Remedying “Involution-Style” Competition by Breaking Structural Barriers

Competition is a basic attribute of the market economy and the source of momentum for market circulation, but “involution-style” competition is a manifestation of excessive competition, essentially a disorder in the market order that causes the costs of competition to far exceed its benefits. In recent years, in some of our country’s traditional industries and some emerging industries, the phenomenon of “involution-style” competition has appeared to varying degrees. At the micro level, it severely squeezes enterprises’ profit margins, and at the macro level, it creates an imbalance in the supply-demand structure, potentially forming a vicious transmission path of “declining enterprise profits → suppressed income growth → insufficient effective demand → excess supply of production capacity.” This has become one of the stubborn maladies that must be eliminated in the current deepening of the construction of a unified national market. From the perspective of institutional economics, the key inducement of “involution-style” competition is the structural contradiction between excessively high administrative barriers and excessively low market barriers, which locks a large number of our country’s enterprises into the mid-to-low end of the industrial chain. They can neither move “upward” to achieve innovation and upgrading, nor can they “downward” to exit the market quickly; they can only compete within a limited market space primarily along the dimensions of price and quantity, and the natural result is “involution.” In view of this, our country should comprehensively remedy “involution-style” competition in accordance with the principle of “establishing the new while abolishing the old.” On the one hand, it should “do subtraction” regarding excessively high administrative barriers; on the other hand, it should “do addition” regarding excessively low market barriers, thereby breaking the rigidity of structural barriers and strengthening the domestic economic cycle.

竞争是市场经济的基本属性，是市场循环的动力来源，但“内卷式”竞争却是竞争过度的表现，本质上是市场秩序混乱导致竞争成本远超竞争收益。近年来，我国一些传统行业以及部分新兴行业，不同程度地出现“内卷式”竞争现象，不仅在微观上严重挤压企业利润空间，而且在宏观上造成供需结构失衡，可能形成“企业利润下降—抑制收入增长—有效需求不足—产能供给过剩”的恶性传导路径，已成为当前纵深推进全国统一大市场建设必须清除的顽瘴痼疾之一。从制度经济学视角看，“内卷式”竞争的关键诱因是行政性壁垒过高而市场性壁垒过低的结构性矛盾导致我国大量企业被锁定在产业链的中低端环节，既无法向“上”实现创新升级，又无法向“下”快速退出市场，只能在有限的市场空间内以价格和数量为主要维度进行竞争，结果自然是“内卷化”。鉴于此，我国应按照“立破并举”原则综合整治“内卷式”竞争，一方面针对过高的行政性壁垒“做减法”，另一方面针对过低的市场性壁垒“做加法”，从而打破结构性壁垒刚性，做强国内大循环。

How “Involution-Style” Competition Takes Shape

“内卷式”竞争何以形成

The causes of “involution-style” competition are complex, involving both micro-level factors related to the enterprises themselves and macro-level factors of cyclical fluctuations. Institutional factors are equally non-negligible: the structural contradiction between excessively high administrative barriers and excessively low market barriers causes a large number of enterprises, passively or actively, to cluster in specific segments of the industrial chain, forming an industrial structure lock-in effect. Our country has a large number of mid-to-low-end industries, and some emerging industries have already seen their technologies become relatively mature. Therefore, under current buyer’s market conditions where supply is a fast variable and demand is a slow variable, overinvestment and redundant construction in mid-to-low-end industries inevitably occur in the process of the domestic economic cycle, leading to product homogenization. Under these conditions, the means of enterprise competition often becomes the price variable, which may even escalate into a vicious “price war.”

