中国宏观了解中国_反进化_ Drive-117768693

Date China Macro Understanding China's "Anti-involution" Drive China'seconomic policy is undergoing a significant reorientation in 2025,centered on a new initiative: "anti-involution".This strategy directly confronts theissueof excessive,self-defeating competition within key industries,aphenomenontermed"involution."This article will explore the origins andconsequences of "involution". The compelling case of China's automotive industry shows how failure to enableconsolidation in a highly innovative and rapidly growing industry has led toprolonged price war that could damage the broader economy. The “anti-involution”policy push is set to reshape China's economic landscape,with critical implications forChina andEurope. While potentially leading to a near-term slowdown in China's headline growth as capacity is rationalized, successful"anti-involution" could alleviate persistent deflationary pressures and reduceChina’strade imbalances in the long run.Success in reflatingChina’s economycould also lead to a strongerRenminbi. 1.What is"involution"? INVOLUTION/ˌɪn vəˈluʃən/noun.Anthropology, Sociology.,Growthwithout evolution, as in a growing agrarian society with increased fieldlabor whose production mechanisms become more complex withoutincreasing yield. Adefiningterm has emerged at the forefrontChina's economic policymakinginrecent months:fan nei juan, literally translated as "anti-involution." This conceptrepresentsBeijing's ambitious attempt to break free from self-destructiveeconomic cycles that have plagued several key industries. For European policymakers and business leaders, understanding this shift iscritical because it signals asignificantreorientation of China's economicpolicyfocus,with profound implications forgrowth, inflation andtrade. China's internaleconomic rebalancing,driven by this policy framework, could reshape thecompetitive landscape in industries from electric vehicles to renewable energytechnology—sectors where European firms maintain vital interests. To understand "anti-involution," we must first grasp the phenomenon it seeks tocombat. In China's economic context, "involution" (nei juan) describes a viciouscycle where companies engage in increasingly intense competition that yieldsdiminishing returns for all participants. Picture a crowded theatre where oneperson stands for a better view, forcing others to stand until everyone is equallyuncomfortable but now on their feet. This captures the essence of involution:increased effort doesn't lead to proportional gains; instead, it becomes necessaryjust to maintain one's current position. Gradually, the term's use in Chinaexpanded to describe not only competition among individuals but also fiercecompetition among corporates in certain industries. 2.Why is “anti-involution” necessary? The case oftheautomotiveindustry So how does "involution"-style competition happen in reality, and why doesgovernment intervention through "anti-involution" policy become necessary?China’s automotive industry offers a fascinating example of how the world’slargest car market suffered from excessive competition. China saw a boom in its electric vehicle (EV) sector since 2020. Chineseconsumers were attracted to EVs by their novel functions, affordable prices, andaccessible charging infrastructure. EV production and sales increased tenfold injust five years; by 2025, EV sales had exceeded internal combustion engine (ICE)cars in China. Despite this rapid growth, profitability has plunged: total profits in the automotiveindustry reduced by 33% between 2017 and 2024, despite a 21% increase insales. The net profit margin of the auto industry dropped from 8% in 2017 to 4.3%in 2024. Not only did profits of traditional ICE carmakers fall sharply, but losseswere also common among the new EV maker entrants. Source:Deutsche BankResearch, Haver Analytics How did this happen? It all began several years ago with the market liberalizationof a tightly controlled automotive industry. For a long time, China’s automotiveindustry was dominated by a few large,historically state-owned conglomerates.Foreign carmakers had to set up joint ventures (JVs) with existing domesticcounterpartsto enter the market,while high entry barriers and approvalrequirements made it difficult for new carmakers to emerge. Throughout the2010s, China's top five carmakers accounted for nearly 70% of all cars made inChina.Stable competition landscapepreservedprofits:at its peak in 2016-17,totalprofits reached$100 billion for the whole automotive manufacturingindustry. A significant change came in 2018 when Chinaremovedentry barriers for theautomobile industry. Amid the US-China trade war, China committed to furtheropen domestic industries to foreign investors. The government announced inApril 2018 the removal of foreign investment restrictions in the automotiveindustry, allowing foreign ownership to exceed50%. This paved the way for theopening of Tesla’s solely owned Shanghai factory later that year