China NDRC on involutionary competition: Industry-specific solutions will be applied to tackle core problems

At the National Development and Reform Commission's press conference in May 2025, in response to the situation where some companies are caught in "involutionary" competition, Li Chao, deputy director of the Policy Research Office of the National Development and Reform Commission and spokesperson of the Commission, pointed out that they will target the crux of the problem, implement policies based on the industry, prescribe the right medicine, and address both the symptoms and the root causes to resolve the structural contradictions of key industries and promote the healthy development and quality upgrade of the industry.

Li Chao introduced that at present, China's economy is in a period of transition from old to new drivers, new industries, new formats and new models are emerging, and traditional industries are accelerating transformation and upgrading. In this process, some industries have indeed encountered structural problems, some blindly follow the trend of investment, and some cannot keep up with the pace of technological updates and iterations. Some companies are caught in "involutionary" competition, some sell at low prices, ultra-low prices, or even below cost prices, and some make and sell counterfeit goods and sell inferior goods as good ones. These have broken the boundaries and bottom lines of market competition, distorted the market mechanism, and disrupted the order of fair competition, and must be rectified.

The National Development and Reform Commission, together with relevant parties, has thoroughly implemented the spirit of the Central Economic Work Conference and the deployment of the Government Work Report. It has targeted the crux of the problem, implemented policies and measures according to the industry, and addressed the root causes of the problem. It has resolved the structural contradictions of key industries and promoted the healthy development and quality upgrading of the industry.

First, we must adhere to innovation-driven development and accelerate industrial transformation and upgrading. We must strengthen the leading role of enterprises in scientific and technological innovation, support enterprises to improve product quality and core competitiveness through scientific and technological innovation, increase high-end production capacity and high-quality supply, continuously explore diversified markets, and enhance development resilience.

Second, we must strengthen local constraints and work harder to break down local protectionism and market segmentation. In January this year, the National Development and Reform Commission issued the "Guidelines for the Construction of a National Unified Market (Trial)", requiring all regions not to break through the red line bottom line stipulated by the state and illegally implement preferential investment promotion policies in finance, taxes, prices, land, resources and environment, and to focus on the repeated prohibitions and new tricks of local protectionism and market segmentation.

Third, we must optimize the industrial layout and curb the disorderly expansion of backward production capacity. Give full play to the supporting role of quality and standards, promote mergers and reorganizations in a market-oriented manner, and accelerate the elimination of inefficient and backward production capacity in industries such as oil refining and steel; scientifically demonstrate new production capacity projects in industries such as coal chemical industry and alumina to prevent blind new construction; strengthen industry self-discipline and guide new energy vehicles and photovoltaic companies to focus on technology research and development.

Fourth, strengthen market supervision and purify the market competition ecology. Severely rectify market chaos such as inferior quality and low

prices, investigate and deal with unfair competition and price violations in accordance with the law, resolutely crack down on infringement and counterfeiting, counterfeiting and selling counterfeit goods, increase quality supervision and inspection efforts, jointly maintain a market order of fair competition and survival of the fittest, and effectively give play to the vitality and role of the market mechanism.