“内卷式”竞争的成因很复杂，既有微观层面企业自身的原因，也有宏观层面周期波动的原因。制度性因素同样不可忽视，过高的行政性壁垒和过低的市场性壁垒之间的结构性矛盾，使大量企业被动或主动地聚集于产业链的特定环节，形成产业结构锁定效应。我国存在大量中低端产业，部分新兴产业技术也已经相对成熟。因此，在当前供给是快变量而需求是慢变量的买方市场条件下，国内经济循环过程中就会不可避免地出现中低端产业过度投资和重复建设，导致产品同质化。在此条件下，企业竞争的手段往往是价格变量，甚至可能激化为恶性的“价格战”。

The first path of formation: excessively high administrative barriers → enterprises’ innovation and upgrading “encounter obstacles” → passive “involution-style” competition. For a long time, governments have improperly intervened in the market by virtue of administrative power, forming a thick and high administrative barrier. This administrative barrier can be divided into vertical and horizontal types. Vertical administrative barriers mainly refer to the government directly or indirectly controlling the allocation of factors of production, leading to varying degrees of dysfunction in these factor markets, such as the operational behavior of commercial banks under the control of administrative monopoly power. Horizontal administrative barriers refer to the government’s “quasi-market entity” intervention behavior, especially the “administrative region economy” competition mainly manifested in local government-led industrial policies, such as actions taken by local governments to exclude or restrict the participation of enterprises from other regions out of consideration for maximizing local interests. Under the influence of excessively high administrative barriers, the vitality of enterprises to engage in innovation and upgrading is suppressed, forcing them to compete for survival in the original mid-to-low-end segments of the industrial chain. As the market capacity in the original field gradually becomes saturated, the final result can only be “involution.” Furthermore, excessively high administrative barriers are also manifested in significant restrictions on enterprise exit.

第一条形成路径，行政性壁垒过高—企业创新升级“遇阻”—被动型“内卷式”竞争。长期以来，政府凭借行政权力对市场进行不当干预，形成了一道又高又厚的行政性壁垒。这种行政性壁垒可以分为纵向和横向两类。其中，纵向行政性壁垒主要指政府直接或间接地控制生产要素配置，导致这些要素市场的功能存在不同程度的缺失，如在行政垄断力量控制下的商业银行经营行为。横向行政性壁垒是指政府的“准市场主体”干预行为，尤其是以地方政府主导型产业政策为主要表现形式的“行政区经济”竞争，如地方政府出于本地利益最大化的考虑采取的排除、限制外地企业参与竞争的行为。在过高的行政性壁垒影响下，企业进行创新升级的活力受到抑制，被迫在原有的产业链中低端环节为了生存而进行竞争，而原有领域的市场容量又逐渐饱和，最终的结果只能是“内卷化”。此外，过高的行政性壁垒还表现为对企业退出的极大限制。

The second path of formation: excessively low market barriers → enterprises “surge” toward the mid-to-low end → active “involution-style” competition. The reality of our country’s industrial structure, which includes a large number of mid-to-low-end industries, determines that the overall technical and capital thresholds for enterprise entry are not high. Under these circumstances, a large number of new enterprises actively flood into the market, causing a rapid expansion of production capacity supply. More importantly, these new entrants tend to favor technological imitation rather than independent technological innovation. This “copy-paste” model further deprives the entire industry of the necessary technological “moat,” which is detrimental to increasing the industry’s market concentration. In fact, a certain degree of market concentration is conducive to enhancing the industry’s capacity for spontaneous self-regulation, promoting autonomous coordination and cooperation among enterprises, and thereby improving enterprise performance. Although the market concentration of our country’s manufacturing industries shows an overall upward trend over time, a report titled “Origin and Region: Two Observations on Concentration” published in July 2025 [1]1 The report “产地与地区：两个集中度观察” (Origin and Region: Two Observations on Concentration) is cited as published in July 2025, a date that lies in the future relative to the likely original publication date of this text, indicating a hypothetical or projected reference. indicates that the concentration of most manufacturing industries in our country, such as pharmaceuticals, automobiles, and food, is relatively low. This suggests that enterprises within these industries are relatively dispersed and act independently, which easily triggers “involution-style” competition.

