies (e.g. specific temperature/humidity parameters)

• core operational data from major seed enterprises, including sales networks and strategic client information.

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tourism and duty-free retail

(separately regulated domains subject to substantially similar personal information thresholds)

• restrictions in these sectors focus entirely on the volume and sensitivity of Personal Information (PI) exported annually.

• high restriction (Security Assessment Required)

  • exporting non-sensitive PI of over 1 million individuals/year

  • exporting sensitive PI (e.g. biometrics, IDs, financial details, travel tracks) of over 10,000 individuals/year

• medium restriction (standard contract/certification required)

  • exporting non-sensitive PI of 100,000 to 1 million individuals/year

  • exporting sensitive PI of less than 10,000 individuals/year

While Tianjin, Beijing, Shanghai, and Zhejiang operate under wide negative lists—ranging from 46 to 134 restricted items—Hainan streamlines them to just 14 scenarios, a distinct approach to ‘managed openness.‘

In major hubs like Shanghai or Zhejiang, dense and highly granular restrictions are preferred, easing ambiguity and risk across industrial ecosystems. Hainan, by contrast, fixes oversight on a narrow set of sensitive areas. Most commercial data still circulate with low intervention. Routine business is insulated from national security issues.

FDI gains vs. maturity gaps

For foreign-invested firms, this offers operational advantages. The negative-lists follow a ‘permitted unless prohibited‘ logic. Restrictions are limited to national security and public interest categories. Firms engaged in re-export, advanced manufacturing, and other globally integrated activities are attracted.

Beyond rules, Hainan is building enabling infrastructure, e.g. global data-centre services and dedicated cross-border transmission, aimed at reducing practical frictions.

Yet structural constraints remain. Hainan’s foreign-invested economy is young and limited, lacking experience or the many precedent cases found in the likes of Shanghai. As outbound data cases mount, regulatory adjustment and operational uncertainty are likely to persist. While the overall policy direction is unlikely to alter, firms should expect deployment practice to evolve.

data engineers

Hong Yanqing 洪延青 | Beijing Institute of Technology professor

Authorising FTZs to create negative lists is a shift from strict ‘security first‘ to ‘balancing security and development,‘ explains Professor Hong: beyond ‘tightening the fence‘, it lowers compliance costs. Such pilots are ‘stress tests‘ for aligning with high-standard global rules: facilitating data flow, building experience in negotiation on duty-free electronic transmission, and co-recognition of privacy standards.

Cybersecurity pundit Hong is a member of the National Information Security Standardisation Technical Committee (TC260), drafting national standards in privacy and cross-border data flows. Previously with the Cybersecurity Administration of China and now teaching at BIT and PKU, he is a member of the Ministry of Commerce’s Legal Working Group on Free Trade Agreements and often represents the PRC in talks with Europe and the US. He heads the Data Security Group for the Beijing Pilot FTZ’s Expert Working Group on the Digital Economy.

Dong Xuegeng 董学耕 | former director of Hainan Big Data Administrative Bureau

Hainan’s cross-border data regime stands out for its industry-focused rules and streamlined oversight through negative lists. By prioritising sectors such as aerospace, deep-sea tech, tourism and modern services, it shifts from heavy pre-approval to stronger in-process and post-event supervision—allowing compliant firms to export non-sensitive data more efficiently while reducing regulatory uncertainty.

Dong highlights Hainan’s pioneering legislation on international data centres and its ‘three-mode’ framework for cross-border data flows. Matched with greater openness and alignment with global standards such as DEPA and CPTPP, these measures are set to enable overseas-oriented data processing, regulated data exports and rule mutual recognition—positioning Hainan as a regional digital hub.

A technocrat with a PhD in theoretical physics from Lanzhou University, Dong enjoys the rank of senior engineer. He has served in multiple senior posts in Hainan since 2011, with senior Party roles in the Department of Industry and Information Technology, the Big Data Administration, and the Business Environment Construction Department.

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trimming export tax rebates—how is this shifting policy?

• cutting subsidies: stop price wars, reduce overcapacity and push high-tech/green upgrade

• joining policy levers: link trade, industry, fiscal & investment for resilience & 15th FYP goals

• rebalancing toward overseas expansion: shrinking surpluses and boosting the ‘Chinese People Economy’ abroad

January’s export rebate cuts signal tougher moves in tackling overcapacity.

As involution intensifies in glass and lithium batteries, Beijing moved in early January to reduce export rebates on some 250 photovoltaic products. Rebates for 22 battery products will fall from nine to six percent. As Beijing pushes tighter policy coordination, the move carries implications beyond industry—for trade, fiscal policy and overseas investment.

overcapacity and upgrading industries

By trimming export rebates, Beijing is ratcheting up pressure on involutionary price wars that cut profits, aiming to spur industrial upgrading (cutting pollution and carbon emissions)—a Ministry of Finance spokesperson said. Urgency is rising: nearly 30 percent of PRC industrial firms are losing money, capacity use has dipped below average, and producer prices stayed deflationary.

The policy marks another step after Beijing’s 2025 campaign to address overcapacity and ‘involution’, including consultations with top firms and curbs on output and expansion. It also builds on a 2024 cut in rebates for speciality and ordinary glass from 13 to nine percent. This time, specialty glass rebates are entirely scrapped.

