context: Following the March 2026 Two Sessions and subsequent State Administration for Market Regulation guidance, anti-involution policy is shifting from signalling to enforceable standards. With price wars persisting in strategic sectors, regulators are using the Anti-Unfair Competition Law to define and police specific competitive behaviours.
State Administration for Market Regulation guidance on accelerating implementation of Anti-Unfair Competition Law marks a transition from principle-based regulation to enforceable legal standards in anti-innovation policy, argues Chen Hao 陈浩 Renmin University School of Applied Economics associate professor.
The integration of ‘involution-style competition’ into the legal framework provides a concrete basis for identifying and prosecuting harmful competitive behaviour.
A key development is the introduction of multi-factor assessment criteria for determining unfair competition.
Rather than relying on price levels alone, enforcement will consider cost structures, product quality, production efficiency and market conditions. This expands regulatory scope beyond traditional monopoly thresholds, allowing low-price strategies that undermine industry sustainability or rely on distortionary practices to be classified as violations.
The framework also strengthens oversight of supply chain relationships.
Explicit focus on abuse of bargaining power—such as imposing unreasonable payment terms or delaying payments to smaller firms—extends anti-involution enforcement into commercial contracting practices. This links competition policy with broader supply chain governance, particularly in sectors with dominant lead firms.
Sector targeting reflects policy priorities.
New energy industries, including photovoltaics, batteries and electric vehicles, are identified as key areas where rapid capacity expansion and price competition require tighter regulation. The shift signals that competition in strategic sectors will be managed not only through industrial policy tools but through enforceable legal constraints.
The emerging model combines legal enforcement with industry self-regulation.
While regulatory agencies define minimum standards and penalties, industry associations are expected to support compliance through pricing guidelines, data transparency and coordination mechanisms, creating a layered governance structure for competition control.