China Issues Guidelines to Curb Homogeneous Competition in Emerging Sectors

People's Daily reported that the Central Committee of the Communist Party of China and the State Council recently issued opinions on developing new quality productive forces. The document calls for cultivating and expanding emerging industries, deepening specialized division of labor within industries and products, advancing cross-industry and cross-regional integration, and avoiding self-defeating homogeneous competition. The policy serves as a significant top-level correction to current industrial competition dynamics, where industrial parks in certain localities have rushed into identical projects that cause duplicate production lines and highly uniform products. Homogeneous rivalry has already emerged in multiple emerging fields, including photovoltaics and new energy vehicles. In these sectors, companies feature similar products and technological approaches, engage in frequent price wars, and experience steadily narrowing profit margins. Because resources tilt toward sheer scale expansion, spending on frontier technological breakthroughs faces constraints, which restricts the iterative upgrading of industries to higher levels. Certain localities layout projects regardless of their industrial foundation, directing land and capital into identical schemes that plant hidden risks of overcapacity. To resolve homogeneous rivalry, authorities emphasize deepening specialized division of labor within industries and products. Under intra-industry division, leading firms can concentrate on core technologies and branding while outsourcing non-core stages to specialized supporting enterprises. Intra-product division allows stages such as research, design, manufacturing, marketing, and services to be separated among different companies according to their strengths, helping businesses succeed through specialized capabilities rather than low prices alone.

Homogeneous competition creates resource misallocation that shakes the foundation of industrial innovation. Trapped in price wars, companies prioritize securing market share over research and development, remaining stuck in middle and low ends of value chains. Suppressed industry profits also reduce firms' capacity to withstand market fluctuations, weakening supply chain stability and slowing down the cultivation of new quality productive forces.