Comprehensive Rectification of "Involution-style" Competition: Progress Report (New Economic Positioning)

(Original Title: Series of Measures Introduced to Address Typical Behaviors — Progress in Comprehensive Rectification of “Involution” Competition (New Economic Directions))

The more “competitive” products become, the lower their quality; a certain power bank manufacturer was investigated for violating mandatory product certification regulations and false advertising. The more “competitive” platforms are, the greater pressure on merchants; several food delivery platforms were summoned due to “subsidy wars”… “Involution” competition is a form of low-price, low-quality, and low-level competition that not only disrupts the market, reduces the efficiency of resource allocation, and erodes the long-term competitiveness of enterprises but also hampers industry structure optimization, upgrading, and high-quality development.

Since last year, a series of measures have been introduced to address typical “involution” behaviors in market competition. How is the comprehensive rectification of “involution” competition progressing? Our reporter conducted interviews.

Strengthening Regulation Against “Involution” Competition Such as Forced Promotions and Business Defamation

“A platform requires hotels to activate the ‘Price Adjustment Assistant.’ If our prices are higher than on other platforms, it automatically lowers the room rate without notifying us,” a hotel operator told us about being forced to have their pricing regulated by a certain platform. Recently, under regulatory pressure, that platform removed the “Price Adjustment Assistant” feature, which is a positive step toward alleviating price “involution” in the hotel industry.

Earlier this year, the State Administration for Market Regulation issued the “Guidelines for Anti-Monopoly Compliance of Internet Platforms,” listing eight risk examples such as “lowest price across the entire network” and “selling below cost” to clarify compliance requirements for internet platform companies. This helps improve market expectations, guide enterprises to operate legally, and prevent issues before they arise.

The Anti-Unfair Competition Law revised in June 2025 strengthened regulation of new and typical “involution” behaviors. For example, it explicitly prohibits platforms from forcing operators to lower prices or promote sales against their will, including requiring “the lowest price across the entire network.” It also clarifies that platforms cannot compel or covertly force operators to sell products below cost, which disrupts market order. To address malicious defamation by some operators employing “online water armies” to harm competitors, the law fills legal gaps and expands the scope of defamation targets from “competitors” to “other operators,” providing a more comprehensive regulation. A series of institutional rules are continuously improved to implement effective measures to resolve the difficulties caused by “involution” competition.

Enhancing Certification Supervision of Products Significantly Priced Below Cost

Media reports have highlighted a tragic incident where a consumer left a power bank charging on the sofa and forgot to unplug it when leaving home, resulting in a fire that nearly destroyed the house and caused heavy losses. Inferior power banks exemplify the “market becomes more competitive, products become lower quality” phenomenon, ultimately harming consumer rights.

How can we prevent the risk of product quality decline caused by “involution” competition among manufacturers?

Yang Dong, Deputy Director of the Certification Supervision Department of the Market Regulation Administration, believes that mandatory product certification is an important means to reduce institutional transaction costs and safeguard product quality and safety. Under the pressure of “involution” competition, companies are more inclined to cut costs, increasing potential risks to product quality. Strengthening product consistency management is fundamental to effectively implementing the mandatory product certification system.

Regulatory authorities will carry out targeted actions to uphold the bottom line of the mandatory product certification system. This includes strengthening daily supervision of designated certification bodies, conducting ongoing capability assessments, and establishing a bi-monthly scheduling mechanism for key product certification agencies. Improving refined management levels, requiring certification bodies to enhance risk identification, and utilizing “cost accounting” methods to strengthen oversight of products priced significantly below cost. Developing regulations for establishing certification quality directors and project quality leaders within certification agencies, ensuring responsibilities are assigned to individuals. Increasing inspections of raw materials and key components during certification processes to promote enterprises’ quality assurance capabilities and product consistency.

Reducing Disorderly Competition in Key Industries and Regulating Local Government Actions

What policies and measures have been introduced since last year to address “involution” behaviors?

In response to phenomena like “subsidy wars” among internet platforms, the “Basic Requirements for Food Delivery Platform Service Management” was implemented, setting overall standards for platform service management, including merchant management, pricing behaviors, delivery personnel rights, consumer protection, and complaint handling, aiming to improve service quality and reduce disorderly competition.

To address issues such as “overemphasis on marketing at the expense of quality” and “low-price, low-quality” products in online sales, the “Guiding Opinions on Improving Product and Service Quality on Online Trading Platforms” was issued to promote a healthy cycle of “high quality and good price.”

To promote high-quality development of new energy vehicles, lithium batteries, and photovoltaic industries, the Market Regulation Administration has planned the development of 167 national standards in the “New Three” fields by 2025, focusing on quality safety, energy efficiency, and classification standards to curb “involution” competition among these enterprises. Zhu Meina, Deputy Director of the Standards and Technology Management Department, stated that by the end of 2025, China will have issued 57 relevant national standards, with plans to accelerate the development of additional standards to lead and drive high-quality growth in the “New Three” industries.

Zhao Chunlei, Deputy Director of the Competition Policy Coordination Department, introduced that the in-depth implementation of the fair competition review system and strengthening law enforcement against abuse of administrative power to exclude or restrict competition are key measures to regulate improper government intervention in market competition. By 2025, market regulation departments at all levels will have carried out a series of activities related to fair competition review and anti-monopoly enforcement.

Improving the fair competition review system further clarifies boundaries for government actions. The “Implementation Measures for the Fair Competition Review Ordinance” refines the 19 standards into 66 prohibited scenarios. The revised “Regulations on Preventing Abuse of Administrative Power to Exclude or Restrict Competition” adds new behaviors, enhances penalties for violations, and strengthens accountability, laying a solid institutional foundation to eliminate local protectionism and administrative monopolies.

Moving forward, the Market Regulation Administration will promote the implementation of the “Fair Competition Review Ordinance” across regions and departments, continuously eliminate local protectionism and market segmentation, and foster a better integration of an effective market with proactive government, further deepening the rectification of “involution” competition and supporting the construction of a unified national market.