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A prominent Chinese Communist Party publication has criticized large companies and local governments in China for unfair practices and is demanding a crackdown on the competition that contributes to price wars and squeezes profits in various industries.  The criticism came via a Qiushi article that is apparently one of the most strongly worded Communist Party warnings yet on industrial overcapacity risks. Shared on Tuesday, it pointed to price wars as the reason behind “enormous waste of social resources,” and unsustainable debt, which could, in time, endanger growth. Qiushi article issues strong warnings to Chinese manufacturers Warning from the Qiushi article comes amid mounting concerns over deflationary pressures in China’s economy. These pressures are escalated by U.S. President Donald Trump’s tariffs, causing global uncertainty and threatening demand, something China relies heavily on for its ambitious growth targets. In China, public messaging against price wars has increased in recent weeks, with top leaders pledging on Tuesday to drive up regulation against aggressive price-cutting and state media propaganda. The people are now looking forward to new policies allowing unprofitable factories to close or improving consumer incomes. However, analysts have warned that it is possible for Beijing to have trouble convincing local governments to rein in access to cheap credit over fears of unemployment. “This cuts to the heart of China’s economic model and therefore we’re not going to see quick fixes necessarily,” Fred Neumann, chief Asia economist at HSBC said before adding that it is “encouraging now that we’ve seen the recognition of these issues – that there is such a thing as too much competition and excessive price wars.” The Qiushi article, which was written under a pseudonym, focused mainly on “involutionary competition,” which sees firms and local governments invest capital to capture market share amid limited demand and still fail to…

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Filed under: News - @ July 2, 2025 3:29 pm