People's Daily publishes a commentary: To break the "involution," the key is to make good use of the rule of law

The rule of law is not only a “firewall” against unfair competition but also a “stabilizer” for companies to develop with confidence. It is an important means to break the cycle of “involution” competition.

Currently, solving the problem of “involution” competition is a key task in building a unified national market. Two cases offer insights.

One about strong protection.

A subsidiary of Ji’s automobile company saw 40 senior executives and technical staff “jump ship” to another car company. Without technical accumulation or legitimate sources, the new company used Ji’s chassis component drawings and technology to quickly launch a series of electric vehicle models, causing significant losses to Ji’s company.

How should malicious competition—such as planned poaching and stealing competitive advantages—be punished? The Supreme People’s Court applied double punitive damages, ruling the infringer to compensate Ji’s company for economic losses and reasonable rights protection expenses totaling about 640 million yuan, setting a new record in China’s intellectual property infringement litigation. This ruling draws a clear line for fair industry competition and provides legal guidance for the healthy development of new energy vehicles.

Strong protection can incentivize innovation and creation. Only by using the rule of law to maintain fair market competition can we better break the cycle of “involution.”

One about strong confidence.

A machinery technology company in Jiangsu was sued three times for patent infringement by competitors. After winning the first two cases, the opponent filed a third lawsuit when the company applied for listing, attempting to damage the company’s reputation and hinder its development through litigation. The company’s leader decided to defend and filed a countersuit.

Do companies that engage in malicious litigation suffer? No! Ultimately, the court dismissed the competitor’s claims, ordered them to publish a statement to eliminate the impact, and awarded the company 400,000 yuan for reasonable expenses. The head of this machinery company said, “The rule of law ensures honest businesses won’t suffer,” and “Our confidence in the first two cases came from our technology; the third is more about the rule of law.”

The rule of law provides security, giving business entities confidence. When the rule of law supports compliant operators, it is also an internal requirement for addressing “involution” competition.

Analyzing the causes of “involution” competition involves many complex factors, including insufficient innovation and unfair competition. This requires law enforcement and judicial authorities to focus on encouraging innovation and maintaining fair market competition, clearly defining boundaries, establishing rules, and strengthening protections through legal means. These two cases vividly demonstrate that the rule of law is both a “firewall” against unfair competition and a “stabilizer” for companies to develop with confidence—an essential tool for solving “involution” competition.

To effectively use the key of the rule of law to break “involution,” strict and fair law enforcement and judicial practices are necessary to draw the bottom line of fair competition.

Observing enforcement. Recently, the State Administration for Market Regulation released ten typical cases of comprehensive rectification of “involution” competition by 2025. Focused on key areas with prominent “involution” issues, law enforcement efforts have been intensified, emphasizing a strict approach to effectively enhance deterrence.

Observing the judiciary. People’s courts, through judicial trials, set clear boundaries for competitive behavior, effectively cracking down on intellectual property infringements, and promoting a shift from low-cost, low-quality competition to high-quality and innovative competition.

From practice, only strict law enforcement and impartial justice can guide companies out of the vicious cycle of competition and promote innovation through fair competition.

To effectively use the key of the rule of law to break “involution,” it is also necessary to increase the supply and guidance of rules.

Currently, with the development of platform economy and digital economy, many new challenges have emerged in areas like artificial intelligence and data rights protection. For example, a short video platform’s “transforming comic effects” used AI models and parameters directly from other companies—how to hold them accountable? Or some companies illegally scrape massive data and use software to “steal images and copy stores”—how to regulate?

These are new types of unfair competition cases. Responding promptly through improved legislation and clarified judicial rules can ensure that rules serve as a “weather vane” to guide healthy industry development and maintain market order in emerging fields.

The rule of law is an inherent requirement and an important safeguard for building a high-level socialist market economy system. By properly applying the rule of law, breaking the “involution” dilemma will unleash market vitality, accelerate the growth of new productive forces, and inject continuous momentum into high-quality development.

Source: People’s Daily

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