第二条形成路径，市场性壁垒过低—企业向中低端“潮涌”—主动型“内卷式”竞争。我国存在大量中低端产业的产业结构现实，决定了企业进入的总体技术、资金门槛不高。在这种情况下，大量新企业主动涌入市场，导致产能供给迅速膨胀。更重要的是，这些新进入企业往往倾向于技术模仿而非技术自主创新，这种“复制粘贴”模式会进一步导致整个行业缺乏必要的技术“护城河”，不利于提升行业市场集中度。实际上，一定程度的市场集中度有利于行业增强自发规范能力，促进企业自主协调合作，进而提高企业绩效水平。虽然我国制造业各行业市场集中度在纵向时序上表现出整体上升的态势，但2025年7月发布的《产地与地区：两个集中度观察》报告显示，我国医药、汽车、食品等多数制造行业的集中度均偏低，表明行业内企业分布比较分散且各自为政，容易引发“内卷式”竞争。

Using “Addition and Subtraction” to Break Structural Barriers

以“加减法”打破结构性壁垒

According to the above analysis, an effective path for comprehensively remedying “involution-style” competition lies in doing “addition and subtraction” regarding excessively high administrative barriers and excessively low market barriers, thereby breaking the rigidity of structural barriers.

根据上述分析，综合整治“内卷式”竞争的有效路径在于针对过高的行政性壁垒和过低的市场性壁垒做好“加减法”，打破结构性壁垒刚性。

On the one hand, it is necessary to “do subtraction” regarding excessively high administrative barriers. First, the implementation method of industrial policy must be changed. Currently, in addition to reforms for openness and transparency, subsidies can be redirected to consumers or users. This not only helps stimulate the expansion of the market scale for emerging industries but also allows for the selection of truly outstanding enterprises in the eyes of consumers. At the same time, the focus of industrial policy support should be shifted from the back end of the industrial chain—the production stage—to the front end—the stage of technological innovation—reducing support for the mere expansion of production scale. Second, cross-regional fair competition reviews should be carried out to regulate local government investment attraction behavior. One measure is to expand the scope of fair competition reviews to include local government-led investment activities, especially illegal and non-public investment subsidies. Another is to rely on major regional strategies such as the integration of the Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area to explore the establishment of cross-regional and cross-departmental fair competition review working mechanisms. Third, the central economic authorities should work jointly with the Central Commission for Discipline Inspection, especially the Central Inspection Teams [2]2 The Central Inspection Teams (中央巡视组) are dispatched by the Central Committee of the CPC to conduct discipline inspection tours of Party and government organs, state-owned enterprises, and other institutions, reporting findings directly to the central leadership., to focus on inspecting situations where local chief officials violate the spirit of the central document on building a unified national market. On the other hand, it is necessary to “do addition” regarding excessively low market barriers. First, research and exploration into tax system reform should be conducted to form new, stable sources of revenue for local governments. The local government’s interest has always been in the investment and production end, the root cause of which lies in the value-added tax system, which taxes according to the production end. If the system were gradually changed to a consumption tax levied according to the consumption end—moving the collection point of the consumption tax backward and steadily delegating it to local governments, gradually expanding the scope of the consumption tax, and transitioning the consumption tax into a universally levied retail tax—then phenomena such as local governments not paying attention to the market and the difficulty in boosting domestic demand would be improved.

一方面，要针对过高的行政性壁垒“做减法”。第一，要转变产业政策的实施方式。当前，除公开化、透明化改革外，还可以将补贴对象转化为消费者或用户，这不仅有助于刺激新兴产业的市场规模扩大，也能遴选出消费者心目中真正优秀的企业。同时，要把产业政策支持的重点，从产业链后端转向前端的科技创新环节，减少对单纯的生产规模扩张环节的支持。第二，开展跨区域公平竞争审查，规范地方政府招商引资行为。一是拓展公平竞争审查范围，将公平竞争审查范围扩展到地方政府主导的投资行为，尤其是违规的非公开的投资补贴。二是依托长三角一体化、粤港澳大湾区等区域重大战略，探索建立跨区域跨部门的公平竞争审查工作机制。三是中央经济主管部门要与纪律检查委员会尤其是中央巡视组联合工作，重点巡视地方主政官员违反中央关于全国统一大市场建设文件精神的情况。第三，要研究探索税收制度改革，形成地方政府新的稳定的收入来源。地方政府的兴趣始终在投资和生产端，根源在于按照生产端收税的增值税制度。如果逐步改为按照消费端征收消费税，推进消费税征收环节后移并稳步下划地方，逐步拓展消费税征收的范围，并把消费税过渡到普遍征收的零售税，那么地方政府不注重市场、内需难以提振等现象将会得以改善。

