China’s top leaders pledged stronger efforts to stabilise the economy in the second half of 2025, signalling a policy shift toward controlling overcapacity, curbing price wars and promoting fair competition.
The commitments came after a key Politburo meeting in Beijing. Officials said the government would move away from heavy stimulus and focus on more targeted measures.
One major concern is “disorderly competition,” marked by steep price cuts in manufacturing and online retail that have squeezed margins and contributed to deflation. Authorities plan to reduce excess production in industries facing oversupply, including solar panels, batteries and steel.
Unlike past cycles, Beijing has avoided immediate interest rate or reserve requirement cuts. Instead, policymakers are deploying targeted bonds to support infrastructure projects, secure jobs and lift household consumption.
Boosting domestic demand remains central. Leaders highlighted renewable energy, electric vehicles and semiconductors as sectors to drive growth. At the same time, they acknowledged that local subsidies and regional protectionism have fueled overproduction and unstable prices.
An amendment to China’s pricing law will ban sales below cost designed to eliminate rivals and regulate algorithm-driven pricing in the digital economy. Officials said the changes are aimed at promoting fairer competition.
Markets have reacted cautiously. Prices of raw materials such as lithium, steel and coal rose in recent weeks, a sign investors expect Beijing to balance supply and demand. Analysts warn, however, that cutting energy output too sharply could lead to job losses in vulnerable sectors.
President Xi Jinping, in a recent speech, condemned “cutthroat competition” and urged policies to support consumer spending and balanced growth.
China’s strategy now leans on targeted fiscal support, legal reform and structural adjustments, with officials framing the approach as a move toward sustainable, long-term development.
