【Abstract】The problem of "involving" is the product of economic and social development to a certain stage. In-depth analysis of the generation mechanism of "involving" competition requires entering from multiple perspectives such as market, technology, industry, and system. To comprehensively rectify "internal-coil" competition, we must adhere to the coordinated efforts of effective markets and effective governments, break administrative barriers and eliminate market segmentation through the construction of a unified national market; use scientific and technological innovation to break through the dilemma of "low-end lock-in" and cultivate new development momentum. By enhancing the independent development capabilities of enterprises, promoting administrative reforms of local governments, and promoting the transformation and upgrading of industrial policies, the pressure of "internal circulation" will be transformed into "outer expansion" driving force, injecting strong momentum into high-quality economic and social development.

[Keywords] "Intra-roll" competition industrial policy to develop the economy with high quality [Zhongtu Classification Number] F015 [Document Identification Code] A

At present, the "intra-volume" issue has attracted widespread attention at home and abroad, and has profoundly affected the economic operation and development trend. Academic and industry have different views on this. Some views believe that "involving" is a normal market competition phenomenon. Market competition is manifested to a certain extent as "involving" between enterprises, and enterprises gain international competitiveness through domestic market competition; but some views also emphasize that "involving" competition is vicious and is an important factor leading to economic austerity. If the latter view is true, the problem will be far beyond the ordinary market competition phenomenon and become extremely serious. We must quickly seek effective governance methods. "Intra-roll" competition has become a pain point that restricts the sustained, healthy and high-quality development of the national economy.

The "involuntary" issue is a product of economic and social development to a certain stage. It is essentially different from the serious overproduction that leads to the economic crisis and cannot be confused. In the era of shortage economy, consumers compete for producers, and the market "repeat" consumers; when entering the stage of high-quality development, producers compete for consumers, and the market "repeat" producers. This is an important mechanism for the market to promote competition, division of labor and growth. However, when producers compete for consumers, they need to have a reasonable degree of competition. If they exceed this degree of competition, they will become disorderly and inefficient competition. What is this "degree"? That is, the price cannot be lower than the cost, especially the average variable cost.

The 2024 Central Economic Work Conference pointed out: "Comprehensively rectify 'in-volume' competition and regulate the behavior of local governments and enterprises." ① The "in-volume" problem can be analyzed from the three levels of micro, meso and macro. At the micro level, it is related to corporate strategy and behavioral choices, such as low-price market occupation strategy; at the meso level, it focuses on the interactive relationship between enterprises within the industry, such as the correlation between the entry and exit of the enterprise and the degree of competition; at the macro level, it is necessary to grasp the macro trend and trend from the perspective of balanced supply and total demand. In-depth exploration of the "intra-copy" competition problem, analyzing its generation logic, the causes behind it, and exploring effective countermeasures is of great significance to the high-quality development of my country's economy and society.

Generation logic of "involved" competition

The imbalance in supply and demand triggers a "price war". When an industry's production capacity or supply capacity significantly exceeds the expansion speed of its market capacity, it is easy to trigger a "price war". Taking the new energy vehicle industry as an example, in recent years, the industry has developed rapidly, with many companies pouring in, and production capacity has been greatly improved. However, the growth of market capacity is difficult to keep up with the pace of capacity expansion, inventory pressure continues to increase, and oversupply ultimately triggers a "price war", which has become an important factor in the low profit margin or even losses in the new energy vehicle industry. If the expansion of production capacity far exceeds the growth of market capacity, the market share of each enterprise will continue to shrink. In order to survive, enterprises can only compete for the market by lowering prices, and then fall into a vicious cycle of price competition. Even in the case of overcapacity, meager profits or even losses, some companies continue to invest. This is because vicious competition has caused an existing threat. In the fierce market competition, whoever does not continue to invest may be eliminated first. This irrational continuous investment further aggravates overcapacity and puts the industry in a deeper "involved" dilemma.

In the past period of time, in the process of attracting investment, some local governments have competed to provide unreasonable preferential conditions to attract large projects and adopted a "one-one-one-discussion" competitive strategy for major projects. This not only sacrifices reasonable remuneration for factor input, but also puts the government on a heavy debt burden. According to the survey, the debts of development zones in some counties and cities account for one-third or even more than half of the total liabilities of the city or county, and the marginal returns of actual project investment are often negative or close to zero. This kind of investment promotion behavior causes too much profit to flow to capital owners, giving birth to a large number of groups who are rushing to obtain project benefits, further leading to overcapacity and laying hidden dangers for "intra-roll" competition.

