China's leadership is addressing aggressive price-cutting that threatens marquee industries like electric vehicles. Recent governmental meetings led to a pledge to curb unhealthy competition and create a unified national market. Persistent deflation and depressed consumer confidence highlight the need for policy changes. Measures taken, such as consumer subsidies, have not sufficiently stimulated demand. Economists emphasize the need for supply-side interventions as excessive competition has distorted the market and adversely affected high-quality development, leading to economic instability.
China's top leadership pledged to curb "low-price and disorderly competition among enterprises" and create a "unified national market", according to Xinhua state news agency.
While Beijing has consistently pushed back against those accusations, the price war is likely taking a toll on its own economy, too.
The price war is threatening broader economic stability and has contributed to a deflationary spiral that depresses wages.
A senior BYD executive said last month that the EV price war is "not sustainable."
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