Chinese stocks buzzing on hopes of end to price wars

BEIJING

Exhibitors attend visitors at the China Resources Power Holdings Company Limited exhibition booth showcasing its wind turbines farm during the 3rd China International Supply Chain Expo at the China International Exhibition Center, in Beijing on July 17, 2025. (AP Photo/Andy Wong)

China’s stock market is buzzing over government promises to tackle price wars that have hurt profits and worsened global trade tensions.

The prevailing catchphrase is “anti-involution,” and it reflects efforts to curb intense competition and overcapacity in industries like solar panels, steel, and electric vehicles.

With rising trade barriers like President Donald Trump’s higher tariffs and weak domestic demand, manufacturers have slashed prices, undermining their bottom lines and driving some out of business.

The Chinese government and industry groups have recently signaled they're getting serious. On June 30, the top 10 makers of solar glass agreed to cut production by 30 percent. 

The possibility of reform was enough to spark a rally. Shares of Liuzhou Iron & Steel Co. gained 10 percent on July 18 and are up over 70 percent since late June. Solar panel producer Changzhou Almaden Co. is up about 50 percent.

Two ETFs focused on solar and steel have gained around 10 percent, outperforming the Shanghai Composite Index’s 3.2 percent rise. EV stocks showed mixed performance: Li Auto and Nio rose, while BYD declined.

On June 29, the People’s Daily ran a full-page article denouncing involution, saying it clashes with the party’s goal of quality growth. Xi Jinping later called for better regulation and curbs on overinvestment.

The pressure began with EV makers in May, after BYD’s new round of price cuts. Analysts at UBS said a near-term ceasefire in price wars is possible, though a full shift to orderly competition is unlikely.

Ultimately, economists say industries need to consolidate through company mergers and bankruptcies. But the process will take time.