xiaohongshu

Zhang Weiying is Austrian school people lol. They love this free market shit.

Stop the price wars: China’s state media guns target cutthroat industrial competition SCMP

People’s Daily again rails against the scourge of neijuan plaguing sectors from EVs to batteries

China’s Communist Party mouthpiece has taken another shot at the unsustainable price wars dragging down industrial profits in the world’s second-biggest economy, urging firms to abandon the race to the bottom and refocus on quality.

In a front-page editorial on Sunday, People’s Daily raged against cutthroat neijuan tactics “infesting” various industries with excess capacity, including electric vehicles, photovoltaics and batteries.

Neijuan, also known as “involution”, refers to a self-defeating cycle of excessive competition.

“Solar module prices have tumbled to just 0.6 yuan per watt, prices have been slashed on over a hundred EV models while producers of energy storage equipment seek to underbid each other in the race for orders,” the editorial said.

“Disorderly price undercutting and homogeneous competition have infested many industries, distorting the market mechanism.

“It is a race to the bottom and will weaken the competitiveness of the entire industry.”

The editorial echoed earlier calls by both People’s Daily and other state-run outlets to stamp out neijuan, which is proving intractable as business profits plunge, leaving many manufacturers struggling to realise even razor-thin margins.

Amid persistent deflation and simmering trade tensions with the United States, industrial profits fell by 1.1 per cent year on year in China in the first five months, with a 9.1 per cent decline in May.

Profits for China’s car sector, one of the foundations of the country’s economy, were down 11.9 per cent during the January-May period.

The People’s Daily editorial highlighted the decline of the neijuan-riddled sector, saying average profit margins dropped to 4.3 per cent last year, with only four EV makers – BYD, Huawei-backed Seres, Li Auto and Leapmotor – making money in 2024.

“Resources are wasted on inefficient competition, which stifles innovation and leaves an imbalance in supply and demand. Neijuan directly affects wage levels, government tax revenues, investment confidence and the whole economy,” it said.

It also warned that neijuan took forms other than price wars, including companies that abused their dominance of the industrial chain to exploit partners upstream and downstream.

In addition, the editorial pointed to businesses that cut corners on quality and made copycat products in sectors that already had excess capacity, as well as local officials who made misguided efforts to woo investment through unsustainable tax breaks and subsidies.

This is the second time in a month that People’s Daily has taken aim at the vicious cycle of low price, low quality and ineffective, unrelenting competition.

The newspaper said at the end of May that regulators must act quickly and efficiently to stamp out price wars.

A month earlier, Beijing-based Economic Daily said in a commentary that neijuan remained prevalent, defining the phenomenon as “the harder you work, the less you gain”.

Observers said authorities needed to take tougher action to help ailing businesses escape the trap – action that could be spurred by the state media calls.

“Neijuan’s harm has been explained umpteen times but businesses are unable to escape it … It requires firmer state action,” said Tang Dajie, a senior researcher with the China Enterprise Institute think tank in Beijing.

Tang added that neijuan remained a big disincentive for tariff-hit exporters to pivot to the domestic market.

“Many more firms and investors are waiting to see how well and quickly Beijing can tame neijuan. It’s also a litmus test of the resolve and effectiveness of Beijing’s policies,” Tang said.

In his annual work report to the country’s legislature in March, Premier Li Qiang vowed to mount a “comprehensive crackdown on neijuan”. That followed similar directives from the top leadership at the annual central economic work conference in December.

In the past, authorities have promised to curb all neijuan excesses while also vowing to respect the market’s role in resource allocation and to create a unified, level national market, among others, to ensure “survival of the fittest”.

This shouldn’t come as a surprise for anyone paying attention to my posts.

I have an idea though: how about we raise the wages of the working people so they have the purchasing power to actually buy these products at a price that pay the workers well? Is this too much of a radical idea?

Trump can smell weakness and goes straight for the killing blow. This is the kind of people he likes to bully the most.

Lenin was imprisoned and then exiled to organize from abroad. Stalin stayed underground and had to organize in secret, narrowly avoided prosecution by the authorities numerous times. These people were living dangerously.

Chinese communists had it even worse. During the Long March, attrition rate was 95%, either died fighting the pursuing KMT forces, or from exposure to the elements. Barely a few thousand cadres made it to Yan’an, outgunned and outnumbered, after trekking thousands of miles of the most arduous mountainous terrain. Without ideological conviction, the group would have disbanded long before they made it to their destination.

