Politburo's July meeting, fighting 'involution', and paying people to have kids

Beijing tightens control over investments as the leadership signals concern over price wars

Welcome back to What’s Happening in China, your weekly China brief.

Jumping straight in this week.

— PC

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Through the Lens

Alleyway in central Beijing.

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In Focus

I. Fighting ‘involution’

China will crack down on "herd behaviour" in investment in emerging sectors and tighten oversight of local governments' investment promotions, officials at the state planner said on Friday.

"Currently, 'involution' and disorderly competition appeared in some industries," Wang Renfei, an official at the National Development and Reform Commission (NDRC), said at a media briefing.

"In emerging sectors, we will continue to encourage innovation and appropriate competition, while resolutely opposing blind imitation and strictly preventing herd behaviour, such as everyone rushing in or out at once," Wang said.

Chinese leaders have signalled their intention to rein in price wars among producers, as expectations grow for a new round of factory capacity cuts in a long-awaited but challenging campaign against deflation, a move that could pose risks to economic growth.

NDRC did not specify which new sectors could be targeted. However, analysts expect Beijing to focus first on high-profile industries once touted as the "new three" growth drivers — autos, batteries, and solar panels — which state media now singles out for engaging in price wars.

China will seek to better combine the roles of an effective market and a proactive government, leveraging the strengths of both, standardising government conduct, and further clarifying which investment promotion practices are encouraged or prohibited, Wang said.

Read: China to crack down on 'herd behaviour' in emerging sector investment (Reuters)

Related: China to Name and Shame Firms Blamed for Destructive Price Wars (Bloomberg)

II. Paying people to have kids

The Chinese government will offer parents subsidies of 3,600 yuan ($500, €429) per child under the age of three per year, Beijing's state media said Monday.

China's population has declined for three consecutive years, the world's second most populous nation — after India — is facing an emerging demographic crisis.

The number of births in 2024 — 9.54 million — was half as many as in 2016, the year that ended its one-child policy that was in place for more than three decades.

Marriage rates in China have also hit a record low. Young couples put off having babies due to the high cost of raising children and career concerns.

Read: China to offer $500 per child in move to boost birth rate (DW)

Related:

• What will it take for China to arrest its declining birth rate? (The Conversation)

• China social spending hits highest level in nearly two decades (The Straits Times)