China moves to curb disorderly low-price competition in key industrial products

 China has issued a notice clarifying cost accounting rules to address disorderly low-price competition in key industrial products. This move is part of broader efforts to curb irrational price wars and ensure fair competition.

The notice, jointly issued by the National Development and Reform Commission (NDRC) and the State Administration for Market Regulation, clarifies the form and requirements of cost accounting, providing clear guidance for industry and regulators.

The notice says cost accounting should in principle be based on a business operator's individual cost for producing a specific product. If individual cost can not be calculated, the industry average cost should be referenced, allowing for a certain downward margin.

The move comes as the country's efforts to curb "involution-style" competition are showing results, but irrational competition remains prominent in some industrial product manufacturing fields, noted an NDRC official.

"These behaviors are disrupting normal production and business order, potentially allowing 'bad money to drive out good', and harming healthy economic development," the official said.

While current law and rules prohibit low-price dumping and require accounting for individual and industry average costs, they lack detailed provisions on how such accounting should be done. The notice aims to fill that gap and strengthen the institutional foundation for governing disorderly low-price competition.

It is intended to encourage companies to compete on quality and innovation instead of price, promote the rational formation of market prices, and foster a market environment in which high-quality products command premium prices, the NDRC official said.

The notice comes amid signs of improving industrial prices. Latest data showed that the country's producer price index, which measures costs for goods at the factory gate, rose 0.4 percent in August, reversing a 0.7-percent decline in July. The rebound was partly attributed to elevated demand driven by industrial upgrading, the National Bureau of Statistics said. ■