China aims to heal wounds of industrial ‘involution’ as officials vow to stem bloodletting
Beijing intends to rectify ‘neijuan-style’ competition that has caused overcapacity concerns and taken a toll on profits, especially in new-energy sector
Amid increased complaints from private sectors over dwindling profit margins and overflowing inventories, China’s top leaders have pledged stronger actions to combat industrial overcapacity and vicious competition in the year to come.
Beijing will “comprehensively rectify ‘neijuan-style’ competition”, through regulating the behaviour of local governments and enterprises, the country’s leaders vowed at the two-day central economic work conference that wrapped up on Thursday.
The green energy sector, which has been a bright spot in the country’s economy over the past few years and is concentrated among private firms, has borne the brunt. In the solar supply chain, for example, product prices and industrial-output value have kept falling this year, along with the rapid expansion of manufacturing capacity, application scenarios and export volumes.
China’s local governments have been the main force behind the industrial policies that have spurred the rapid growth of China’s new-energy sector, offering comprehensive support such as cheap land and low-priced-power purchase agreements, which encourage the construction of more factories to the degree that they become excessive.
The average prices of solar products have fallen by 60 to 80 per cent compared with their high point in 2023, and one-third of the listed solar manufacturers have suffered net profit losses this year, with leading companies bleeding the most, according to Wang Bohua, honorary chairman of the China Photovoltaic Industry Association.
