Oct 23, 2026 15:53 pm IST

Opinion | Why China Is Producing More, Selling Cheaper - And Still Not Getting Anywhere

More capital, more capacity, more elaborate technology, and steadily less profit to show for any of it. That's what's happening to China now.

Aditya Sinha Aditya Sinha Analyst

In 1963, anthropologist Clifford Geertz, in his study of Javanese rice farming, gave an old word a second life. The word was 'involution'. Geertz used it for a system that absorbed ever more labour onto the same wet paddies, growing more intricate and more crowded, yet never breaking through to higher productivity. More hands, more elaborate arrangements, the same output per head. A treadmill dressed as progress.

Six decades on, the word has migrated to a country Geertz never wrote about. Young Chinese call it 'neijuan'. Officials in Beijing have adopted involution as a term of policy. This is used for the self-defeating price wars in which makers of electric vehicles, solar panels, and food delivery undercut one another until no one earns a margin. The market that fell into a bear this week is the financial expression of the same treadmill. More capital, more capacity, more elaborate technology, and steadily less profit to show for any of it.

The numbers are these. Chinese equities lost about 2.4 trillion dollars in market value between a peak in May and October 22 this year. The China Securities Index (CSI) 300, the benchmark of the 300 largest mainland firms, closed 1.8% lower on Thursday, taking its fall from a June high to 20%. It has now declined for ten straight weeks. Shanghai's technology board, the STAR 50, is........

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