In response to deflation and eroding profits from hyper-competition, the Chinese government's "anti-evolution" policy is a deliberate strategy to force consolidation, reduce overcapacity, and restore pricing power, thereby boosting corporate return on equity.
China's campaign against "evolution" (excessive competition) is not a broad economic stimulus. It specifically benefits sectors like EV batteries, steel, and cement where state control or rapid market consolidation can restore pricing power and profitability.
China's airline industry, despite persistent losses, is a surprising beneficiary of the "anti-evolution" strategy. The sector doesn't suffer from seat oversupply, and strong regulatory coordination, rather than capacity cuts, could drive a significant turnaround.