EU chamber urges China to tackle involution, boost efficiency

The European Union Chamber of Commerce in China recently urged Chinese policymakers to fix the root causes of involution; provide a bigger role for the market to boost efficiency and eliminate waste; make trade make sense for its key partners; capitalise on its strength in green leadership; and ensure an open and inclusive digital transition.

Involution means low-quality price competition fuelled by oversupply in certain sectors.

EuroCham in China has urged policymakers to address involution—low-quality price competition driven by oversupply—and shift to a productive growth model in the 15th Five-Year Plan (2026–2030).
Its position paper offers 1,100+ recommendations, highlighting issues like deflation, excess manufacturing output, weak profit margins, and wasted resources.

Releasing its ‘European Business in China Position Paper 2025/2026’, it called on policymakers in the country to use the upcoming 15th Five-Year Plan (2026–2030) to affect a shift towards a new, productive development model, and strike at the heart of cutthroat price competition that hurts both foreign and domestic firms.

The chamber’s individual industry and horizontal position papers provide more granular detail, putting forward more than 1,100 constructive recommendations for optimising China’s business environment, a release by the chamber said.

“We hope China’s next chapter will be one of sustainable growth, which requires solving systemic challenges, such as entrenched deflation and a persistent investment-driven mismatch between demand and supply growth,” said chamber president Jens Eskelund.

“While consumption in China is actually growing, a core issue is that manufacturing output has grown faster…. Involution, expanding inventories, pressure on profit margins, decreasing asset utilisation and pressure to export are all natural consequences of this mismatch,” the paper noted.

To boost consumption, the position paper advises increasing national medical expenditures, fostering the ‘silver economy’ and facilitating remote work.

Resources are ‘wasted’, the paper noted, when provincial governments approve wind or hydrogen projects in ways that create ‘redundant project clusters’.

Fibre2Fashion News Desk (DS)