Nomura: China’s anti-involution push insufficient to revive growth as demand weakens

Nomura warns China’s “anti-involution” campaign won’t be enough to reignite growth

Nomura said China’s latest inflation data showed only modest improvement, suggesting the recovery remains fragile despite headline gains.

• October CPI rose 0.2% year-on-year, up from a 0.3% decline in September and slightly above forecasts. Producer price deflation narrowed to -2.1% from -2.3%, broadly in line with expectations.
• The bank noted that consumer prices were mainly lifted by higher food costs and a firmer core component, with surging gold prices a notable contributor, while producer prices benefited from stronger non-ferrous metals.
• However, durable goods prices stayed weak, underscoring persistent industrial softness.

Nomura kept its 2025 forecasts unchanged, expecting CPI to average around 0% and PPI to fall 2.5%. It said China’s “anti-involution” measures — aimed at easing workplace competition and boosting productivity — are unlikely on their own to deliver sustained growth, given mounting demand-side headwinds and sluggish domestic spending.

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I’ve been posting on China’s anti-involution policies since they came to ligfht.

ICYMi:

China’s “anti-involution” campaign refers to government and social efforts to counter neijuan (内卷) — a term describing excessive internal competition that yields diminishing returns, such as long work hours, overqualification, or unproductive rivalry in schools and workplaces. The concept captures how individuals and firms keep working harder without meaningful gains in innovation or income.

Beijing’s anti-involution push seeks to shift focus from relentless competition toward productivity, creativity, and better work-life balance. It includes policies encouraging quality-driven growth, youth employment reforms, and a more sustainable corporate culture — though economists argue that without stronger demand-side stimulus, these measures alone won’t meaningfully lift China’s economic momentum.