How is this self-harm? China is poised to win big if it can convince the US to not go through the divorce. China’s export-led growth model has benefited greatly from dollar hegemony and intends to keep it so. The rare earth threat was a stern warning for the Americans that they couldn’t decouple just like that.

It is Europe and the Global South who will be harmed as the new global supply chain is being shaped under the US. If there is no alternative framework emerges, then we will, at best, see a multipolar neoliberalism. We’ve had three years to observe the changes in the world, and so far, there is no indication whatsoever that an alternative to neoliberalism is being formed (Russia did propose dedollarization back in 2022-2023 but that project is now as good as dead with China and the rest of the BRICS not being interested).

To put it in another way, we need to approach this from a Marxist perspective: let’s first examine what is the principal contradiction that is threatening American capitalism at this very moment?

Under the backdrop of trade union movements and anti-war/anti-government/civil rights protests at home and excessive spending on foreign wars abroad up to the 1970s, the key weaknesses of the Fordist-Keynesian model that had fostered a labor-capital class collaboration had been fully exposed under the stagflation following the oil crisis. Their failures gave way to the rise of neoliberalism, whose solution to the stagflation was to brutally crush the labor movement and various protests at home by exporting the American industrial base to the developing world. What, you’re asking for higher wages? We’ll let the cheap labor in the developing world to build our stuff, how about that?

With the US abandoning the Bretton Woods and turned the dollar into a free-floating fiat currency, it gained the ability to leverage its monetary hegemony to obtain “free lunch” all over the world, all to the benefit of the FIRE sector (finance, insurance, real estate) while its industrial base was being hollowed out.

When the 2008 global financial crisis hit, with millions unemployed and many more businesses closing down, what remained of the American manufacturing sector never recovered. Disillusionment and disenfranchisement of the system led to the rise of populism in the 2016 election cycle, in the form of Sanders’s progressive movement and Trump’s MAGA movement, with significant overlap between their support base. The contradictions caused by neoliberal finance capitalism and the long-term effect of deindustrialization have finally resulted in visible and increasingly obvious cracks in the American capitalist system.

In short, American capitalism has been attempting to “escape” from its own contradictions since the first Trump term. It is no coincidence that Trump launched the first trade war against China back in 2018. The goal is to ensure American hegemony while at the same time, handling its trade deficit problem that has caused so much discontent at home. The enemy of the US is not China, but the contradictions caused by its own system. Everything that happened since: including Biden’s Ukraine war to negate the vast consumption potential of Europe, and Trump’s global tariffs against the world, needs to be understood and viewed within such framework.

I don’t understand what you mean by this.

China has been very adamant that they want to defend the neoliberal free trade order, and Trump is the one that wants to disrupt the status quo. This is why the rare earth card is being played - to persuade Trump that the US cannot live without China. Read all the official statements from the Chinese MFA. China’s position could not be more clear on this. As a matter of fact, Trump returned to the negotiating table right after this.

However, since China is intent on preserving the status quo and wants to stick to this route, China will also become very dependent on the US, and because of this, they are also inadvertently giving Trump a lot of power. For one, the property market price is falling again after spending an inordinate amount of wealth to prop up the failing sector.

Local governments that have taken out huge amount of loans over the past 15 years to build infrastructure, and whose revenues depend on the land price to rise, are once again finding themselves in deep trouble. The latest government audit report for 2024 that just came out last week (will write an effort post on this) showed that hidden debt has increased over the past year despite all efforts to help relieve their debt.

Combined with the deflationary spiral, paradoxically, the local governments now rely even more on exports since their main tax base are value-added tax and corporate income tax. If people in the country don’t want to buy stuff, then foreigners will have to make up for it.

What this means is that all of this is giving Trump a lot of power to dictate the terms: the interest rate and the tariffs both directly control China’s local governments’ tax revenues and their ability to pay off their debt.

As you can see, all of this is a policy choice. The Chinese leadership could have said they don’t want to stick to the neoliberal status quo, and by simply refusing to export to the US, Trump would have no power over them. But this is not their decision, as has been made clear, over and over again.

What you’re seeing are two countries attempting to maximizing their ends at the bargaining table, and they are both very good at playing the game. But make no mistake, this is not a divorce.

