China’s Crackdown on Neijuan

Current Affairs International Issues

Posted by newadmin on 2025-03-07 09:00:30 |

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Chinese Premier Li Qiang recently addressed the National People’s Congress, emphasizing the government’s commitment to tackling ‘Neijuan,’ a term that describes excessive competition leading to diminishing returns. As China faces economic slowdown, the government is working to create a more sustainable business environment while responding to international concerns.

Neijuan represents a cycle where companies and individuals put in more effort without corresponding benefits. In industries, firms engage in price wars and overproduction, impacting profitability. For workers, it results in longer hours and constant upskilling with little improvement in quality of life. This phenomenon is particularly evident in China’s competitive sectors, such as electric vehicles, where companies continuously lower prices to stay ahead, leading to unstable market conditions.

In response, the Chinese government has taken measures to curb Neijuan, signaling a shift towards sustainable economic growth. Policies now focus on reducing market fragmentation, eliminating local protectionism, and fostering fair competition. Stricter regulations on competition have been introduced, alongside meetings with industry leaders to explore long-term solutions. The emphasis is now on innovation rather than aggressive pricing strategies.

China’s efforts to combat Neijuan come at a time of increasing global trade tensions, particularly with the US and the EU. Western countries accuse China of dumping excess production into global markets, threatening their local industries. However, China refutes these allegations, maintaining that its industrial expansion is driven by technological advancements and genuine market demand.

By formally recognizing Neijuan as a challenge, China aims to strike a balance between competition and economic stability. Addressing these concerns is expected to create a healthier business environment that benefits both industries and workers, ensuring long-term sustainability.

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