China moves to curb price wars (“involution” again), weighs national M&A fund

Beijing is signalling tougher oversight of price wars and fresh support for consolidation as it reshapes industrial competition.

Summary:

• NDRC vows crackdown on “disorderly” low-price competition

• Focus on curbing industrial “involution” and price wars

• Authorities want competition based on quality and branding

• China studying a national-level M&A fund

• Aim is to accelerate innovation and industrial upgrading

China is moving to rein in aggressive price competition while exploring new tools to accelerate industrial upgrading, signalling a more forceful policy push to address what officials describe as industrial “involution.”

Speaking at a State Council briefing on Tuesday, National Development and Reform Commission (NDRC) vice chairman Wang Changlin said authorities will step up efforts to curb what he called “disorderly” low-price competition in key sectors. The NDRC plans to tighten price supervision and refine local government investment-attraction practices in a bid to restore healthier market order.

Wang said excessive price cutting has undermined profitability, distorted competition and weighed on long-term innovation, particularly in manufacturing-heavy industries. The policy response aims to shift competition away from price wars and toward quality, branding and value-added production, a message that aligns with Beijing’s broader push to stabilise corporate margins and ease deflationary pressures.

Alongside the crackdown on destructive pricing, the NDRC is also studying the creation of a national-level merger and acquisition fund. Wang said such a fund could help accelerate the development of so-called “new quality productive forces” by supporting consolidation, innovation and strategic investment across priority industries.

The proposed fund would leverage national venture capital as a benchmark and improve coordination between government investment vehicles and existing fund structures. Officials see this as a way to guide capital toward sectors deemed strategically important, while reducing fragmentation and inefficient competition.

Taken together, the twin initiatives highlight a shift in policy emphasis. Rather than relying solely on stimulus to boost demand, Beijing is increasingly focused on supply-side discipline, corporate restructuring and industrial upgrading. That approach also reflects concerns that persistent price wars have contributed to deflationary dynamics and eroded returns across parts of the private sector.

For markets, the messaging points to greater regulatory oversight of pricing behaviour, potential consolidation winners in sectors targeted by M&A support, and a renewed policy effort to stabilise industrial profitability as China navigates slower growth and intense global competition.