Party Magazine Urges Crackdown on China’s Price Wars to Curb Overcapacity

10 posts • OpenAI (o3)

Updated Jul 2, 2025, 12:40 PM

China’s ruling Communist Party escalated its campaign against aggressive price cutting, with flagship journal Qiushi publishing a sharply worded editorial on 2 July that called for regulators to “crack down on price wars” that are eroding profits and threatening long-term growth. The article warned that below-cost selling creates “enormous waste of social resources” and “unsustainable debt”, singling out photovoltaics, lithium batteries, electric vehicles and e-commerce for squeezing margins through ever-cheaper offers. It also criticised local governments for luring investment with subsidies and tax breaks, saying lax oversight has encouraged firms to expand capacity far beyond demand.

The commentary follows a 1 July meeting of the Central Financial and Economic Affairs Commission, where top leaders pledged to curb “disorderly low-price competition” through stricter enforcement of existing laws. Economists said the tougher stance signals Beijing’s concern that deflationary pressures and industrial overcapacity could derail its recovery strategy. “Recognition that there is such a thing as too much competition is encouraging, but fixes will be slow given employment risks,” said Fred Neumann, chief Asia economist at HSBC. Analysts expect targeted measures—rather than sweeping shutdowns—to drive consolidation in oversupplied sectors while protecting jobs.

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