Inadequate innovation leads to homogeneous competition. The technological development of some enterprises mostly relies on imitation and introduction, and the product homogeneity is serious and there is a lack of differentiation and pricing capabilities. Enterprises cannot control market share through product characteristics, and can only compete by reducing prices, which eventually evolves into a "price war". Taking the mobile phone RF chip market as an example, this market is mainly monopolized by several large multinational companies, and it is difficult for domestic peers to break through the technical bottleneck. It is inevitable to fall into homogeneous competition in the competition. The main competitive method is price reduction. This kind of homogeneous competition makes it difficult for enterprises to achieve sustainable development, and even the entire industry will fall into a vicious cycle of low-level competition.

Pressure transmission of industrial chain. my country has significant production advantages in the field of terminal product manufacturing, which has spawned a number of industry-leading enterprises. However, these industry giants often pass on pressure to upstream suppliers in different forms when dealing with fierce market competition. Specifically, downstream chain owners often adopt a delayed payment strategy for upstream suppliers, or force suppliers to reduce prices significantly in a very short period of time, otherwise they will terminate their cooperation. In addition, centralized procurement models in the communication equipment market, pharmaceutical market and other fields often push prices to extremely low levels when bargaining for final products, which squeezes the living space and development prospects of upstream enterprises in the industrial chain, destroys the ecological balance of the industrial chain, and aggravates the industry's "internalization" competitive trend.

The entry threshold is relatively low. When the entry threshold for an industry is too low, the limited market capacity will quickly attract a large number of companies to influx. These companies often find it difficult to reach the level of economies of scale, and ultimately they can only trigger a "price war" by reducing price competition. This phenomenon is more obvious in the wind energy and photovoltaic industries. Taking the photovoltaic industry as an example, its technical barriers are relatively low. The technical thresholds are not high in all links from silicon wafers, battery cells, modules, photovoltaic glass to adhesive films. This has led to many companies entering the photovoltaic field, causing the market to oversupply and the industry to show an "in-convex" trend. In August 2025, the Ministry of Industry and Information Technology and six other departments jointly held a symposium on the photovoltaic industry, requiring "advocating fair competition, orderly development, and strengthening technological innovation leadership." ②

Analysis of the reasons for "in-roll" competition

From the corporate perspective, some companies adhere to the zero-sum game thinking and try to force competitors to a difficult situation through price cuts and other means to compete for market space. ③This competitive thinking can be seen to varying degrees in both the domestic and international markets. Even if the production capacity of some industries has not yet been oversupplied, the "involuntary" phenomenon may still occur due to this zero-sum game concept. This kind of competition method that is either one or the other is contrary to the development trend of win-win cooperation in modern society. If it is promoted and practiced for a long time, it will be extremely unfavorable to the long-term development of the enterprise.

From the perspective of industrial structure, my country's industrial organizational mechanism is not yet sound, and the oligopoly market structure common in market economies of developed countries has not yet formed. The market structure of the oligopoly monopoly is dominated by several oligopoly enterprises, driving the coordinated development of a large number of small and medium-sized enterprises in the upstream and downstream of the industrial chain. This structure helps to form a competitive cooperative relationship and governance mechanism between the main enterprises in the industrial chain and upstream suppliers. The formation of the oligopoly competition structure depends on long-term competition and mergers and acquisition mechanisms. Long-term competition has prompted enterprises to optimize and improve their competitiveness, and mergers and acquisitions and corporate bankruptcy mechanisms have gradually formed oligopolistic enterprises through market integration. These oligarchs have certain competitive relationships and have established close cooperative relationships with a large number of small and medium-sized enterprises. At the same time, they have a certain tacit understanding between them. The imperfect industrial organizational structure is one of the important reasons for "involved" competition. In recent years, local governments have participated in market competition by establishing various funds. However, if local governments excessively interfere in the market during the competition, such as excessive discounts when attracting investment, and lax control over the entry threshold for the industry, it will further aggravate the shortcomings of the industrial organizational structure.

