Pricing law overhaul to ensure fair competition in China

China is overhauling its pricing law after nearly three decades, a critical revision aimed at curbing cutthroat price wars, algorithm discrimination and other unfair market practices in the world's second-largest economy.

The draft amendment to the pricing law has been jointly drawn up by the National Development and Reform Commission, the nation's top economic regulator, and the State Administration for Market Regulation, the nation's top market regulator.

The move marks the first revision since the law was enacted in 1998 and placed on the legislative agenda of the Standing Committee of the 14th National People's Congress in 2003. The current draft amendment was released for public comment late in July.

The 27-year-old law's rewrite comes as China confronts a phenomenon increasingly lamented by economists and business executives alike — cutthroat competition, where firms spiral into destructive internal competition, often slashing prices below cost to gain market share.

Guo Liyan, deputy director of the Economic Research Institute at the Chinese Academy of Macroeconomic Research, said: "The amendment sends a clear signal that maintaining fair market competition is nonnegotiable.

"Selling below cost is a malignant form of involution. When it spreads, it erodes profit margins, drives more firms into losses and makes it harder to stabilize production or create jobs. It even hurts household income growth, particularly for low- and middle-income earners."

At the heart of the amendment are tougher and clearer rules on predatory pricing. The current law, experts said, applies only to goods and to sellers.

The revision, in particular, would broaden its reach to cover services and extend liability to third parties such as online platforms that set pricing rules.

The revised Article 14, for instance, seeks to ban operators from selling goods or services below cost for the purpose of "crowding out competitors or monopolizing the market", unless there are legitimate reasons such as clearance of perishable, seasonal or overstocked items. It also specifies that platforms cannot force other operators to price below cost.

Han Wei, an associate professor at the Law School of the University of Chinese Academy of Social Sciences, said, "The wording distills the essence of predatory pricing into two elements: the means, which is below-cost pricing, and the purpose, which is exclusion or monopoly."

Han added that including services and platforms into the amended law closes regulatory gaps. "It's especially important for sectors like food delivery, ride-hailing or online retailing, where platforms sometimes compel merchants to follow their rules, forcing them into loss-making price battles."

China is strengthening oversight of what it describes as involution-style competition, or cutthroat competition, and is aiming to foster a market that rewards quality and innovation while promoting healthier, more sustainable industrial development.

The 2025 Government Work Report released in March vowed to take comprehensive steps to address intense competition or cutthroat competition.