Written by: Elina Castillo
Neijuan, or the Chinese term for involution, refers to the general concept of working increasingly harder for little or no marginal gain. The term’s use in China was originally meant to describe strenuous working conditions and an increasingly competitive job market in 2020, but is now being used to describe the Chinese business sector’s overcompetition and price wars, especially in industries with heavy government subsidies and low consumer demand. Although involution has brought both benefits and harm to China, the Chinese Communist Party (CCP) has recognized the issues in the economy, and is now pushing for an “anti-involution” movement. An analysis of the history and development of involution shows the harm it has brought to China’s economy and explains why China is making certain policy decisions under this new movement.
Academia has long been an intensely competitive field for Chinese students. The gaokao, or National College Entrance Examination, is just one example of this competitiveness, acting as the main and only form of testing for college acceptances and taking place over 2 to 4 days. This competition continues well into a student’s college life and does not end with graduation. Constant overtime hours and a lack of any free time became the new standard with the emergence of the 996 in the 2010s. The 996 refers to a work schedule of 9 am to 9 pm, 6 days a week, and it became popular with China’s growing technology industry scene (Hall, 2025). Although this was outlawed in 2021, the effects on the working population still linger, and the level of competition. Involution in this context refers to the constant overworking and increasing effort for minimal payoffs.
While this used to be the main, if not only, usage of involution, recently the term has been extrapolated to Chinese businesses to describe the relentless competition and price-cutting occurring between businesses. This applies especially to the solar energy, electric vehicle, and battery sectors which the Chinese government previously subsidized in order to boost ‘strategic’ investment in the economy. As a result of these subsidies, companies within these sectors overproduced. At first this surplus allowed Chinese companies to be very competitive in the global market, as they were able to undercut other countries’ domestic prices, but eventually their production even outgrew global demand, leading to a supply that could not feasibly be used up by both the domestic and global market combined for many years (Lo, 2025). This was when involution became a noticeable threat to the economy. Even still, the businesses kept producing, sinking prices and profits lower and lower in order to stay afloat. This rings true even for businesses besides those mentioned above, such as consumer-oriented companies like fast fashion and food delivery like Alibaba, JD.com, and Meitun, who have dedicated billions of dollars into a battle over “instant retail”, an e-commerce model that emphasizes extremely short delivery times, usually somewhere between 30-60 minutes after purchase (Zhang et al., 2023). In an effort to lower delivery times and beat competitors, these major companies are forced to constantly pour in more money, further reflecting how involution is driving the economy across various sectors (Hall, 2025).
The problem here is that this frantic slashing of prices necessitates a cost cut somewhere else along the line of production. This has led to fears of cuts in quality and safety, as well as salary cuts, lay offs, and unsustainable profit margins. One clear example of this can be found in food delivery services, where companies compete downward to get near zero prices, while sacrificing the original quality of service. Furthermore, this overcompetition has led to a price war and deflation. Chinese consumers, already hesitant to purchase after a burst in the housing market bubble caused them to lose significant wealth, are not spending near close to enough to what would be necessary to maintain economic growth. Although deflation may appear beneficial for consumers due to lowering prices, in the long term, it leads to weakened economic growth. The same consumers who may gain now from low prices may be the same workers to be laid off when profits are dropping. No longer are businesses focusing on the wishes of consumers, but the moves of other competitors.
Policymakers in China have been talking about involution since July 2024, but back then, it was not the main focus of policy. Instead it was seen as something helpful to boost domestic demand, and something that could be left alone. It was not until the following year, in July 2025, when top leaders met together to discuss and elevate involution as a high-level risk, bringing forth the “anti-involution” movement. (Xiong, 2025). Now that anti-involution has become a central focus of policy, the Chinese government is enacting various solutions. One solution is to alter the current Pricing Law, which was originally established in 1998 to dictate the pricing rules by which companies must abide. The updated draft would prohibit irrational price wars, such as by setting a minimum price to prevent undercutting, and would redefine standards for defining price collusion, price gouging, and price discrimination (“China releases draft law […]”, 2025). There would be an additional focus on reducing production capacity. In order to balance out the effects of the reduction in supply, there must be incentives to increase demand and consumption. One idea that has been proposed is boosting government stimulus packages. However, this may lead to the same problem that originally caused involution if not handled carefully, and some officials have questioned whether or not this would be sustainable (Davidson, 2025). Despite the uncertainty facing the Chinese government as they reckon at last with this troubling economic problem, there are very clear movements by the CCP to try and curb the issue.
References
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Yao, K., & Donovan, K. (2025, July 24). China releases draft law amendment to help curb price wars. Reuters. Retrieved November 11, 2025, from https://www.reuters.com/sustainability/boards-policy-regulation/china-releases-draft-law-amendment-help-curb-price-wars-2025-07-24/Zhang, F., Sander, E., & Ma, R. (2023, July 22). Need for Speed: Instant Retail. Tech Buzz China. https://techbuzzchina.substack.com/p/need-for-speed-instant-retail