Latest news with #economicregulation
South China Morning Post
4 days ago
- Business
- South China Morning Post
China's top leadership takes aim at ‘disorderly low-price competition'
In addressing the price wars plaguing many industries in China, the country's top leadership has resorted to a phrase rarely seen at a high-level meeting, saying that enterprises' 'disorderly low-price competition' needs to be regulated. Speaking at a top-level economic meeting on Tuesday, President Xi Jinping used that phrase to explicitly characterise the much-debated phenomenon, in stark contrast to officials who have, since late last year, favoured the vaguer term 'involutionary competition' when discussing the problem. China needs to 'lawfully regulate enterprises' disorderly low-price competition, guide companies to improve product quality, and promote the orderly exit of outdated production capacity', Xi urged at a meeting of the Central Financial and Economic Affairs Commission, the Communist Party body that supervises economic matters. Beijing sees tackling such competition as crucial for the health of the world's second-largest economy as it harms innovation, lowers efficiency and hinders industrial upgrading and product quality improvement. Compared with 'involutionary competition', which was broader and potentially involved technology, talent and other areas, 'disorderly low-price competition' was more focused on price wars and market behaviour – and especially on enterprises suppressing prices to capture market share – said Hou Xuchao, founding partner of China Insights Consultancy.
Reuters
5 days ago
- Business
- Reuters
China's top leaders vow crackdown on price wars as deflation risks mount
BEIJING, July 1 (Reuters) - China's top leaders pledged on Tuesday to step up regulation of aggressive price-cutting by Chinese companies, state news agency Xinhua reported, as the world's second-biggest economy struggles to shake off persistent deflationary pressures. Overcapacity among Chinese manufacturers and the price cuts made to clear stock, have sparked price wars that are showing signs of influencing consumer behaviour. Analysts worry this could drive further reductions, raising concerns that deflation may become entrenched and hinder efforts to stabilise the $19 trillion economy. "Enterprises engaging in disorderly low-price competition must be regulated in accordance with laws and regulations," Xinhua quoted a meeting of the Central Financial and Economic Affairs Commission as saying. The commission is a top economic policy body of the ruling Communist Party and is chaired by President Xi Jinping. "Businesses should be guided to improve product quality and support the orderly phasing out of outdated production capacity," the Xinhua report added. Data showed on Monday that manufacturers were slashing prices to attract buyers, as U.S. President Donald Trump's tariff onslaught threatens the long-term viability of selling to the United States, the world's top consumer market, and domestic demand remains weak. While new orders edged up, factory gate prices remained in the doldrums, the data showed, suggesting that the economy risks getting stuck in a cycle of ever lower prices. A front-page editorial published on Sunday in the Communist Party's official newspaper, People's Daily, drew significant attention for its call for China's economy to "break free from 'rat race-style' competition" among firms. The article concluded that relentless price-cutting fostered destructive competition that defied economic principles and had clear negative economic consequences.