To comment on the validity of the cases here: there is no definite proof as far as we know, but at least a dozen of internet accounts on major internet platforms (Weibo, Xiaohongshu, Douyin etc.) claiming to be the victims have posted photographic evidence of their own identification documents, police arrest warrants, detention notices, attorney bills etc. A number of practicing lawyers have also claimed that they have been approached by the victims. This has been happening since June last year but the number of cases seem to have increased over the past few months.

It is highly unlikely that people post fake evidence like this for drama, at least not in China, and especially since this has turned into a hot topic on the Chinese internet gaining quite a lot of attention. You can get into serious trouble for that. Especially for practicing attorneys linked to their actual businesses. I find it unlikely to be fabricated. Maybe the scale and extent have been exaggerated, but I don’t think people would want to risk losing their careers just for fabricating drama.

Gray zone. Most content creators aren’t registering themselves as businesses, let alone some poor college students writing on a niche website earning some donations and subscription fees.

You can enter into a contractual relationship with the internet platform and you may be liable to pay personal income tax, but personal income tax is only a very small fraction of the Chinese government tax base that they are negligible for internet content creators except for the largest channels with millions of subscribers as well as high profile celebrities involved in contracts comprising tens of millions of yuan.

Most of the tax revenues in China come from value-added tax, followed by corporate income tax. These are where the tax evaders are at. I highly doubt they’re wasting resources going after some poor college students or even internet content creators for evading personal income tax.

It’s a Taiwanese niche website for this kind of content (which can range from mild to shocking). The main audience are female and queer college students. They were writing erotic fictions btw, not producing some exploitative porn materials.

Also, plenty of Chinese content creators have their separate accounts on YouTube, earning American dollars through ads and subscriptions. All you need to do is to fill out the W-8BEN form and pay tax to the US Treasury as a foreigner (10% for mainland Chinese citizens, 30% for Hong Kong residents) and a bank card that accepts foreign currencies to receive the income.

They were writing erotic fictions, mostly female college students writing for a women/queer centric audience. There is no need for imprisonment (the law allows for up to 10 years or life imprisonment).

Actual, exploitative porn materials are dime in a dozen across Chinese internet despite the crackdowns. Maybe the law enforcement should get their priorities straight and focus on those instead.

This has actually spurred a large discussion among Chinese netizens recently on topics on morality, legal rights, the extent of punishment etc.

Just let people have their fun.

American leftists still believe that they can achieve transformative change without having to sacrifice their first world comforts and privileges. That’s why they are so invested in peaceful protests and electoralism.

Because the alternative is to turn militant, getting hunted by the Feds, having to hide and organize from an underground network far and away from the treats and comforts they’re so used to enjoying, like what the actual communists used to do. It’s truly putting your ideological conviction to the test. Are you willing to lose your life for your own ideology? That’s just too much, couldn’t do that. This is why all the American “Marxist” parties will give you a dozen reasons why they’re never getting armed.

People on this site like to fantasize that they could become some revolutionary fighters, but how many of them can actually commit to a life like that? I even doubt that most of us in China can do that now that life has gotten so comfortable compared to a hundred years ago.

Read Michael Hudson here: https://www.nakedcapitalism.com/2025/06/michael-hudson-why-america-is-at-war-with-iran.html

The whole point is destabilization. America is using Israel to destabilize the Middle East just like how it has been using Ukraine to keep Russia busy. It is to prevent the Global Majority from seeking an alternative framework to the US dominated neoliberal order - or whatever brand of fascism it is trying to transition into right now.

Iran has its own industrial base but it is not like Russia with its remnant socialist industrial base, and certainly has suffered a lot under sanctions. It will need a lot of foreign aid, and even then, the whole country is going to suffer with a war going on. If it’s a long war, then we’re looking at years of lost economic development.

For the US, it doesn’t care. It wants chaos, trade flow disruption, killing the economy of the exporting countries so that they come to beg for a deal, which will open up their domestic economy to influx of foreign finance capital. If the US have its way, expect to see record IMF or foreign capital bailouts over the next few years.

This is why an alternative economic and financial framework is needed. We’ve had the chance 3 years ago when the Ukraine war started, but because the so-called BRICS did not have the political will to come together and do it, the whole window of opportunity for de-dollarization has been utterly wasted.

The only card left to play that I can see is for China to give up its net exporter status to absorb the surplus exports from the rest of the world, but the Chinese leaders are very unwilling to do it. They want to convince the US to go back to the status quo which they both enjoyed for the past couple decades.