In recent news from May 2, 2025, the escalating trade war between the United States and China has severely impacted the Chinese industry. The Chinese Communist Party has been promoting a shift from export to domestic sales, a strategy that has faced criticism from the industry. Meanwhile, since the popularization of the term “involution” five years ago, various sectors in China have been accused of entering a period of deep involution.
Starting from early April this year, the escalation of the US-China trade war has led to coastal regions facing difficulties in exporting to the US, further exacerbating the issue of involution in related industries. Recently, the Chinese authorities have been encouraging foreign trade merchants to enter the domestic market, intensifying the involution in the already highly competitive domestic industry.
On April 30, a Chinese blogger released a video stating that the involution of the Chinese panel industry had officially begun following the imposition of additional tariffs by the US. The blogger highlighted the challenges faced by factories producing export panels, now struggling to sell domestically due to the tariffs. This has led to intense competition, forcing price reductions as the only way out, ultimately burdening the majority of business owners. The blogger expressed concerns about the compromised quality and environmental standards resulting from this situation.
A blogger criticized the official slogan of “shifting from export to domestic sales,” pointing out the inherent logical flaws in the strategy. He emphasized that the domestic demand cannot magically increase without changes in population, income, and consumer confidence. There are limitations to what the domestic market can absorb, especially when many foreign trade products are unsuitable for domestic consumption. The challenges of transitioning from export to domestic sales have put immense pressure on businesses, making it difficult to sustain profitability.
As of 2020, the term “involution” has been circulating on the mainland Chinese internet, referring to meaningless over-competition. With the US-China trade war intensifying economic downturns, analysts believe that China has entered a period of deep involution, exacerbating the economic challenges across various sectors.
In recent years, the process of industry involution aligns with the Chinese government’s intensified economic control measures. Since the outbreak of the pandemic three years ago, private enterprises and foreign investments have faced increased scrutiny under the pretext of security, limiting economic opportunities for the general populace. Traditional white-collar positions in real estate, education, and internet technology industries have significantly decreased, leading to fierce competition even in previously considered secure jobs.
The challenges faced by sectors such as ride-hailing, food delivery, and catering exemplify the struggles for middle-class individuals and university graduates who have been left without employment opportunities. A female blogger analyzed the issues within the ride-hailing industry, highlighting the platform’s exploitative algorithms that disregard drivers’ well-being and treat them as mere resources.
A ride-hailing driver illustrated the dire conditions in Beijing, where the oversaturation of drivers has severely impacted their earnings and quality of life. The pressure to maintain long hours in an unprofitable environment reflects the harsh reality faced by many in the gig economy.
A restaurant owner expressed concerns about market saturation, stating that every sector is struggling, making it increasingly challenging to sustain businesses in the current economic climate. The challenges of transitioning from exports to domestic sales have created a pricing dilemma, where maintaining profitability in both markets simultaneously is no longer viable.
A liquor business owner highlighted the severe impact of industry involution in the liquor sector, signaling potential collapse on the horizon. Similarly, the feed industry has entered a crisis phase, with projections indicating a significant closure of feed factories this year.
While the Chinese Communist Party has recently proposed measures to address involution, some netizens argue that the fundamental cause lies in the continuous expansion of the privileged class within the Party, leading to monopolies in lucrative industries and diminishing opportunities for the general population.
Expert analysis from a Taiwan think tank committee member, Wu Se, underscores that China’s internal involution stems from the ruling system, where the “Party-State” structure accelerates the trend of involution and economic challenges. Comparisons to the governance model of North Korea highlight concerns about the marginalization of resources by the Communist Party, leading to widespread societal implications.
Entrepreneur Wang Yingguo from Shenzhen voiced concerns, drawing parallels between Western labor practices that prioritize worker welfare and social security with China’s current system that exhibits tendencies closer to a form of slavery under Xi Jinping’s regime. The monopolization of resources by the Communist Party has led to a dehumanizing cycle where individuals prioritize survival over leading fulfilling lives.
This comprehensive overview sheds light on the multifaceted challenges facing various industries in China, from the impacts of the ongoing trade war to the broader issues of involution and economic control mechanisms instituted by the government. The evolving landscape underscores the urgency for sustainable solutions to mitigate the adverse effects on businesses and the workforce.