В Китае фиксируют рост «инволюции»: гонка за успехом приводит к выгоранию и бесполезной конкуренции

By Dr. Bala Ramasamy, Associate Dean and Professor of Economics, China Europe International Business School (CEIBS), and Dr. Matthew Yeung, Dean of the School of Open Learning and Associate Professor of Marketing, Lee Shau Kee School of Business and Administration, Hong Kong Metropolitan University On Chinese social media, the word neijuan—involution—has become shorthand for the grinding sense that everyone is racing harder but getting nowhere. State media officially refers to it as “rat race-style irrational competition”. The symptoms are everywhere: Parents scramble to buy tutoring hours for preschoolers, young professionals log “996” workweeks (9 AM to 9 PM, six days a week) to show commitment, and startups pour money into user-acquisition contests in which winners are decided by who can lose the most. The result, in public conversation and private life, is pervasive exhaustion: more effort, smaller returns. Neijuan isn’t just a mood; it is the visible product of structural forces that push people and firms into escalating, largely zero-sum competition. Neijuan isn’t just a mood; it is the visible product of structural forces that push people and firms into escalating, largely zero-sum competition. Four dynamics in particular combine to make involution unusually widespread in contemporary China: a vast pool of entrepreneurial aspiration, a “copy-and-scale” business culture, state-enabled production and subsidies, and a credential-driven labor market. Too many founders chasing too few distinct opportunities China is an entrepreneurial country. Whether driven by necessity, opportunity or cultural prestige, an unusually large absolute number of people want to start businesses or be their own bosses. Entrepreneurship rates in China—particularly early-stage activity among young people—are elevated compared with many advanced economies. Data from the Global Entrepreneurship Monitor shows that up to 2019, entrepreneurial intention—defined as the percentage of the 18-64 population who are latent entrepreneurs and intend to start a business within three years—was in the double digits (see Figure 1). Multiply even modestly higher entrepreneurial intention by a population of roughly 1.4 billion, and the result is an enormous number of would-be founders. By the early 2020s, cumulative registrations of market entities in China exceeded 100 million, with millions of new firms registering every year. This high level of aspiration is reflected in data from the World Values Survey (WVS), which reveals a distinct Wealth Value Gap (Figure 2). While populations in the United Kingdom and France largely reject “being rich” as a core personal value, the Chinese show a much broader acceptance of wealth as a primary goal. This is paired with a significantly more positive outlook on market rivalry. Echoing President Xi Jinping’s repeated assertions that “China is not afraid of competition”, the data also shows that the Chinese lean heavily toward viewing competition as a beneficial force, whereas their Western and Japanese cohorts remain far more skeptical. That arithmetic matters. Consumer markets, professional services and small-business niches don’t expand at the same explosive pace as the supply of entrants. What follows is a classic overcrowding problem: dozens or hundreds of small ventures offering variants of the same product or service, all fighting for the same limited pool of customers. In neighborhoods and on digital platforms alike, entrepreneurs increasingly face saturated categories in which marketing budgets, subsidies and hyper-competitive pricing become the currencies of survival. The lived experience of this saturation—long hours, constant marketing pushes and a fragile hope that you’ll be the one who breaks through—is a core element of neijuan. Copy, iterate, scale: when imitation becomes a race to the bottom A striking feature of China’s growth model in recent decades has been its ability to copy, adapt and scale business models quickly. This approach has helped Chinese firms leapfrog in adoption: e-commerce and mobile payments thrived because entrepreneurs adapted winning global ideas to a gigantic, mobile-first market. Xiaomi’s business model of thin-margin hardware and online sales and Baidu’s rise as a locally tailored search solution are examples of constructive adaptation. As economist Keyu Jin has noted, China has been highly successful at innovating from “1 to n”—scaling and refining existing ideas—even though it has historically been relatively weak at core research, or “0 to 1” innovation. But copying at scale has a downside. Successful templates attract countless fast followers. When one company proves that an idea works, dozens more replicate it with small tweaks, leading to a high concentration of entrants pursuing nearly identical value propositions. Instead of competing by producing genuinely different goods or services, firms fight over users through discounts, subsidies and expensive promotional tactics. In ride-hailing, food delivery, short-form video apps and even electric vehicles (EVs), the competition often resembles an arms race: Whoever spends more on marketing wins users temporarily, but the industry as a whole