I don't want to discuss whether he is genuinely racist; I think that's besides the point. Words can have a lot of impact, especially when uttered by a public figure in such a powerful position. I don't think it's unreasonable to expect the Vice President of the United States to carefully weigh the consequences of his words before speaking.
He did carefully weigh the consequences of his words. He deliberately chose the most inflammatory and insulting of possible words. Knowingly and intentionally.
You unsurprisingly choose the third option. Uncouth, crude and or ill-bred people are probably not especially productive in their working life.
We do know that in China, rural people flock to the cities (where they have diminished welfare provisions and 'rural' status, do the work and are then expected to return to their homes in the country.
He did not refer to all Chinese as peasants. China would like you think that though.