Anti-Involution Precision Measures: These Industries Are Undergoing Policy "Mine-Clearing"

Recently, the market has been...“Anti-involution”The interpretation of the policy has deviated, with some viewpoints suggesting it can directly reverse deflation, but this understanding is distant from the essence of the policy. The sixth meeting of the Central Financial and Economic Affairs Commission clearly stated...“Governance of Enterprises' Chaotic Low-Price Competition”…rather than prohibiting competition. From a policy logic perspective, anti-involution is a key component of supply-side reform. Its core lies in paving the way for subsequent demand stimulation by regulating market order and optimizing production capacity structure, rather than artificially driving inflation detached from demand.  

1. Policy Logic: Curbing Disorderly Competition, Not Suppressing Market Vitality  

Central pair“Involuted competition”Governance has always focused on“Low price disorder”The core feature. For example, the photovoltaic industry is experiencing overcapacity.2024The net profit of the entire industry for the year993plummeted to 100 million yuan-256Billion yuan, the price of polysilicon has dropped by more than40%The Ministry of Industry and Information Technology convened a special symposium to address this issue, calling for the regulation of low-price competition in accordance with laws and regulations and promoting the exit of outdated production capacity. The automotive industry is also facing profit margins of only...4.3%the predicament,17Major domestic automakers have responded to the policy by pledging to shorten payment periods and adopting other measures. These actions all reflect the policy’s aim to eliminate barriers.“ - - ”A vicious cycle, rather than a denial of market competition itself.  

Policy coherence needs to be understood from a global perspective.2025The "Guidelines for the Construction of a Unified National Market" issued in [year] explicitly prohibit local governments from creating advantages through unlawful preferential policies.“Policy depression”Eliminate the root causes of involution. Furthermore, the Central Financial and Economic Affairs Commission meeting proposed...“Five Unifications, One Openness”The principle requires unifying government standards of conduct to prevent local protectionism from exacerbating overcapacity. This series of measures indicates that combating involution is part of a systemic reform, aiming to create conditions for demand-side recovery through supply-side clearing.  

 2. Market Misinterpretation: Price Fluctuations Reflect Imbalanced Expectations  

The market's overreaction to anti-involution has triggered significant volatility.7Since the beginning of the month, polysilicon futures have surged due to policy expectations.30%However, subsequently, due to tightened regulatory measures, coking coal, polysilicon, glass and other commodities collectively hit their limit down.“Surge and plunge”The essence is the market testing the boundaries of policy: in the early stages, anti-involution was equated with“Supply contraction+Price increase”…but it overlooked a clear assessment of insufficient demand in policy considerations.  

Taking glass futures as an example, its price broke through the resistance line into a weak equilibrium range under the push of anti-involution policies, but when attempting to rise further, it quickly pulled back due to mismatched demand. This confirms that“Bull trap”Logic——When prices deviate from the supply and demand fundamentals, policies will not forcibly support the market; instead, they will guide a return to rationality through market mechanisms. Research reports from brokerage firms indicate that in key sectors aimed at countering internal competition, such as building materials, steel, and photovoltaics, varieties with higher basis rates experience more volatile fluctuations, which highly aligns with the cyclical nature of commodity valuations.  

3. Governance Path: Supply Clearance and Demand Stimulation Need to Work Together  

From historical experience,1998Year State-Owned Enterprise Reform2016All supply-side reforms were approved this year.“Sell first, stimulate later.”Achieving economic structural optimization. At present, anti-involution serves as the first step in supply-side reform, with its core task being the elimination of outdated production capacity and the enhancement of industry concentration. For example, the photovoltaic industry is improving by cutting production.30%To alleviate excess pressure, the cement industry optimizes the supply structure through staggered production. These measures create space for subsequent demand stimulation but cannot replace the proactive recovery on the demand side.  

Governance of deflation needs to follow“Two-step approach”Logic: The first step is to reshape market order through supply-side reform; the second step is to stimulate demand to activate effective demand.1998The experience of responding to the Asian financial crisis in those years showed that, after eliminating inefficient production capacity through state-owned enterprise reform, demand was stimulated by policies such as infrastructure investment and consumer credit, ultimately achieving economic recovery. Currently, Chinese household consumption accounts for...GDPSpecific gravity only55.7%...which is still far below the level of developed countries, indicating that there is still huge potential to expand domestic demand. If demand is blindly stimulated before supply-side clearing is completed, it may lead to a combination of overcapacity and debt risks. This is precisely why the policy insists...“No clearance, no excitement.”the deeper consideration.  

4. Industry Differentiation: The Key to Identifying True Involution and False Involution  

Not all industries experience substantive involution. Brokerage firm research reports use indicators such as inventory and capacity utilization rates to identify key sectors like building materials, steel, and photovoltaics that are resistant to involution.Some industries that have risen following trends may be driven solely by sentiment. For example, red date futures recently surged briefly as the market searched for new hotspots but quickly retreated due to a lack of fundamental support. Investors need to be wary of two types of risks: first, mistaking normal competition for excessive internal competition ("involution"); second, overlooking the implicit constraints of policies on weakly balanced intervals.——If the price falls below the support level, it may trigger further policy intervention.  

The positive significance of anti-involution lies in reshaping the market ecology through supply-side reforms, but this alone is insufficient to fundamentally cure deflation. The current pains in industries such as photovoltaics and automobiles are a necessary stage of capacity clearance, while price fluctuations in products like glass and coking coal reflect the market’s self-correcting mechanism. In the future, policy focus may shift to the demand side, forming a virtuous cycle of supply and demand through measures such as expanding consumption and equipment renewal. Historical experience shows that only through the coordinated efforts of both supply and demand can sustainable economic recovery be achieved.

Author: Zhou Yongle Specialized VisionSenior Market Analyst