China is taking aim at one of its most persistent economic ailments: involution. Originally rooted in anthropology, the concept now underpins a sweeping policy shift aimed at curbing hyper-competitive, self-defeating dynamics in sectors like solar, lithium batteries and electric vehicles. Beijing’s campaign to curb margin-eroding competition is reshaping the risk-reward profile of China’s clean tech sectors, and sending signals global investors can’t afford to ignore.
China is embarking on a sweeping industrial reset. In a move that could reverberate across global markets, Beijing has formally adopted an ‘anti-involution’ strategy, designed to rein in margin-crushing competition in its fast-growing ‘New Three’ sectors: solar, lithium batteries and electric vehicles (EVs). Once engines of innovation and global decarbonisation, these industries are now facing overcapacity, collapsing prices and eroding profitability.
‘Involution’ (内卷), a term that has gained currency in China’s economic discourse, describes a cycle of hyper-competition where firms chase volume and cost-cutting at the expense of innovation and profitability. Originally rooted in anthropology, it now reflects a broader industrial malaise: companies locked in a race to the bottom, expanding capacity and slashing prices simply to survive.
“Involution’ (内卷), a term that has gained currency in China’s economic discourse, describes a cycle of hyper-competition where firms chase volume and cost-cutting at the expense of innovation and profitability.”
In 2025, Beijing elevated anti-involution to a national strategy with a clear objective: shift the industrial model from quantity to quality, restore pricing power and build long-term resilience in sectors critical to the global energy transition.
You can now read the full whitepaper at the link below