becomes trapped in low margins and high churn. Our analysis of WVS data confirms the structural cost of this culture: The “creativity premium”—the financial reward for original, non-routine work—is significantly lower in China than the global average. In a market that prioritizes rapid replication, the economic incentive for genuine novelty is suppressed. As a result, despite hitting the country’s 5-percent gross domestic product (GDP) growth target in recent years, industrial profits have barely moved, resulting in a “profitless growth” economy. The copy-and-scale reflex creates a market ecology whereby true differentiation is rare and incremental effort—more ads, deeper subsidization, faster scaling—becomes the default. People and firms escalate inputs while the sector’s overall profitability erodes. It has been several years since China began shedding its image as a copycat nation, but that evolution mostly applied to copying the intellectual property (IP) of foreign multinational corporations (MNCs). Today, the copying is fiercely domestic. For example, while China claimed 23 percent of the world’s “unicorns” in 2024 (compared to 48 percent in the United States), for every successful billion-dollar startup, there are tens of domestic copycats right behind it. A strong entrepreneurial spirit, combined with a lack of real entry barriers, makes sustaining economic profits incredibly difficult, even in the medium term. Subsidies, local incentives and the politics of production Local governments in China, perhaps unknowingly, play a distinctive role in amplifying neijuan. Industrial policies and local incentives have powered rapid expansion, especially in strategic sectors such as new-energy vehicles, solar panels, semiconductors and heavy industry. Subsidies, tax breaks, cheap land and favorable financing give firms the cushion to ramp up production quickly and survive longer in a profitless environment. In a purely efficient market, the quick demise of loss-making firms allows more efficient competitors to grab market share and thrive. But with state encouragement, loss-making firms survive unnaturally, putting even healthy companies in jeopardy. This state support has historically been a source of strength, enabling national champions and fostering large-scale manufacturing that might otherwise take decades to build. Yet when production and investment are the primary metrics by which local officials are judged—alongside employment and output growth—even marginal projects get greenlit. State-backed financing allows firms to maintain output despite thin margins or persistent losses. The tax structure exacerbates this. China’s largest source of tax revenue, the value-added tax (VAT), is shared equally between local and central governments and is calculated where a good is produced rather than where it is consumed. Local governments are therefore strongly incentivized to encourage production throughout the value chain, often with little regard for a firm’s profitability or long-term sustainability. The result is systemic overcapacity, where actors produce at scale even when demand does not justify it. Overcapacity feeds neijuan by artificially stiffening competition. If incumbents or local champions can underprice rivals thanks to subsidies or soft financing, newcomers must match or exceed those strategies just to stay visible. Industries saturate more quickly, struggling businesses are kept afloat, and the fight for market share becomes fiercer and more wasteful. The feedback loop is brutal but clear: Policy supports production; production produces a glut; the glut drives down prices and escalates effort; and that escalation feeds a society-wide sense of futility and burnout. The mirror image of this overcapacity is weak domestic demand. A lack of consumer confidence has led to sluggish retail sales, forcing firms to seek survival in the export market—a trend known as chuhai (venturing abroad). However, exporting domestic neijuan comes with geopolitical consequences. The resulting surge in cheap Chinese exports increasingly threatens industries in partner countries, inviting swift retaliation and tariffs from the United States and the European Union (EU) in sectors such as solar panels and electric vehicles. Credentialism and the education arms race At the personal level, another engine of neijuan is China’s intense competition over credentials. The gaokao—the national college entrance exam—is a near-ritual of life planning for millions of students. For most families, a modest improvement in exam ranking can translate into admission to a much better university and that, in turn, changes career prospects. The stakes push families into years of tutoring and structured preparation from early childhood onward. Even as college enrollment has expanded massively, employers and institutions often rely on elite-university credentials as simple filters. As the baseline rises—more people hold bachelor’s degrees—the premium shifts to master’s degrees, overseas diplomas and prestigious internships. The consequences are predictably neijuan: People pile onto incremental signals (more degrees, more certifications, more unpaid internships) that cost time and money but produce diminishing returns. Our cross-national analysis of WVS educational