From the perspective of innovation, some industries have problems with technological innovation lag and path dependence, and it is difficult for enterprises to break through the old technological paradigm and be locked in the old technological track, resulting in homogeneous competition. Taking the photovoltaic industry as an example, the industry relies on mature processes. If process innovation is insufficient, enterprises will conduct homogeneous expansion of production, which will further intensify market competition. In addition, the manufacturing industry has a "hard and softer" phenomenon, and the underlying technology of industrial software is controlled by others, which will limit the overall technological upgrading and innovative development of the industry, making enterprises lack core competitiveness in market competition and fall into a low-level "in-roll" competition.

my country has a super-large-scale market advantage, but this advantage has not been fully released. The domestic demand market is difficult to effectively absorb excess capacity. Coupled with the instability of external demand, companies are forced to adopt low-price competition strategies in order to gain a place in their limited market share, which has led to "intra-roll" competition. In addition, problems such as market rules and regulations are not clear enough, fair competition review is not thorough enough, local protectionism and industry barriers have not been completely eliminated, and industry self-discipline mechanisms are not perfect enough, and have become a "peptidebed" breeding of "intra-roll" competition.

Comprehensive rectification of "intra-roll" competition

If enterprises want to get rid of "intra-roll" competition, they must strengthen the construction of autonomy and decision-making independence and implement hard budget constraints. Hard budget constraints can encourage enterprises to use resources carefully, assume corresponding responsibilities, and compete effectively in the market. Enterprises should establish correct competitive concepts, abandon zero-sum game thinking, turn to the competitive concept of win-win cooperation, focus on long-term development and value creation, improve competitiveness by improving product quality, strengthening innovation, and optimizing services, and avoid falling into simple price competition.

Local governments should further clarify their functional positioning, reduce excessive intervention in the market, and avoid blindly following the trend and misaligned guidance. In the process of attracting investment, formulate scientific and reasonable policies to avoid excessive concessions and abuse of discretion, and pay attention to industrial quality and sustainable development. Strengthen inter-regional cooperation and coordination, further break administrative regional barriers, promote the free flow of factors and the optimal allocation of resources, and create a good market environment for industrial development.

In terms of industrial policies, first, support the transfer of industrial policies to the front end. Facing the requirements of the times to accelerate the development of new quality productivity and promote high-quality development, industrial policies should focus more on front-end R&D and innovation. Although there may be problems such as repeated investment in resources in the early stage, this is an inevitable cost of technological progress. When a company obtains results through R&D and applies for a patent, other companies will naturally withdraw, thereby driving the overall technological upgrade of the industry. The government should increase investment in basic research and key core technologies R&D, encourage enterprises to cooperate with scientific research institutions, establish a collaborative innovation mechanism between industry, academia and research, and improve the overall innovation capabilities of the industry. Second, adjust the direction of industrial policy subsidies. In the past, industrial policies tended to subsidize producers, which could easily lead to overcapacity, corporate rent-seeking and corruption. At present, policies are more shifting to subsidizing consumers, users and customers, in order to expand market demand and alleviate the "involunteer" problem. We can continue to stimulate consumers to purchase new products and services through consumption subsidies, tax incentives and other means, and promote the healthy development of the industry. For example, subsidies to consumers of new energy vehicle can not only expand market demand, but also promote the transformation and upgrading of the automobile industry toward green and intelligent directions. Third, transformation of industrial policies implementation methods. Industrial policies should be committed to creating a fair competition and innovation environment, strengthening intellectual property protection, maintaining market competition order, allowing outstanding enterprises to stand out in fair competition, and stimulating market vitality and innovation momentum. Fourth, the main body of industrial policy implementation has been moved upward. Transforming local leading industrial policies into central leading industrial policies is the basic prerequisite for building a unified national market. The central-led industrial policy is not to return to the planned economy, but to reduce the number of industrial policies and allow the central government to concentrate resources to support key industries. Industrial policies that are compatible with the development of new quality productivity will be implemented uniformly at the central level to achieve consistency, unity and coordination of rules, policies and actions.

