The Chinese government has started a campaign to reduce the division of aggressive prices by local companies, which the organizers warn that it enhances excessive competition and harmful economic stability. As Reuters reported, the “Control of the Revolution” engine responds to the increased shrinkage of industrial excessive capacity and brutal price wars.
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The data from the Indexbox platform highlights the severe impact on corporate profitability, especially in the electric car sector. The average net profit margin of 33 Chinese auto manufacturers fell to only 0.83 % in 2024, a dramatic decrease of 2.7 % in 2019. This pressure is a direct result of intensive competition, represented by the price war that erupted in 2023 between brands including BYD and Tesla.
The solar energy industry faces a similar crisis. The excessive excessive capacity raised losses in the chain of photovoltaic manufacturing value estimated at $ 40 billion last year. Despite the beginning of the restructuring, the current production capacity of China for chips, cells and stereotypes is sufficient to meet the annual global demand until 2032. Other sectors exposed to these destroyed dynamics include lithium, steel, cement and food batteries, as they burn billions of technology giants in support to obtain a market share.
Economists note that changing consumer behavior is driven by persistent prices and risks contraction. This represents great challenges for policy makers, making efforts to achieve stability in the economy of $ 19 trillion. The situation is more tense due to an unnoticed commercial conflict with the United States and President Donald Trump, which increased the pressure on the factory’s profits. With youth unemployment by 17.8 %, Beijing is considered to reduce these excessive grinding as necessary for social stability.
Source: Indexbox Market Intelligence
