China Declares War on Price Wars: The Battle to End 'Anti-Involution'

China's stock market is experiencing heightened activity following government commitments to address price wars, which have eroded profits and intensified global trade tensions. The trend labeled as 'anti-involution' aims to curb fierce competition across industries like solar panels, steel, and electric vehicles. Heightened trade barriers, including those from former President Donald Trump's tariff increases, coupled with limited domestic demand, have prompted manufacturers to cut prices, jeopardizing their financial health.

Solar panel glass manufacturers recently agreed to reduce output by 30% as part of efforts against 'involution' or 'neijuan' in Chinese. The government has launched an auto safety inspection campaign to counteract automakers compromising on quality for cost reduction.

Despite uncertainty about whether these initiatives will succeed, hope is rejuvenating certain sectors with stock surges. The People's Daily, the Communist Party's organ, criticized 'disorderly' price wars, emphasizing the need for high-quality economic development. Analysts suggest that a short-term resolution may be on the horizon, yet structural overcapacity and insufficient demand continue to challenge affected industries.

(With inputs from agencies.)