On the other hand, it is necessary to “add” to excessively low market barriers. First, we must adhere to standard-led and standard-dominant industrial production layout, raise the thresholds of national and industry standards in production, technology, safety, energy consumption, environmental protection, and quality, strictly control new production capacity, accelerate the elimination of outdated production capacity, and orderly promote the optimization and upgrading of the industrial structure. At the same time, we must improve the incentive mechanism for enterprises to increase R&D investment, encourage enterprises to form unique competitive advantages in product functions, quality, design, etc., thereby pushing enterprises to shift toward product differentiation competition. Second, we must make full use of the capital market, support leading enterprises in mergers and acquisitions of troubled enterprises, promote large-scale and intensive operations, and improve the supply-demand relationship. To this end, we must strengthen the classified supervision and rapid review mechanism, optimize the institutional environment for mergers and acquisitions, such as setting a 3–5 year transition period for horizontal competition formed by mergers and acquisitions, allowing gradual resolution through asset divestiture, business segmentation, and other means, to avoid rigid regulatory constraints; we must build a multi-level M&A financing system and broaden the sources of M&A funds. Third, we must vigorously strengthen industry self-discipline and credit constraints, and give play to the supervisory and coordinating role of industry associations in the standardized development of industries. Joint judicial institutions can establish an M&A dispute mediation committee to provide “professional mediation + judicial confirmation” services for common issues such as valuation disagreements and performance commitment disputes. We can also cooperate with stock exchanges and securities regulatory bureaus to establish M&A risk monitoring models, and establish a tripartite consultation mechanism among “industry associations—regulatory authorities—local governments.” In addition, we can explore the use of blockchain technology to achieve data immutability, and connect with the national credit information sharing platform to ensure the authenticity and timeliness of credit records, integrating public credit information with market credit information.

另一方面，要针对过低的市场性壁垒“做加法”。第一，要坚持标准引领与标准主导产业生产布局，提高生产、技术、安全、能耗、环保、质量等国家标准和行业标准门槛，严格控制新增产能，加快淘汰落后产能，有序推进产业结构优化升级。同时，要完善企业加大研发投入的激励机制，鼓励企业在产品功能、质量、设计等方面形成独特竞争优势，从而推动企业转向产品差异化竞争。第二，要充分利用资本市场，支持龙头企业对问题企业并购重组，促进规模化、集约化经营，改善供求关系。为此，要强化分类监管与快速审核机制，优化并购重组制度环境，如对并购形成的同业竞争可设置3—5年过渡期，允许通过资产剥离、业务划分等方式逐步解决，避免机械性监管约束；要构建多层次并购融资体系，拓宽并购资金来源。第三，要大力强化行业自律和信用约束，发挥行业协会对产业规范发展的监督协调作用。可以联合司法机构建立并购纠纷调解委员会，针对估值分歧、业绩承诺纠纷等常见问题，提供“专业调解+司法确认”服务。还可以与交易所、证监局合作建立并购风险监测模型，并建立“行业协会—监管部门—地方政府”三方会商机制。此外，可以探索利用区块链技术实现数据不可篡改，并与全国信用信息共享平台对接，确保信用记录的真实性和时效性，整合公共信用信息与市场信用信息。

(The author is an assistant researcher at the Yangtze River Industrial Development Research Institute, Nanjing University)

（作者系南京大学长江产业发展研究院助理研究员）

Online editor: Huihui

网络编辑：慧慧