Core Viewpoint - The Chinese government is focusing on combating "involution" in competition by regulating local government behaviors and promoting orderly market practices to ensure a unified national market [3][5][6]. Group 1: Government Regulation and Market Order - The central government has emphasized the need to strengthen industry self-discipline and prevent "involution" in competition, with a focus on regulating local government and enterprise behaviors [4][5]. - The State Development and Reform Commission highlighted the importance of combining effective market mechanisms with proactive government actions to address issues of disorderly competition and market failures [5][6]. - Local governments are seen as both maintainers of market order and potential instigators of harmful competition due to performance pressures and fiscal decentralization [6][7]. Group 2: Local Government's Role in Involution - Local governments engage in "involution" through practices such as creating "policy lowlands," homogeneous industrial layouts, and setting market barriers to attract investments [6][7]. - The competition among local governments often leads to resource wastage and market disorder, driven by a GDP-centric performance evaluation system [6][8]. - The central government aims to standardize government behavior and clarify acceptable practices in investment attraction to mitigate systemic risks associated with local government competition [5][6]. Group 3: Long-term Solutions and Market Environment - Experts suggest that a shift from "zero-sum" policy competition to "positive-sum" institutional innovation is necessary for high-quality development [8][9]. - There is a call for the establishment of a regulatory framework that encourages long-term business environment assessments rather than short-term economic metrics [9][10]. - The government should create conditions for innovation-driven development by expanding market opportunities and supporting regional cooperation [14][15]. Group 4: Price Wars and Competition Dynamics - Price wars, often seen in the platform economy, are viewed as aggressive competition strategies that can lead to market instability and consumer dependency on subsidies [10][12]. - The long-term effects of price wars include reduced merchant profitability, market homogenization, and increased operational risks for platforms [12][13]. - The need for a balanced approach to competition is emphasized, where platforms are encouraged to focus on value creation rather than solely on price competition [20][21].

Core Viewpoint - The recent commitment from multiple food delivery platforms to resist malicious competition and regulate promotional activities marks a significant shift in the ongoing "subsidy war" within the industry, following regulatory discussions two weeks prior [1] Group 1: Nature of Price Wars - Price wars are seen as an aggressive competition strategy aimed at rapidly capturing market share and user resources, driven by structural motivations and competitive dynamics [1] - New platforms utilize subsidies to quickly attract users, while established platforms respond to defend their market share, leading to a cycle of competitive pressure among mid-tier platforms and merchants [1][2] - Despite being unsustainable, price wars often become institutionalized due to the "flow logic" and "competitive path dependence" in platform economies, resulting in normalized "involution" competition [1] Group 2: Regulatory Perspectives - Not all price wars are illegal; the legality hinges on whether they disrupt market order or harm fair competition, with key considerations including cost levels, forced participation, and exclusionary effects [4] - Short-term promotional subsidies are generally acceptable, but long-term, systemic below-cost subsidies may violate competition laws [4][5] Group 3: Short-term and Long-term Impacts - Short-term effects of price wars include a surge in orders and user growth, creating a false sense of prosperity that collapses once subsidies are withdrawn, leading to market instability [6] - Long-term consequences include profit compression for merchants, potential market exits of small businesses, and increased risks related to food safety and delivery pressures [7][8] Group 4: Consumer Behavior and Market Dynamics - Price wars can distort consumer expectations, leading to a dependency on subsidies and a decline in the perceived value of product quality and service [8] - The instability in labor markets and employment quality arises from the pressures of price wars, resulting in temporary employment and increased workload for delivery personnel [8] Group 5: Regulatory and Market Solutions - Effective governance should aim to distinguish between legitimate competition and "involution" competition, focusing on maintaining a healthy market environment [10][11] - The ultimate goal of countering "involution" is to foster a market that encourages differentiated competition and efficiency, allowing stakeholders to make autonomous decisions [13] Group 6: Role of Government - The government should create conditions for innovation-driven development, expanding market opportunities and reducing reliance on low-price models [16] - By enhancing infrastructure and regulatory frameworks, the government can support small businesses and facilitate a transition from price competition to value creation [16]