Reducing the rebate is set to steer the battery industry away from pure scale expansion and price cuts, urging firms to raise product tech content and value-added to absorb cost pressures, explained Yu Shuo, 余烁, of Chuangyuan Futures. This will guide industry toward healthier, more sustainable paths, Yu added.

While Beijing is scaling back support from low-value manufacturing, such as basic glass processing, to free resources for more value-added uses, it remains alert to the security and social risks of deindustrialisation. Xi Jinping underscored this in a January 2026 speech, calling for ‘a reasonable weighting in manufacturing’.

The goal is upgrading and replacing, not wiping out, traditional industries. A case in point: rebates for ordinary float glass (HS code 7005, used in construction and cars) stay untouched at nine percent from late 2024. Beijing still seeks to cushion the construction supply chain while pushing ‘high-tech’ and ‘green’ sectors to become more self-sufficient.

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joining policy levers

This shift also fits within a broader effort to align policy across sectors amid changing domestic and global conditions. The 15th 5‑year plan, the country’s blueprint for the coming five years, warns of ‘external risks’ and ‘changes unseen in a century’. These range from a record US$1.2 trillion trade gap in 2025 (up 20 percent over 2024) to worsening trade disputes with the West and deflation weighing on prices.

Glass and lithium batteries—export engines facing supply glut and external pushback—illustrate some of these pressures Beijing aims to address. To meet these challenges, the plan calls for greater resilience across tech, industry and the broader economy.

Beijing has outlined clear steps to realise this vision by tightening links between trade, industrial, fiscal and investment policies. First proposed in 2023 by Liu Yuanchun 刘元春, the country’s top economic adviser, and backed by Jiang Xiaojuan 江小涓 in 2024, a leading trade and industry scholar affiliated with MofCOM.

The idea now anchors major policy frameworks, including the Third Plenum, the Central Economic Work Conference and the 15 5-year plan. Beijing’s recent change to export tax rebates extends this ‘coordinated’ approach, leveraging and coordinating sectoral policy for broader national goals.

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trade, fiscal and overseas investment

By cutting export tax rebates, an indirect subsidy, Beijing aims to ease trade imbalances and let glass exports find their market level. The step supports its renewed 15th 5-year plan goal of ‘balancing exports and imports’. It also comes as the PRC’s trade surplus hits record highs and the glass sector wrestles with overcapacity and weak prices.

Photovoltaic glass exports rose 26 percent year on year in Jan–Nov 2025, while major producers planned 30 percent output cuts in July 2025 to stem oversupply. The China Photovoltaic Industry Association welcomed the change, saying it should cut the PRC’s exposure to trade frictions and lower the risk of countervailing and anti‑dumping claims.

Scrapping rebates could also bolster the budget and ease fiscal strain. Official data show export tax rebates cost nearly C¥2 tn in the first 11  months of 2025. The move could free funds for 15th 5-year plan goals such as lifting consumption, raising public services spending, supporting farming and advancing high‑end industry and research in areas like semiconductors and AI.

It also fits Beijing’s goal of expanding overseas investment—leveraging comparative advantages, commanding more resources, mitigating geoeconomic tariffs and capturing new markets. Citing the 15th 5-year plan call to ‘guide industrial chains to venture abroad reasonably’, Jiang Xiaojuan says Beijing now places more weight on the ‘Chinese People’s  Economy’, which counts offshore output as national income.

She expects it to play a larger role in growth and urges PRC firms to expand beyond China’s borders. From 2020–25, PRC ODI jumped 31 percent. Lending PRC credit abroad also helps draw down excess savings and narrow the global trade gap–another national aim.

PV commentators

Zhang Xiuqing 张秀青 | China Centre for International Economic Exchanges Regional and Industrial Economics Research Department director

Phasing out export tax rebates on photovoltaic products and batteries shows that these industries are strong enough to compete on their own and are now leading global markets, says Zhang, noting that this signals a shift from chasing scale to improving quality and efficiency.

Cutting rebates will raise firms’ export costs and squeeze profits in the short term, but over time, this will spur industrial upgrading and force weaker firms to exit the market, said Zhang. Firms now face pressure to cut costs, hone processes, build brands and open overseas sales channels, she added.

A PhD in management from Renmin University, Zhang serves as a senior economist at CCIEE. She previously worked at the Dalian Commodity Exchange Research Centre. She has led over 30 projects with key government agencies, including the Central Financial and Economic Affairs Commission, NDRC, MARA and CSRC. Her research focuses on FDI, industrial upgrading and agricultural risk management.

CPIA | China Photovoltaic Industry Association

The CPIA says photovoltaic exports now face fierce price competition abroad, with export volumes up but prices down. Some firms sell at deep discounts, even using export tax rebates as price leeway, transferring fiscal funds meant to offset domestic VAT to overseas buyers. This effectively turns the rebates into subsidies for foreign markets and cuts domestic profits. At this stage, lowering or scrapping export tax rebates could help overseas prices return to reasonable levels. While not a full remedy for excessive competition, such steps may curb the long-term rapid slide in export prices.

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Demographic headwinds have promoted long-term care as a structural policy imperative. By 2024, 220 million older adults, some 16 percent of the population, were 65 or over. They are projected to surpass 20 percent by 2032.