Optimize the industrial organizational structure. Through the combination of policy guidance and market mechanisms, we will promote mergers and acquisitions and asset restructuring among enterprises and promote the optimization of the industrial organizational structure. Advantageous enterprises are encouraged to expand their scale through mergers and acquisitions, increase market concentration, and at the same time drive small and medium-sized enterprises to develop together in the upstream and downstream of the industrial chain to form a good industrial ecology. Strengthen the systematic thinking of "online" coordination of the industrial chain, fully cultivate and support chain-master enterprises, and fully build a linkage mechanism between chain-master enterprises and specialized, specialized, and new small and medium-sized enterprises. ④ Strengthen the norms and guidance of enterprise mergers and acquisitions, prevent monopoly behaviors, and ensure the fairness and effectiveness of market competition.

Improve technological innovation capabilities. Increase investment in technological innovation, encourage enterprises to independently develop, break through key core technologies, and get rid of technological dependence and path dependence. Establish and improve a technological innovation incentive mechanism and provide policy support such as tax incentives, financial subsidies, and financial support to innovative enterprises. Strengthen intellectual property protection and improve the enthusiasm and initiative of enterprises to innovate. Cultivate innovative talents and provide intellectual support for technological innovation. Promote industrial technology upgrading, promote industrial structure optimization, improve industrial added value and competitiveness, and fundamentally solve the problem of "intra-roll" competition.

Promote the balance between total supply and demand and structure. Coordinating the expansion of domestic demand and optimizing supply are the basic principles. In the buyer's market, the supply side is a fast variable and the demand side is a slow variable. The actual scale of the economy depends on the scale of demand, not the scale of production. Expanding domestic demand is not a short-term response, but a fundamental task in the medium and long term. Therefore, on the one hand, we need to actively expand the foreign demand market, strengthen international cooperation, improve the mechanism for promoting high-quality joint construction of the "Belt and Road" and open up new international market space for enterprises. On the other hand, we should focus on expanding domestic demand and fully release the advantages of super-large-scale market through measures such as improving the social security system, increasing residents' income, and promoting consumption upgrades. Encourage enterprises to base themselves on domestic market demand, develop innovative products and services, promote the formation of a benign interactive pattern between industries and consumption, achieve a dynamic balance of supply and demand structure, and effectively alleviate the pressure of overcapacity.

In July 2025, the Central Committee of the Communist Party of China held a symposium for non-party members to listen to the opinions and suggestions of the central committees of various democratic parties, the All-China Federation of Industry and Commerce, and representatives of non-party members on the current economic situation and economic work in the second half of the year. General Secretary Xi Jinping presided over the symposium and delivered an important speech emphasizing: "We should effectively boost consumption, break the 'intra-volume', smooth the domestic circulation, and promote the domestic and international dual circulation." ⑤ To comprehensively rectify "internal-coil" competition, we must adhere to the coordinated efforts of effective markets and effective governments, break administrative barriers and eliminate market segmentation through the construction of a unified national market; use scientific and technological innovation to break through the dilemma of "low-end lock-in" and cultivate new development momentum. By enhancing the independent development capabilities of enterprises, promoting administrative reforms of local governments, and promoting the transformation and upgrading of industrial policies, the pressure of "internal circulation" will be transformed into "outer expansion" driving force, injecting strong momentum into high-quality economic and social development.

【Note】

① "The Central Economic Work Conference held an important speech by Xi Jinping in Beijing. Li Qiang made a summary speech by Zhao Leji, Wang Huning, Cai Qi, Ding, Xue Xiang and Li Xi attended the meeting", People's Daily, December 13, 2024.

② "Six departments deploy further standardize the competitive order of the photovoltaic industry", China Government Network, August 19, 2025.

③Qiao Ruiqing: "Comprehensive rectification of "internal-copy" competition to create a good development environment", China Economic Net, December 21, 2024.

④Liu Zhibiao: "Solidly promote the rise of the central region with industrial chain policies as the center", "People's Forum·Academic Frontier", Issue 12, 2024.

⑤ "The Central Committee of the Communist Party of China held a symposium on the current economic situation and economic work in the second half of the year. Xi Jinping presided over and delivered an important speech. Li Qiang reported on the relevant situation. Wang Huning, Cai Qi, Ding and Xue Xiang attended." People's Daily, July 31, 2025.