In recent years, China’s auto, photovoltaic, lithium battery, cement, and other industries have faced intense “involution-style” competition, with companies blindly cutting prices and overbuilding to seize limited market share both domestically and overseas. This has severely eroded profits, damaged supply chains, and endangered entire sectors.
Now Beijing tries to control the cutthroat price competition in China.
In 2025, China’s auto industry saw a fierce price war, with some models slashed by over 50,000 yuan (a car may only sell for 150,000 yuan). Over 100 models cut prices by May, trapping the industry in a cycle of sales growth without profits. In Q1 2025, the industry’s profit margin fell to 3.9 percent, and major automakers extended payments to their suppliers for dangerously long periods. Now the China Association of Automobile Manufacturers and 17 automakers have jointly called for an end to destructive price wars and promised to pay suppliers within 60 days.
In the photovoltaic sector, top glass manufacturers will cut production by 30 percent from July to ease competition. The lithium battery industry is also reducing output to rebalance supply and demand. The civil aviation sector plans to tighten pricing rules to prevent under-cost competition.
On July 1, the China Cement Association urged the industry to cut overcapacity, with provinces like Shandong and Sichuan starting staggered production. Steel, coal, and other industries are also moving to limit overproduction and fight harmful price competition.
Source: Sina Finance, July 4, 2025
https://finance.sina.com.cn/jjxw/2025-07-04/doc-infefssx2994474.shtml