LTCI (Long-term care insurance) was brought in to meet the care needs of older people with long-term disabilities. The ‘sixth pillar’ of social insurance (after pension, medical, unemployment, work injury, and maternity insurance), LTCI covers basic daily help and nursing care. It is designed to provide basic daily assistance and nursing to those with long-term functional disabilities, reducing family burdens through shared social responsibility.

After nearly a decade of pilots, LTCI is coming to the fore. A recent national conference flagged a dramatic advance for the scheme: universal coverage to be realised in the upcoming 15th 5-year plan.

The expansion, the greatest since LTCI’s first mention in the 13th 5-year plan (2016), sets the stage for a broader shift in how care is provided to a burgeoning dependent cohort.

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expanding pilots

Launched in 2016 as a 15-city experiment, LTCI pilots gathered experience to develop a framework suitable for the PRC. Following MoHRSS guidance, other centres, like Beijing’s Haidian District, launched LTCI pilots, and following NHSA and MoF opinions, pilots extended to 49 cities in 2020.

A national LTCI regime was formally proposed by the 20th Party Congress (2022), signalling a move from pilots to nationwide design. Draft criteria for assessing disability levels dropped in late 2023, addressing a patchwork local standards and the lack of cross-regional recognition.

By 2024, the 49 pilot cities covered some 188 million participants, 1.5 million of whom received benefits, supported by just under 9,000 designated providers and some 300,000 care personnel. Zhejiang took the lead, setting province-wide LTCI management standards.

2020–24 long-term care insurance/benefits recipients

2025 saw expansion under unified rules. Standardised care service categories and payment principles were defined under an NHSA service catalogue, issued in September. This provided an institutional foundation for promoting LTCI at a unified national level. Proposals for the 15th 5-year plan, issued in October, promote universal coverage and the merger of grassroots institutions into LTCI networks.

LTCI service delivery was the next focus: a December 2025 text placed disability assessment under unified national modes, procedures, et al. Some provinces began rolling these out: Hainan, for example, set up province-wide LTCI effective January 2026.

why now?

Due to a skewed distribution between the city and the countryside, public pensions currently fail to guarantee stable basic offerings that underwrite daily life for the population as a whole, laments Zheng Gongcheng 郑功成Chinese Academy of Social Security president. The coming 5-year plan’s expansion of LTCI is a response to mounting care needs.

In most countries, some 35 years is spent moving from mild to moderate ageing, whereas the PRC did it in just 20, says Du Yang 都阳 Chinese Academy of Social Science, Institute of Population and Labour Economics.

Disability, meanwhile, rises with age among older adults. Some 600,000 people aged 60 and above were unable to live independently in 2021, accounting for some 2.5 percent of the elderly population.

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2020 Chinese elderly disability rate by age

Sustained demand for daily care and nursing is due to a growing share of older adults living with chronic conditions, notes Li Chunsheng 李春生 China Cooperative Economy Society. Some 35 million disabled need long-term help with daily living: about 12 percent of the elderly; the figure will reach 46 million by 2035.

filling gaps

Effective nationwide LTCI requires clear rules for what is covered and how it is delivered. In theory, subscribers can choose between home self-care, home visit care, combined home and home visit care, and institutional care. Delivery is by a new profession of nationally certified ‘long-term care workers’.

From 2023, assessing disability levels relied on a trial document. From 2026, standardised forms guide local care providers in assessing individual needs, setting care plans, and monitoring and reporting service delivery. Such services as daily care (hygiene, diet) and treatment must be formally approved to qualify for LTCI.

Rolling out unevenly, current LTCIs vary from region to region. For example, basic care takes the form in Sichuan of regular cash subsidies: the insured disabled can buy home care, from hired carers or family members, explains Jia Yong 贾勇 Chengdu Municipal Healthcare Security Administration. Payments match disability levels and insurance status, the severely disabled receiving C¥500–1,800 per month, deemed to keep daily care steady and affordable.

constraints

Despite pilots and local moves, national protocols on funding or service provision are yet to emerge. LTCI still lack an independent financing, with many local schemes relying on medical insurance funds on a transitional basis.

Delivery is left to local statute, like Beijing’s ‘Home-based aged care service regulations’. Absent a national framework or rollout rules, coverage, assessment and care remain fragmented, limiting both equity and efficiency. Risk pooling is weak, leaving the vulnerable uncovered, regrets Cao Xinbang 曹信邦 of Nanjing University of Information Science and Technology.

Shortage of trained care workers adds to the problem, notes Zhou Jian 周坚 Zhejiang Provincial Drug Administration and Zhang Jianying 张剑颖 16th Shanghai Municipal People’s Congress delegate, among others.

It is widely acknowledged that a broad legal foundation, consistent national standards, and enhanced professional training and support are essential to transform LTCI from a series of local experiments to a cohesive, equitable model.

caring for the aged

Wang Shenyuan 王深远 | China Research Centre on Ageing former Party Secretary and Director

Pension and long-term care fundamentally require three things: money, people and skills. Commercial pensions, corporate annuities, occupational pensions and LTCI are all solutions to the ‘money’ aspect.

