Core Viewpoint - The article discusses the issue of "involutionary competition" in various industries, emphasizing the need for regulatory measures to promote product quality and orderly market competition, as highlighted in the recent Central Financial Committee meeting [1][5][6]. Understanding "Involutionary Competition" - "Involutionary competition" refers to a form of homogenized and disorderly competition, resulting in excessive investment without improving output efficiency, leading to resource misallocation [10][11]. - It manifests in two dimensions: horizontal competition among peers, characterized by over-investment and price wars, and vertical competition, where dominant firms transfer competitive pressure to suppliers and retailers, disrupting market order [11][12]. Causes of "Involutionary Competition" - The root causes include macroeconomic oversupply and microeconomic market failures. Oversupply leads to a negative cycle, while market failures can stem from blind investments and structural power imbalances [22][23]. - The article identifies the need to combat "involution" to achieve reasonable price recovery and promote sustainable innovation, shifting competition from price to value [31][35]. Effective Measures to Address "Involutionary Competition" - The current approach to combating "involution" is more market-oriented and legalistic compared to previous capacity reduction efforts, focusing on innovation and consumer demand [3][44]. - Industries likely to benefit from these measures include coal, steel, construction materials, chemicals, and emerging sectors like photovoltaic and electric vehicles, which are currently experiencing "involutionary competition" [6][66]. Regulatory Framework and Industry Response - Recent regulatory actions include collective production cuts in the photovoltaic glass sector and commitments from major automotive companies to limit payment terms to suppliers [6][9]. - The government has implemented various laws to ensure fair competition, such as the "Fair Competition Review Regulations" and the "Payment Guarantee for Small and Medium Enterprises" [9][17]. Industry Impact and Future Outlook - The article suggests that industries with significant "involutionary competition" characteristics, such as declining capacity utilization and increased sales expenses, should be closely monitored for the effectiveness of "anti-involution" policies [64][66]. - The transition from price competition to value competition is expected to enhance product quality and long-term profitability, aiding in the overall industrial upgrade and high-quality development [43][44].

Core Viewpoint - The recent price war initiated by leading electric vehicle manufacturer BYD has triggered a chain reaction in the industry, leading to significant market volatility and a decline in the market value of major automakers, with losses exceeding 100 billion yuan [1] Group 1: Industry Dynamics - The price war has resulted in a widespread drop in stock prices for automakers, with leading companies experiencing a market value loss of over 100 billion yuan [1] - Local government policies, driven by GDP competition, have created a distorted market environment, leading to overcapacity and price reductions in various sectors, including the photovoltaic industry [1] - The rampant practice of "zero-kilometer used cars" has emerged as a symptom of industry internalization, distorting pricing systems and undermining brand reputation [1] Group 2: Innovation Challenges - The survival anxiety among companies has led to a reduction in R&D budgets, with funds originally allocated for key technological advancements being redirected to subsidies for terminal promotions [2] - Tier 1 suppliers have been forced to cut costs, resulting in a decline in R&D investment ratios, which has contributed to a homogenization of products in the automotive industry [2] - The dual pressure from developed countries' technological barriers and Southeast Asian countries' cost advantages has made it increasingly difficult for Chinese companies to innovate and upgrade [2] Group 3: Solutions and Recommendations - To break the cycle of internalization, there is a need to create an "innovation-friendly" ecosystem by optimizing the existing institutional framework and promoting fair competition across regions [3] - Companies should focus on core technological innovations, increase R&D investments, and foster collaboration within the supply chain to enhance overall efficiency [3] - Macro policies should guide resources towards high-tech sectors and encourage consumer willingness to pay a premium for technological innovations, particularly in emerging industries like electric vehicles [4] Group 4: Long-term Transformation - The transformation away from internalization is crucial for national development, requiring a shift in development logic to prioritize innovation and entrepreneurial spirit [5] - Achieving high-quality development in the automotive industry and manufacturing sector necessitates a transition from a "sweat economy" to a "smart economy" through long-term collaboration among institutions, companies, and society [5]