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Opinion
China will rein in vicious competition at the root of its overcapacity
New reforms for a unified national market, including addressing unfair competition, will rein in unchecked competition and the damage it is causing
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Bernard Chan, born in 1965, is a Hong Kong businessman.
The Chinese economic miracle occurred on a far greater scale than even the most experienced observers could have imagined. It transformed a country with a gross domestic product of US$361 billion in 1990 into an international financial powerhouse and market leader in several technology-related areas.
By 2023, its GDP had risen to US$17.8 trillion, an increase of over 4,800 per cent. This economic transformation lifted over 800 million people from poverty, vastly expanded the middle class and led to an unprecedented economic shift.
But such remarkable growth also introduced new challenges, particularly overcapacity and excessive competition, commonly known as neijuan or involution. This excessive competition fails to produce sustainable returns, ultimately hindering innovation and obstructing healthy economic growth.
Rapid economic development and rising consumer demand resulted in overinvestment and saturated markets, where businesses resorted to excessive competition to generate short-term revenue and gain market share. These sectors are characterised by cutthroat pricing strategies that cannot be commercially sustained, as they erode profit margins and compromise the quality of the goods or services offered.
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