Politburo Vows Continued Crackdown on Involutionary Competition, Implementation of Unified Market Regulation

After two years of gradual advancement, the campaign against 'involutionary competition' has evolved from a special rectification in individual industries into a medium- and long-term institutional reform that supports the building of a national unified market and reshapes industrial growth models. In July 2024, the Political Bureau of the CPC Central Committee first proposed preventing 'involutionary' vicious competition; in December of that year, the Central Economic Work Conference upgraded the wording to 'comprehensively rectify involutionary competition.' In December 2025, the Central Economic Work Conference further escalated it to 'deeply rectify involutionary competition.' At the Political Bureau meeting held on July 30, 2026, the call was made to 'continue comprehensive rectification of involutionary competition' and to 'formulate and implement the Regulation on Building a National Unified Market.' This is the first time since the Central Economic Work Conference in 2025 first proposed formulating the regulation that the word 'implement' has been added, signaling a shift from legislative planning to enforcement.

In terms of policy evolution, 2024 was the first year of problem identification, when the Political Bureau meeting first proposed preventing 'involutionary vicious competition' and required unblocking exit channels for outdated production capacity, formally bringing low-price industrial attrition into the macro-control governance framework. 2025 was a critical period for institutional formation, with the official implementation of the National Unified Market Construction Guidelines (Trial). In July, the sixth meeting of the Central Financial and Economic Affairs Commission incorporated disorderly low-price competition by enterprises, homogeneous local investment promotion, distorted performance views, and regional fiscal and tax irregularities into a unified governance system. 2026 is the year of comprehensive deepening and implementation, with 'anti-involution' governance written into the outline of the 15th Five-Year Plan, formally establishing it as a main line for medium- and long-term economic governance.

At the implementation level, the 'anti-involution' governance has moved away from the previous fragmented departmental model, with multi-departmental coordination and simultaneous governance of existing and incremental capacity. In response to widespread problems in industries such as photovoltaics and energy storage, including 'low-price bidding and runaway capacity expansion,' regulators have formed a model of 'inter-ministerial coordination plus whole-chain governance,' intervening in advance through pre-emptive risk warnings, policy coordination, and compliance guidance. Local investment promotion governance has entered a stage of strict constraints on incremental projects and clearance of existing stock. According to the 'Report of the State Council on the Construction of a National Unified Market' submitted to the Standing Committee of the National People's Congress in June 2026, and the latest progress information released by the National Development and Reform Commission, the central government has fully implemented a positive and negative list system for investment promotion, with local assessment systems being restructured accordingly. Guangdong, Gansu, and other regions have abolished crude evaluation standards based solely on GDP and signed contract amounts, shifting toward investment selection, full life-cycle industry management, and assessment of regional innovation capacity.

In terms of data, profits of industrial enterprises above designated size grew 0.6% in 2025, reversing three consecutive years of decline from 2022 to 2024. In the first half of 2026, profits of such enterprises rose 18.7% year-on-year, with growth accelerating. In March 2026, the national producer price index (PPI) rose 0.5% year-on-year, ending 41 consecutive months of negative year-on-year growth since October 2022. By sector, domestic crude steel output fell 4.4% year-on-year in 2025, and improved supply-demand dynamics boosted steel company profits by 1.4 times year-on-year, returning their main business to profitability; however, steel company profits have come under pressure again since 2026. In the first half of 2026, profits in the automobile manufacturing industry fell 19.5% year-on-year. In the electronic information manufacturing sector, profits of computer, communication, and other electronic equipment manufacturers above designated size grew 19.5% in 2025 and 96.9% in the first half of 2026.

On July 31, Jiang Yi, director of the Policy Research Office and spokesperson of the National Development and Reform Commission, said that the work of establishing rules and regulations would be accelerated, with the focus on a combination of 'one regulation, three lists, and three systems.' The 'one regulation' refers to the Regulation on Building a National Unified Market; the 'three lists' are the list of matters hindering the construction of a national unified market, the negative list for local fiscal subsidies, and the list of encouraged and prohibited matters for local government investment promotion; the 'three systems' refer to statistical, fiscal and tax, and assessment systems conducive to market unity. In addition, accelerating the revision of the Price Law has been listed as a follow-up work direction. The current Price Law has been in effect for nearly three decades; in the face of new types of price violations brought by new business forms such as the platform economy and algorithm technology, it is necessary to curb bottomless low-price dumping from a legal root.

In regulating local government behavior, the core lies in systematically cleaning up, evaluating, and standardizing local preferential policies and fiscal subsidies, establishing a rigid constraint mechanism for fair competition review, and transforming the investment promotion model of 'competing to offer preferential treatment' among local governments into a benign competition model of 'competing to optimize the business environment and improve public service efficiency.'