During the 15th 5-year plan, the sector is shifting from single-source support to a multi-tiered pension system, Wang notes. Full LTCI implementation is key to addressing the care needs of disabled older adults and to building a more comprehensive pension system. A more complete LTCI network could also stimulate the silver economy. Between 2025 and 2027, the PRC’s pension sector and silver economy are likely to experience rapid growth, Wang predicts.

Former Party Secretary and Director of the China Research Centre on Ageing, Wang has held senior leadership roles across state-affiliated institutions and is a seasoned policy expert in ageing affairs, aged services, and social governance. He has extensive experience advising national ageing and welfare initiatives.

Dai Weidong 戴卫东 | Zhejiang University of Finance and Economics professor

LTCI pilots have run for nine years, says Dai, and prolonged ‘trial without determination’ risks deepening fragmentation. A nationwide unified system is now needed, with clear funding, service, and coverage frameworks.

Dai believes that LTCI should function as an independent ‘sixth social insurance,’ requiring separate financing, accounting, and governance. He strongly opposes long-term reliance on medical insurance fund transfers and advocates instead a diversified financing model jointly supported by the state, employers, and individuals.

Central to Dai’s thinking is the principle that LTCI must prioritise services over cash benefits. He urges faster professionalisation of long-term care workers, standardised service delivery, and tiered benefits based on care needs. He also stresses the importance of national standards combined with local flexibility to avoid policy fragmentation while accommodating regional differences.

Professor at Zhejiang University of Finance and Economics, Dai is a senior policy expert in social security and long-term care insurance. He has closely monitored PRC LTCI pilot programs since their launch in 2016, and has led multiple major state-funded research projects about ageing policy, LTCI, and social welfare reform.

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Resentment is simmering over a newly codified provision in the amended PSAPL (Public Security Administration Punishments Law): sealing (i.e. blocking) notices of petty administrative violations. In practice, the furore largely concerns drug-taking.

The amendment runs contrary to public opinion, not least online. To curb social risk, the public insists drug-use records not be sealed.

Weeks before its rollout, social media buzzed not with praise, but apprehension, less about drugs per se than about the PRC version of ‘rule of law’.

dual-track legal system

The public reaction underscores the hard line drawn between ‘crime’ (fànzuì) and ‘administrative violation’ (wéifǎ ‘illegal act’).

• crimes: offences violating the Criminal Law, liable to prison sentences and permanent, unsealed criminal records

• administrative violation: acts disturbing public order, yet involving no criminal liability. Penalised under the PSAPL, it runs to acts like minor assault, soliciting, and crucially, drug use (distinct from drug trafficking)

The amendment applies only to administrative violations; permanent records of crime remain unaffected.

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from chaos to codification

Despite all the conspiracy theories, blocking notice of ‘illegal acts’ is no sudden invention to hide an upwelling of secrets, but a decade-old administrative correction now formalised in statute.

The PRC was, for years, dogged by a chaotic ‘background check’ culture. Risk-averse employers and local bureaucracies routinely demanded ‘proof of no violation’, whether for delivering food or working as a security guard. Absent formal criteria, local police stations indiscriminately issued certificates detailing each and every minor infraction.

A turning point came in 2016. The Ministry of Public Security called for tighter practice and judicial modernisation. Confined to nine clearly defined categories, police certification would abstain from catch-all ‘non-violation’ checks for general jobs.

Sealing records has been the de facto operational norm, simply elevated into statute by the 2026 amendment for permanence and authority.

public anxiety

Yet, despite all the rationalisation, public reaction has been intense, a backlash reflecting security fears and distrust of status.

In a society shaped by deep security concerns, Beijing’s zero-tolerance on drugs fuels conspiracy rumours. Offspring of elite families, runs one of them, will see their decadence ‘washed’ by the amendment. Discretion in the legal system is viewed as a privilege in the eyes of a cynical public; it is inevitably traded by the powerful to dodge consequences rather than show tolerance.

Anxiety has been rising. Blocking records creates ‘ticking time bombs’, insist online commentators: bus drivers or schoolteachers hiding histories of addiction. The fear is visceral, an urban myth preferring collective safety to rehabilitative happy endings.

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rationale and clarification

Facing this wave of scepticism, legal scholars and the judiciary are now going public, offering responses twofold: clarifying the technical criteria and, more to the point, deeming the amendment sociologically imperative.

• ‘sealing’ is neither absolute nor available to those convicted of crimes, Zhao Hong 赵宏 Peking University and others have clarified; they noted that for sensitive or regulated professions (such as public servants or teachers), rigorous industry-specific background checks are already clearly prescribed by law

• officials like Zhang Yijian 张义健, NPC Legislative Affairs Commission, have laid out the statistical reality driving this reform; the National Bureau of Statistics reports some eight million administrative violations are handled annually by police

‘Practical’ views of punishment are the point: penalties for petty misconduct should aim to rehabilitate, while preserving basic rights like privacy. Annually stigmatising eight million people for life for small offences—shut out of work and harming their children’s prospects—would result in a huge, resentful group. Their accumulating ‘social death’ is a greater risk to long-term stability than the original offences. Sealing their records provides a means of societal repair rather than a get-out-of-jail card.

rethinking the reform

For the global public, the shift cuts against easy ‘stagnation’ narratives. The PRC’s path is often cast as a blunt choice between a control-obsessed state and a society long denied liberty. The PSAPL fracas arguably offers the inverse, progress in the form of modernisation: proportionality, and protection of privacy against ‘digital stigmata’. A parallel narrative is on show in the social credit system. The public position is conservative, insisting on absolute transparency and permanent punishment.

