China’s Chemical Industry: Anti-Involution Policies Struggle to Resolve Overcapacity Dilemma

Under the anti-involution policy, China’s chemical industry still faces declining profits, falling prices, and export resistance, indicating that the overcapacity problem is deeply entrenched, and new energy materials may become the next risk point.

Amira Lin08/17/2026, 12:504 min readAuthor profile

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In 2025, China’s top leadership made “anti-involution” the core direction of its industrial policy, attempting to reshape manufacturing competitiveness by cutting overcapacity and curbing blind investment. However, for the chemical industry—a sector characterized by heavy assets, strong cyclicality, and extreme fragmentation—the implementation of the policy has encountered significant resistance. The latest data show that the chemical industry not only failed to emerge from the downturn with the help of the policy tailwind, but instead sank deeper into an adjustment period under the combined pressure of weak demand and excess supply.

According to data released by China’s National Bureau of Statistics on November 27, in the first ten months of 2025, total profits of industrial enterprises above designated size reached $827 billion, a slight year-on-year increase of 1.9%. However, profits in the manufacturing of chemical raw materials and chemical products fell by 5.4% year-on-year, recording only $43 billion. The profit growth rate of the chemical sector significantly underperformed the broader market, clearly illustrating the headwinds currently facing the industry.

The direct driver of the profit decline is the continued contraction in prices. A research report from Cinda Securities pointed out that China’s chemical product price index has fallen for three consecutive years, with a cumulative decline of nearly 36%. Analyst Zhang Yansheng believes that this price collapse stems from two structural contradictions: first, the long-standing overcapacity in key chemical product markets; and second, the slowdown in downstream demand caused by decelerating economic growth and the deep adjustment of the real estate sector. Although the growth rate of chemical projects under construction eased in 2025, the absolute scale of investment is still climbing, indicating that the capacity cycle is far from bottoming out.

To address overcapacity across the industry, Beijing launched an “anti-involution” campaign in March, encouraging enterprises to cut output and postpone the construction of new facilities. The policy once brought confidence to the market: after major producers agreed to reduce output, caprolactam prices rose about 5% month-on-month in November; the industry prosperity index compiled by the China Petroleum and Chemical Industry Federation also rebounded from 98.43 in August to 99.79 in October. However, this recovery lasted only two months, and the prosperity index fell back to 99.79 in November, returning to the contraction zone at 97.21.

“Anti-involution is far more complex than a slogan,” said Qiu Dengke, secretary-general of the Guangzhou New Energy Industry Association and a senior chemical industry analyst. “In a segmented market composed of thousands of small and medium-sized enterprises, no company is willing to proactively cut output and cede market share to others.” More critically, local governments lack the motivation to implement the policy. As the main implementers, local governments, under pressure from tax revenue and employment, often hold reservations about mandatory production cuts—this constitutes a deep institutional obstacle to the implementation of the anti-involution policy.

Looking ahead to 2026, the fundamentals of the chemical industry remain far from optimistic. The domestic real estate market continues to be sluggish, suppressing demand for bulk chemical products such as building materials and coatings. On the export front, as China’s chemical products continue to expand their global market share, trade protectionism is intensifying. Qiu Dengke predicts that anti-dumping investigations and local content requirements targeting Chinese chemical products will become more frequent, and the export environment may deteriorate further.Not all sectors lack bright spots. Driven by the “new three items” industrial chain, demand for chemical materials used in electric vehicles, energy storage batteries, photovoltaic modules, and high-performance fibers achieved over 8% growth in 2025, a trend also corroborated by statistics from the China Chemical Information Center. However, Qiu Dengke warned: “Production capacity for new chemical materials is expanding at an unprecedented rate. Without strict, punitive constraint mechanisms, this emerging track is likely to replay the overcapacity script of traditional chemical products within two years.”

