China’s leaders aim to curb aggressive price cuts by companies to combat overcapacity and damaging competition. The “anti-involution” campaign targets sectors where price wars are escalating, raising deflation concerns that could hinder economic stability. “Neijuan” reflects the exhausting grind of hyper-competition in China’s industrial pivot, leading to diminishing returns. Beijing faces decisions to combat overcapacity and excessive competition amid mounting deflationary pressures. Industries like EVs, solar, and food delivery are most exposed, with shrinking profit margins and price wars threatening economic stability. The fight against deflation poses risks to employment and growth as China grapples with policy changes to address overcapacity and competition.

Read more at Yahoo Finance: Explainer-What is “involution”, China’s race-to-the-bottom competition trend?