AsianFin -- China’s stock market is rallying on government pledges to tackle price wars that have squeezed corporate profits and intensified global trade tensions.

The buzzword driving this optimism is “anti-involution,” signaling efforts to rein in cutthroat competition and overcapacity in sectors such as solar panels, steel, and electric vehicles.

Faced with rising trade barriers—including higher tariffs imposed by former President Donald Trump—and sluggish domestic demand, many manufacturers have resorted to aggressive price cuts. This race to the bottom has eroded margins and forced some players out of the market.

China’s producer price index, which tracks the prices factories receive for goods, has been declining for almost three years, reflecting persistent deflation. This ongoing challenge has spilled over internationally, with low-cost Chinese exports fueling trade disputes with major partners like the U.S. and Europe.