The predicament of China’s chemical industry is essentially a contest between industrial upgrading and the old growth model. The anti-involution policy has captured the crux of the problem, but at the implementation level it is constrained by the triple reality of market fragmentation, local government rivalry, and insufficient demand. In the short term, administrative measures can only temporarily prop up prices, but can hardly reverse the long-term pain of capacity clearance. For China’s chemical industry, the real way out may lie not in “how to cut production” but in “how to upgrade”—reshaping its position in the global chemical value chain through technological innovation, M&A integration, and global footprint. And this is destined to be a protracted battle that requires time.

https://www.chinaindustrybrief.com/en/articles/china-chemical-industry-overcapacity-policy-2026

内卷 (Involution): The Word That Defines China’s Endless Competition

October 8, 2025tdunthuluri61 Comment

Introduction:

There’s times I catch myself comparing how much I studied last night or how much work I did, and sometimes I feel guilty when I relax while others kept working. It’s that quiet, persistent sense that no matter what I do, when I compare myself to others there’ll always be someone putting in more effort and working harder. And even when there is no one else for some reason if feels like there should be. These thoughts aren’t neccesarily unique to me, they’re part of an overall pressure that defines our modern life. The Chinese have a slang word for this exact feeling, “内卷” or “Involution”. It describes the cycle of working harder and harder, yet never really moving forward like running on a societal treadmill that keeps speeding up but you still end up in the same place. I chose to explore this word because it encapsulates a lot of the emotions like anxiety, ambition, and fatigue that I and so many students and workers experience every day.

Origins and Evolution:

Before it became one of China’s most famous buzzwords, the concept of involution first appeared in the 1960’s when an American Antropolgist Clifford Geertz used it describe how Javanese farmers were working harder and harder on the same plots of land but producing no real growth, basically an endless cycle of effort without progress. Decades later, Chinese scholars adopted this word to describe similar social patterns of people investing more time and energy but seeing diminishing returns. Fast forward to our modern digital age 内卷 took on a whole new life online. Around 2020, Chinese students and young professionals started using the term on Weibo and Zhihu (chinese social media apps) to describe their own lives like staying up until 3 a.m. to study for an exam, competing for internships, or joining a hundred different WeChat groups just to stay ahead. What started as an academic joke ended up defining a generation caught between ambition and exhaustion. So in our modern day, 内卷 isn’t about farming anymore. It reflects how young Chinese navigate a society that praises hard work yet very rarely slows down to ask if it’s all really worth it. From viral memes showing students sleeping on their desks to workplace jokes about “卷王” (the “King of Involution”), the word evolved into both a coping mechanism and sort of a implicit protest to joke and acknowledge the system that places so much pressure on it’s people.

This graphic is commonly used to show involution and workers burnt out and exhausted over the constant grind of working in Chinese culture.

Usage:

The word is often used when students compare how late they studied or when office workers share pictures of sleeping at their desks. The word captures that collective exhaustion from constant competition, where everyone feels pressured to do more even when there’s little to gain.

Netizens use 内卷 in both serious and humorous ways. Saying “太卷了” (“It’s too involuted”) can express frustration and irony. The term has also branched out to phrases like 卷王 (“Involution King”), describing those who push themselves the hardest.Regardless of how it is used though it has become a single word to describe the burnout being faced by students and workers in chinese culture.

Cultural Analysis:

At its core, 内卷 reflects two forces that have long shaped Chinese life, Confucian diligence and Daoist balance. From Confucianism comes the belief that hard work and self improvement are moral obligations. For centuries, this value defined education and family life as effort showed virtue and success was proof of your character and value. Today, that mindset still drives people to push themselves endlessly turning the discipline and diligence into exhaustion.

On the other hand, Daoism offers an escape from this. Its philosophy of wui wei encourages people to step back and live in harmony with the world instead of fighting against it. The growing appeal of another term 躺平 (“lying flat”) shows a return to that thinking, where peace is found not in striving but by letting go and being content.

In this way, 内卷 and 躺平 represent two sides of the same culture, one rooted in ambition, and the other in acceptance. Together they sort of capture the Chinese struggle to balance ancient ideals with the reality of burning out and the ill effects that causes.

A good example of this is the 996 work culture shown in this video is the real world face of 内卷. It captures how long hours and relentless competition have become normalized in modern China, turning Confucian diligence into exhaustion. It helps show the meaning of involution, how people work so hard – hours from 9.am. – 9 p.m. 6 days a week yet never truly progress anywhere and end up burnt out and exhausted rather than at rest and satisfied.

Reflection:

When I think about 内卷, I don’t just see it as an online thing or restricted to Chinese culture. I see it in myself and the people around me. Especially that fear of falling behind in school, internships, and overall just growth as a person. Writing this made me realize that 内卷 isn’t just about competition, it’s about searching for purpose and what brings you peace in a world that never slows down. And the challenge isn’t to escape it completely, but to find a balance of working hard while being content and retaining peace.

sites.gatech.edu/china-cultural-odyssey/2025/10/08/%E5%86%85%E5%8D%B7-involution-the-word-that-defines-chinas-endless-competition/