The Trivium China Podcast Ep 49 - I say overcapacity, you say involution, let’s call the whole thing off
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Dec 6, 2025 Dinny McMahon, Head of Markets Research at Trivium China, shares insights on China's recent rebranding of its overcapacity issues as 'involution.' He explains how this shift impacts Beijing's policies and why they dismiss overcapacity in a global free market. The discussion highlights the cutthroat competition among firms and the government's agenda to bolster profitability and innovation. McMahon also reviews recent stabilization measures and the implications for US-China trade dynamics, providing a balanced view of challenges and potential progress.
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China Argues Overcapacity Can't Last Globally
- Beijing argues in a free global market true overcapacity cannot persist because prices and demand adjust over time.
- The Development Research Center defended forward investment as preparing for future global demand.
Problem Is Domestic Cutthroat Competition
- Beijing sees the core problem as cutthroat domestic competition, not foreign undercutting.
- Anti-involution policy aims to stop Chinese firms from eroding profits by eating each other's market share.
Korean LCD Build-Out Example
- The DRC compared China's strategy to Korea's LCD build-out that ran years of losses before booming.
- LG and Samsung invested heavily for years before global demand pivoted to flat screens.