Not quite a retreat from reform, this tension reflects the drag of modernisation itself. While Beijing officials hope to move governance closer to global norms on rehabilitation and privacy, public opinion remains deeply shaped by older moral frameworks that favour harsh justice. Blocks to a ‘rule of law’ flow not only from above, but also from deep-seated conservatism in society at large.

progressive lawyers

Zhao Hong 赵宏 | Peking University Law School, Research Centre for Human Rights and Humanitarian Law Director

Enactinf the ‘record sealing system’ for public security violations marks a pivotal move from purely punitive governance to a rights-based approach, argues Zhao. With the revised Public Security Administration Punishments Law taking effect 1 January 2026, Zhao notes that the focus must now move to strict enforcement of privacy protocols. She contends that merely sealing files is insufficient; the system must effectively sever the chain of ‘collateral consequences’—such as employment discrimination—to prevent minor administrative penalties from becoming lifetime stigmas. A sounder approach, she suggests, is to ensure these records remain inaccessible to non-judicial bodies, thereby guaranteeing the ‘right to be forgotten’ and allowing for genuine social reintegration.

A researcher at Peking University Law School, Zhao is Director of its Research Centre for Human Rights and Humanitarian Law. Previously, she served as a professor at the China University of Political Science and Law. A specialist in administrative law with visiting fellowships in Germany, she is a prominent public intellectual. She frequently advocates for legal reforms that balance state power with the protection of individual dignity.

Luo Xiang 罗翔 | China University of Political Science and Law Institute of Criminal Law Director

The newly enacted record-sealing offers a vital ‘exit mechanism’ for minor offenders, Luo argues, warning that administrative penalties should not become life sentences in disguise. He contends that without such privacy safeguards, a simple public security record acts as a ‘digital tattoo’, permanently barring individuals from the labour market and casting a shadow over their families. While welcoming the 2026 amendment, Luo cautions that the law’s spirit relies on strict execution—specifically, limiting the abuse of background checks by firms. A just society, he maintains, must offer the possibility of genuine redemption rather than imposing a lifetime of social exclusion for a momentary lapse.

Director of the Institute of Criminal Law at the China University of Political Science and Law, Luo is a celebrated legal educator with a large social media following. He was previously a visiting scholar at Duke University. His work specialises in criminal justice reform and legal ethics.

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Energy storage has taken off over the past five years and is playing an ever larger role in PRC decarbonisation. Positioned as a ‘new quality productive force’, on the back of subsidies and strong policy, the sector has surged to lead globally.

The next phase will look different. Future growth is to be leaner and more market driven, with efficiency set to matter as much as scale.

brave new world

14th 5-year plan massive expansion in new energy storage

Growth has been led by NES (new energy storage). This includes lithium, lead-carbon, and flow batteries, as well as molten salt, compressed air and other emerging tech. NES overtook traditional pumped hydro as the largest storage source in 2024 after making up just 10 percent in 2020, largely due to the rapid expansion in lithium batteries. NES capacity now makes up some 90 GW.

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A September 2025 action plan for large-scale development aims to roughly double capacity in two years, reaching 180 GW by 2027, stimulating some C¥250 billion in direct investment. Expansion is in line with industry expectations, according to Caixin. Insider forecasts expect 230-300 GW of new capacity by 2030. But new growth will need to adapt to a changed landscape.

building up markets

Previously, Beijing mandated building energy storage with new renewable power projects. The rule left much of that capacity in the wrong place, sitting idle more often than not and locking in sunk costs for developers. This requirement was dropped in February 2025, and full marketisation of renewables was encouraged. Following the policy, several provinces have made progress in developing mature spot markets, ancillary services and highly anticipated protocols for capacity pricing, argues Yu Zhenhua 俞振华 Zhongguancun Energy Storage Industry Tech Alliance founder.

While the full effect of the changes is yet to be seen, half of all provinces have implemented the decision thus far, improvements in storage utilisation rates are already visible.

Wider market access for renewables opens new avenues for revenue. As spot markets spread, storage should be able to capture real-time-based value, notes a Minmetals report. Capacity pay schemes, which the plan backs, are under trial in several provinces and could deliver a strong income stream for large standalone projects. Once revenue tops cost, the report adds, growth shifts from policy push to market pull. State Grid organised China’s first cross-provincial medium and long-term trading of NES in November, with 51 independent storage stations participating in monthly bidding for 3.4 million kWh. Surplus renewable power was absorbed from Xinjiang during the day and discharged to Shaanxi during the evening peak.

Recently completed ‘1+6’ basic rules for the power market set out how energy storage can take part. Yet profitability post-subsidies still hinge on where storage projects are located, and how far along power market reform is, notes Li Zhen 李臻 China Energy Storage Alliance deputy secretary general. Currently, only a few provinces—such as Gansu and Guangdong- allow meaningful participation by independent storage in frequency regulation markets, which keeps new income streams narrow.

Profitability remains constrained and depends on policy support and renewable resources. While many projects remain profitable, returns don’t fully compensate for the technological uncertainty inherent in storage, notes Yu.

