Notes on Involution in China
Involution (內卷), is a phenomenon in China that too many people does the same thing without much difference lead to no one benefiting from the competition. 同質競爭 would be a more accurate term.
Keyword: a bunch of people doing nearly the same thing.
Verified potential causes:
- No copyright protection, not to mention patents. (Not the case if the firm has government background.)
- No economic freedom. Little risk capital due to CCP’s control on capital.
- Lack of invention of new technology.
- De dure 18% transfer tax (when goods and services changing hands between two companies, this amount is taxed on the transfer price), coined misleadingly as “value-added tax” (增值稅).
- Lack of social trust leads to short supply chain.
To be honest, this feels like a engineered problem, like how nearly all students in China need to pass one exam to participate in a college.
References
https://theinitium.com/opinion/20210107-opinion-china-industry-workers-involution
https://www.youtube.com/watch?v=42giCVlE_ts
I didn’t learn anything from the two articles below. Listed here for completeness.
https://carnegieendowment.org/posts/2025/08/whats-new-about-involution?lang=en
https://www.thinkchina.sg/economy/chinas-involution-could-spur-post-capitalist-era-part-1
The wikipedia pages on this are trash.
More?
There’s more to China’s economy than this. Hopefully I’ll be able to understand it and write about it.