data confirms this squeeze: The “return on education” in China is notably lower than the global average. When formal education offers a smaller payout, workers pivot toward more desperate forms of signaling. On the job, the same logic encourages long hours and intense signaling of commitment: Stacked résumés and visible “grind” culture become the paths to marginal advantage. How do these forces reinforce each other? Individually, each of the four dynamics contributes to competitive escalation. Together, they are corrosive. A large cohort of entrepreneurial aspirants gravitates to the most visible success stories; the copy-and-scale culture funnels them into identical plays; state support allows many to remain viable even when the market cannot sustain them; and credential-driven labor markets provide a ready supply of motivated workers willing to surrender time and health to gain small advantages. The cumulative effect is a society-wide leveling of incentives toward doing more for less. This is not merely economic waste; it is a social and psychological problem. When the dominant cultural logic rewards visible overwork and ephemeral scale, people postpone other life goals: family formation, hobbies, civic engagement. The emotional cost shows up as burnout, mental-health strains and social unease—faint but real signals that the system’s incentives may be misaligned with long-term social welfare. Cross-national data reflect this trade-off; while populations in France and Germany overwhelmingly prioritize “having a good time”, the Chinese distribution is visibly skewed toward the lower end of the scale, reflecting a lower relative priority for leisure and personal enjoyment compared to European peers (Figure 3). Can neijuan be reduced? Possible paths forward Neijuan is baked into many structural features of China today, so any mitigation will require coordinated policy, corporate and cultural shifts. - Rethink local incentives. If local-government evaluations prioritized quality—innovation, sustainable employment and environmental outcomes—over raw investment and output, the pressure to foster marginal projects would ease. More importantly, domestic consumption has to be incentivized for both consumers and local governments. The subsidy provided for white goods (Xinhua, 2025) in 2025 had a positive effect, but perhaps it was ended prematurely. Similarly, if local-government performance is based on consumer expenditure rather than production, increasing demand becomes a priority. - Target subsidies more carefully. Time-bound, performance-tied support that rewards technological depth and differentiated products can disincentivize wasteful capacity expansion and quick-follow copycats. - Encourage real differentiation. Public and private investments in long-term research and development (R&D), deeper IP protection and patient capital can make original innovation a more attractive avenue than fast-follow scaling. This may include reducing the number of junk or utility-model patents to discourage me-too products and services. By expanding IP requirements, inventors and true innovators may be able to earn the necessary economic profit. - Diversify career pathways. Expanding vocational education, apprenticeships and skills-based hiring reduces reliance on elite credentials and might lower the pressure to engage in endless credential arms races. - Shift cultural signals. Media, businesses and parents can begin to value sustainable work practices and diverse life choices rather than equating worth with visible sacrifice. Not one of these changes is easy. Each requires bureaucratic reform, political will and cultural patience. But the cost of inaction is also high: a generation that equates self-worth with overwork and a market economy that confers returns to scale rather than value creation. Everyday choices matter, too. For entrepreneurs, the most promising strategy is to focus on genuine differentiation—product quality, niche depth or real technological advantage—rather than pouring cash into user-acquisition contests. For workers and parents, resisting the instinct to pile on one more certificate or tuition hour and instead investing in deep skills, downtime and relationships can yield better long-run outcomes for wellbeing and productivity. Neijuan captures a broad social truth: Scaling systems without recalibrating incentives produces grinding competition that benefits few and exhausts many. Neijuan captures a broad social truth: Scaling systems without recalibrating incentives produces grinding competition that benefits few and exhausts many. China’s recent history shows an extraordinary capacity for collective problem-solving. The same pragmatic energy could, with the right policy nudges and cultural shifts, turn the logic of escalation into one of sustainable value creation. For now, the challenge is to complete this transition without letting another generation burn out in the process. Dr. Matthew Yeung is the Dean of the School of Open Learning and the Associate Professor of Marketing at Hong Kong Metropolitan University (HKMU). His research focuses on international trade, foreign direct investment, consumer sentiment and big-data analytics, with work published in leading international journals spanning business, economics and finance.