Extreme competition in 2025 saw BESS (Battery Energy Storage System) bids drop to record lows (approx.US51.59/kWh for a four hour battery), eroding margins. The Ministry of Industry and Information Technology (MIIT) has since intervened to curb ‘irrational competition’, pushing the industry toward consolidation and innovation.

great leap forward

Looking ahead to the 15th 5-year plan, energy storage will move beyond rapid expansion to focus on quality, efficiency, safety and value, argues Zhang Tianren 张天任 Tianneng Holding Group.

A wider range of technologies and real-world uses is needed. As renewables make up ever more of the power mix, long-duration storage—capable of over four hours of continuous charge-discharge cycles—is required to balance the system across months and even quarters, argues Hu Ming 胡明 China Electric Power Planning and Engineering Institute Party secretary.

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Leading state-owned power enterprises and private battery companies are at the forefront. State Grid’s subsidiary has set up joint ventures with CATL, a leading electrochemical technology provider, in Xinjiang and Fujian, while completing a C¥36.5 billion capital increase and share expansion project to build pumped hydro storage. CATL recently signed an MoU with Australian partners to deliver long-duration 8-hour continuous discharge.

Though lithium-ion is expected to be the mainstay, alternative technologies will continue to emerge. Long-duration storage will scale to commercial deployment, flow batteries / compressed air will be key to balancing energy across time and space, while sodium-ion will expand rapidly through distributed storage and EVs, says Zhang. Traditional pumped hydro is set to advance through the development of large-scale mega projects. Beijing is also keen on concentrated solar power.

The cutting edge is often visible in demo projects, which set examples in generation, grid, behind-the-meter storage, and storage paired with coal-fired power. Firms use these projects to showcase solutions, feed into national standards and steer the pace of tech roll-out. In 2024, 56 pilot projects were approved, supporting large-scale bases and supply security.

Energy storage is now being applied across more varied uses. Renewable energy bases require long-duration storage, eastern low-carbon industrial parks need multi-energy coordination, and southern cities’ emergency power backup, China Electric Power Planning and Engineering Institute notes.

Crucial for the continued development of renewables, the health of energy storage in the 15th 5-year plan will depend on unlocking new market revenue streams and smarter deployment.

power movers

Ouyang Changyu 欧阳昌裕 | State Grid Energy Research Institute Party secretary

The PRC power system is speeding toward a new stage of ‘five highs’, meaning high

• proportions of renewable energy

• levels of innovation

• participation of new market players

• reliance on electronic power devices

• probability of extreme climate events

This will require improving the effective capacity of renewables, i.e.: lowering curtailment rates, for which energy storage will be crucial. Yet before 2030, short-duration, daily-cycle energy storage will remain the norm, potentially reaching saturation during major power shortages. This means greater attention must be paid to coordinating the development of storage and traditional energy sources, alongside increased tech innovation.

Long focused on power sector planning and low-carbon development, Ouyang is also the China Electricity Council deputy secretary-general, and was formerly State Grid deputy chief engineer.

Li Zhen 李臻 | China Energy Storage Alliance deputy secretary general

Power market reform is moving faster, but wide regional gaps remain. Local markets differ in how far they open to new energy storage. Independent projects tend to gain access to more mature spot markets. Elsewhere, they still struggle to earn revenue through medium- and long-term trades.

The same holds for ancillary services. These markets are only partially open to independent storage, with only a few provinces allowing meaningful participation in frequency regulation. To unlock full value, new energy storage needs wider recognition across power supply and use, as well as in frequency control. Above all, some form of capacity pay scheme is needed.

With China Energy Storage Alliance (CNESA) for the best part of a decade, Li is currently a deputy secretary general.

China Energy Storage Association (CESA) 中关村储能产业技术联盟

CNESA stands at the centre of the PRC energy storage boom, shaping national policies and standards while driving explosive scale-up. Its flagship Energy Storage International Conference and Expo 2026 (1-3 April, Beijing)—the premier global energy storage event—will deliver a 160,000 m² expo across six halls, high-level forums, the Energy Storage Industry White Paper 2026 launch, innovation competitions, and new focuses on AI-driven management, zero-carbon parks, and hydrogen integration, drawing global buyers to scout next-gen tech and partnerships.

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In 2025, ‘invest in people’ was a standout buzzword in the Government Work Report, resurfacing at the Fourth Plenum and the Central Economic Work Conference.

Calling to ‘invest in steel and concrete—but in people too’, Xi Jinping first hinted at the phrase in 2023. By the early 2020s, the PRC was up against the first hard edges of economic transition and structural strain, alongside lingering COVID impacts. Rising gig work, jobless youth, property and debt crackdowns, and rapid ageing have driven a shift away from relying on abundant, cheap young labour towards investing in human capital for technology‑driven ‘high quality development’.

From the late 1990s to the mid‑2010s, physical asset investment was the major growth driver. Building infrastructure, upgrading industry and advancing urbanisation all depended on massive, sustained capital spending, noted Bian Yongzu 卞永祖 Renmin University Chongyang Institute for Financial Studies. As the economy enters a new stage, this model’s marginal returns are weakening, and human capital is becoming the key constraint.​

Addressing this constraint requires a paradigm shift towards investing in health and careers across education, employment, healthcare, social security, and other livelihood sectors. Channelling more funding and resources into ‘investment in people’ stores up momentum for long‑term growth and turns individuals into sustainably appreciating ‘human capital’, argues Jin Lin 金李 Peking University’s National Finance Research Centre.

