The Chinese government employs 2 main planning documents to set the stage for the nation's economic and agricultural development. The 5-Year Plan, as the name suggests, outlines goals to achieve within every 5-year period. The No. 1 Central Document is an annual agenda that serves as one of the stepping stones to achieving the 5-Year Plan, as specifically related to agriculture. Since China is the world's largest tea-producing nation, both the 5-Year Plan and the No. 1 Central Document shape the agenda for China's tea industry in terms of resource allocation and the role of tea in economic development.
THE FIVE-YEAR PLAN
China's first 5-Year Plan ran from 1953-1957, and 2021 marked the beginning of the 14th 5-Year Plan. Some highlights of the current plan include:
- Economic development. Like the plan before it, a main goal is to further develop domestic supply while also promoting domestic consumption. Initiatives like the Belt and Road Initiative (BRI) will likely impact over 65% of the world's population and over 40% of global GDP. The flow of trade through the BRI is intended to drive growth and consumption in developing markets. This further aligns with current and previous Plans that aim to eradicate poverty and/or develop rural areas.
- Note: Previous plans have set numeric targets for economic growth as a percentage of GDP. The current plan differs in that it does not. The global pandemic and concerns about China's massive debt levels are the likely reasons for this omission.
- Global politics and economic trade tensions have also pushed China to call for greater self-sufficiency in food security, energy, technology, and industry.
- Environmental development: China continues to commit to reducing pollution, including carbon neutrality by 2060.
THE NO. 1 DOCUMENT
The No. 1 Document is an annual statement of priority in the development of China's agriculture and rural affairs. As in previous years, objectives have focused on:
- Rural poverty. 2020 priorities included the eradication of absolute poverty in rural, agricultural areas, and now the focus has shifted to rural revitalization that includes improvements in rural infrastructure, electricity, health care, education, and environmental protection
- Food security. For the first time, major crops have targets set for yields. This is in addition to the previous protection of arable lands from urban encroachment or industrialization. Efforts to consolidate areas of agricultural production and strengthen food supply chains will be continued or strengthened.
The concerns and trends expressed in these documents directly impact the Chinese tea industry:
- Rural development: For several years, China has been promoting the development of tea fields and training tea farms as a means of economic development in some of the most poverty-stricken counties. Firsd Tea's parent company Zhejiang Tea Group (ZJT) actively worked to donate tea cuttings, invest in local processing facilities, and contract with these new tea farmers to market and sell their teas.
- Rural development is mainly targeted in more central and southwestern China, which coincides with the expanding amount of new tea field acreage that has been established in these areas in recent years.
- Food security and stronger food supply chains may push core commodities (like hogs, soybeans, and corn) production and processing to locations with greater supply-chain flow to urban areas, leaving tea production to the hinterlands of China's Central and Western areas
- Domestic consumption. China seeks to develop its economy by developing its domestic markets. In sum total, China consumes a lot of tea, but it is still quite low on a per capita basis. Currently China exports about 13% of its annual crop, so any drive towards more domestic consumption will need to be calculated against the growing capacity being created and any growth in exports. The China Tea Marketing Association's (CTMA) own statement of response to the 14th 5-Year Plan places significant emphasis on spurring domestic consumption via brand development and other initiatives.
- Environmental protection: China's tea industry is already a leader in sustainable, Fair Trade, and USDA Organic tea production, and further advancements are likely in terms of scope and quality.