China's SAMR to curb excessive investment competition among regional governments
By MLex Staff ( February 12, 2025, 07:06 GMT | Insight) -- China's top competition regulator has vowed to combat excessive competition in government investment promotion, where regional authorities compete through increasingly aggressive incentives and protectionist measures. The move signals Beijing's expanding campaign against destructive zero-sum competition, widely known as "involutionary competition," by extending regulatory oversight from industries to government bodies.
China's top competition regulator has vowed to combat excessive competition in government investment promotion, where regional authorities compete through increasingly aggressive incentives and protectionist measures. The move signals Beijing's expanding campaign against destructive zero-sum competition, widely known as "involutionary competition," by extending regulatory oversight from industries to government bodies. "Involutionary" investment promotion practices undermine fair competition, a deputy chief at an antitrust bureau of the State Administration for Market Regulation recently told the People's Daily, the official newspaper of the Chinese Communist Party Central Committee. Legal observers told MLex that local governments at various levels frequently engage in irregularities in investment promotion, favoring specific enterprises and creating unfair competition against external firms. These policies often require local registration or impose restrictive conditions, such as relocation limits, while offering preferential tax subsidies and financial incentives. Such competition can even occur among different districts within the same city, it is said. Market regulators will tackle the issues through a system of enforcement measures that includes sending reminder letters, conducting regulatory talks, launching antitrust investigations, and issuing administrative recommendations, the senior official noted. Last year’s Central Economic Work Conference highlighted the importance of curbing "involutionary competition," characterized by escalating resource investments that lead to diminishing returns and diverting funds from critical areas such as research and development. In its 2025 agenda, SAMR chief Luo Wen pledged to tackle this type of competition, noting that in the platform economy, such practices not only impede platforms' own innovative development but also harm the interests of in-platform small and medium-sized businesses and workers....
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