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‘invest in people’ and ‘invest in physical assets’

The December 2025 Central Economic Work Conference marks a shift from chasing sheer speed of growth to prioritising development quality and sustainability, comments Tian Xuan 田轩 Tsinghua National Institute of Financial Research. According to Tian, the global tech race now focuses on people and skills. Countries can only achieve true tech independence by investing more in their workforce and improving workers’ skills and innovative skills.

Jin likens investing in people to software; investing in physical assets to hardware. Building infrastructure creates jobs quickly, while investing in people takes time but builds long-term growth. Real quality growth happens when these two work together—physical investments should develop human capital, and skilled people should drive infrastructure improvements.

consumption vs investment

Investing in human capital could unlock a larger pool of household spending and build a more competitive workforce in strategic emerging industries.

In recent years, PRC household consumption has accounted for about 39 percent of GDP, while gross capital formation has hovered around 41 percent; globally, household consumption averages roughly 57 percent of GDP and gross capital formation about 27 percent.Weak domestic demand—above all, consumer spending—is a major constraint in the PRC economy, notes Sheng Zhaoxun 盛朝迅 Xi Jinping Economic Thought Research Centre.

‘Investing in people’ aims to turn the market potential of over 1.4 billion people into growth momentum, notes Chi Fulin 迟福林 China Institute for Reform and Development. Economic work in 2025 prioritised ‘boosting consumption, improving investment efficiency and broadly expanding domestic demand’. It can lift households’ confidence and willingness to spend, Chi argues. He sees the new paradigm as paving the way for domestic demand‑led, consumption‑driven growth as the backbone of stable expansion over the next decade.

upskilling the workforce

Education is central to nurturing innovative next-gen workers. AI education has already been rolled out for younger students, while adults can access training to upgrade skills. An early March 2025 initiative targets new productive‑forces sectors, such as digital talent and advanced manufacturing, as well as urgent livelihood fields, such as aged care and domestic service.​

A further Guiding opinion aims to expand the technical workforce from 2025 to 2027, encouraging firms and vocational schools to join up on training in advanced manufacturing, the digital and low‑altitude economies.

‘Degree worship’ should be dismantled, urges Tian; evaluations should prioritise capability over credentials and potential over seniority. The next step is to build development pathways for workers across education levels and occupations, and to allow employers to set flexible hiring conditions to better match candidates with positions.​

‘the old and the young’

In an ageing society struggling with unemployed youth, ‘investing in people’ policies are gravitating towards ‘the old and the young’—two groups most in need and most disadvantaged in the labour market. Large language models have sharply reduced the value of entry‑level skills in many white‑collar roles, observes Cai Fang 蔡昉 Chinese Academy of Social Sciences. At the same time, older workers face a digital skills divide. Cai calls for more resources so workers can access public employment services throughout their working lives.

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Beijing aims to ease burdens around childbirth, childcare, education and aged care. By lifting the quality of childcare and education, investment is flowing to a ‘high quality’ next generation—smaller in number but stronger in health and skills. More emphasis is placed on expanding paediatric drug development and including the elderly in clinical trials of innovative drugs.

Childcare subsidies began allocating C¥3,600 per child per year in July 2025, the first nationwide parental subsidy. The State Council also released Opinions on gradually introducing free preschool education to lower education costs. Beijing is expanding access to its best universities to maximise the next generation’s educational success.

The aged‑care strategy seeks to build community‑based services while turning care into a consumption opportunity through the silver economy. A long‑term care and nursing care consumption subsidy has been rolled out for disabled older people.

increasing income

Labour income accounted for 73 percent of workers’ pay in the PRC in 2024, making higher earnings one of the main levers for boosting consumption. The 2024 Central Economic Work Conference called for ‘raising incomes for lower‑middle income groups’, while the 2025 agenda notes ‘formulating plans for lifting urban‑rural incomes’. Zhang Xiaojing 张晓晶 Chinese Academy of Social Sciences, National Finance and Development Laboratory, highlights a shift in principle and greater operability in income‑growth policy.

Previous policies for low-middle income groups focused on safety nets; the current direction aims at broad income gains for all urban and rural residents, says Yang Weimin 杨伟民 13th CPPCC Standing Committee. Yang sees this as a first major turn in income policy that will later translate into specific targets and measures.

Concrete steps are already visible. An initiative to boost consumption puts raising urban‑rural income at the top of its agenda; Opinions on improving public well-being call for higher minimum wages; and MoHRSS has issued skilled-talent minimum-wage guidelines to clarify minimum pay for technicians by skill level.

Tech sector performance gains, combined with worry about losing highly skilled workers—above all, top talent in large language models—have prompted major firms to act as poaching spiked among local and international firms.

In December 2025, giants like ByteDance, JD.com, Dreame, CATL, and BYD announced major pay increases. JD’s year-end bonus climbed over 70 percent year-on-year. ByteDance raised its bonus budget by 35 percent and expanded its annual salary adjustment budget by 1.5 times.

Wage rises have extended into manufacturing. Battery leader CATL raised base salaries uniformly by ¥150 per month effective 1 January 2026.

but the constraints...

Lack of funds, mainly at the local level, is the major constraint. Over 60 percent of cities have not fully rolled out free final‑year preschool education; among the four municipalities, only Beijing has completed city‑wide subsidies, according to research by the Yiyang Education Research Institute Public Policy Research Centre. Weak local finances and short revenue cycles pose existential threats to private kindergartens, with over 90 percent of respondents reporting near‑term survival pressure.

Overall wealth accumulation in the PRC remains far below developed country levels. As the third‑pillar pension system grows, the insurance sector faces low interest rates, leaving returns unable to cover liabilities, notes Tong Boning 童伯宁 Aegon‑THTF Life Insurance. Less than half of eligible residents have opened individual pension accounts since their launch in December 2024.

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Tsinghua economist Feng Runhuan 冯润桓 warns of another issue: a shortage of quality assets for ordinary Chinese to invest in. With fewer value‑preserving, capital‑guaranteed products available than before, households shoulder more investment risk.

Even for long-discussed hukou (household registration) reform, pensions and medical insurance are the hardest nuts to crack. Because these benefits rely heavily on fiscal subsidies and hukou reform mainly benefit the national macro picture, localities—as implementers of reforms—have weak incentives, Cai Fang points out. If urban hukou numbers expand sharply, local governments must shoulder higher social spending without reaping all the dividends. Hukou in megacities like Beijing and Shanghai brings major advantages in education, healthcare, and housing. Residents who have them, fiercely resist reforms allowing in newcomers.

next steps

Funding will be directed toward education, healthcare, aged care, and childcare to improve livelihoods, increase spending, and expand domestic demand. Research by Cai suggests that if hukou reform gave migrant workers equal access to basic public services, their consumption could rise by 27 percent. Yet the funding gap sits squarely between ambition and reality; even where public finances suffice, private investment and community buy-in must still be encouraged.

Sustained progress requires steady economic growth and follow-through at the local level. Investing in people pays off more slowly than building infrastructure—and experts warn that localities must break their addiction to quick wins.

‘people’ people

Cai Fang 蔡昉 | Chinese Academy of Social Sciences academician

Since the United Nations introduced the Human Development Index in 1990, the PRC has been the only country to move from the low human development group to the high human development group and is now progressing towards the very high human development category. The country’s rapid progress in the past was largely driven by fast economic growth and rising per capita GDP. Looking ahead, as economic growth slows, further improvements in human development will rely more on health and education.

With AI becoming a competitor to human labour, the government must shoulder more responsibility for financing projects that benefit society as a whole, and the share of public education spending in GDP should rise significantly.

According to international experience, as per capita GDP rises, the consumption rate tends to follow an ‘S-shaped curve’. A per capita GDP of around USD$14,000 marks the threshold from upper-middle-income to high-income status. Cai predicts that by 2026, the PRC’s per capita GDP would reach this level, suggesting that household consumption should then rise significantly.

Renowned demographer Cai took a PhD in economics from the Graduate School of the Chinese Academy of Social Sciences (CASS) in 1989. Rising to CASS vice president. From 2021, he was active on the PBoC Monetary Policy Committee, writing on labour economics, income distribution, and economic reform. Cai is currently the chief expert of CASS National Think Tanks and chair of the Silk Road Research Institute.

Huang Shisong 黄石松 | Renmin University National Academy of Development and Strategy senior researcher

‘Investing in people’ is essential for cultivating new productive forces, as AI and robotics surge. Tech gains track skill levels. Modern industries need steady, long-term and broad investment to close skill gaps. The aim must shift from swelling headcount to building real talent by lifting skills and quality across the board. This approach actively responds to the PRC’s moderately ageing society. As demographic dividends diminish, strategic human investment through vocational training can boost labour productivity while meeting evolving public needs, which creates new consumption growth points.

Spending on human capital, therefore, serves two ends at once. It speeds up tech progress in emerging fields while easing demographic strain. With the right mix of skills and social support, rising social costs can be turned into economic gains.

Huang Shisong is a senior researcher at Renmin University’s National Academy of Development and Strategy, directing the Centre for Ageing Industry Research. He advises national health and civil affairs ministries on aged care policy and urban development.

Bian Yongzu 卞永祖 | Renmin University Chongyang Institute for Financial Studies research fellow

Local governments often compete for business by offering generous investment incentives, but these policies have fuelled overcapacity in certain industries and wasted resources. In the future, regional development differences will increasingly depend on human capital and public service quality.

This shift will encourage greater investment in people, support equal access to basic public services, and promote the balanced flow of talent and resources. Strengthening these areas can also ease difficulties in attracting and retaining skilled workers, adding new vitality to the economy.

For people-first investment to work, policy must be carried through at every level. Industrial upgrading, tech progress and skills spending need to be joined up. Funds should be used with care, with an eye on long-term value rather than vanity projects or quick wins.

Research Fellow at Renmin University Chongyang Institute for Financial Studies, Bian’s research focuses on national macroeconomic policy. He has provided consulting services to multinational corporations and large state-owned enterprises across financial services, technology, media and telecommunications, pharmaceutical and manufacturing sectors.

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