In today's complex economic landscape, the phenomenon of "price-for-volume" exchanges has become increasingly prevalent, prompting critical reflection on its causes and implicationsThis practice is not merely a spontaneous result of market adjustments; rather, it reflects a broader tension between microeconomic realities and macroeconomic challengesUnderstanding why this trend is so widespread, whether it stems from individual business struggles or systemic issues, and if it can be reversed in the future is essential for shaping effective economic policies.

The Ubiquity of Price-for-Volume Exchanges

One of the most striking aspects of the current economic environment is the rise of an "involutionary" competitive dynamicThis term describes a scenario where competition intensifies to the point that it becomes self-defeating, often leading to a race to the bottom in terms of pricing

This trend is not confined to domestic demand sectors; it has extended into broader external markets, causing profound impacts across various economic dimensions.

When examining this phenomenon from a microeconomic perspective, it becomes evident that approximately 62% of industrial sectors are resorting to price reductions to maintain stable production levelsThis trend reveals the significant challenges these sectors faceIn an environment where market demand is tightening, businesses are compelled to lower prices to retain market share and avoid being outcompetedBy adopting a low-margin, high-volume strategy, these companies hope to move their products and sustain production levelsWhile this approach may stabilize output in the short term, it poses long-term risks by compressing profit margins and potentially depriving firms of necessary funds for research, innovation, and equipment upgrades

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Consequently, this could undermine the overall health and competitiveness of entire industries.

The labor market reflects a similar struggleDespite stagnating growth in per capita income, average weekly working hours have surged to historic highsWorkers are increasingly compelled to invest more time and effort to maintain their income levels or secure their jobsThis trend highlights two key points: first, companies may extend existing employees' hours to enhance productivity without incurring additional labor costs; second, long working hours can negatively affect workers' physical and mental health, limiting their opportunities for personal development and family timeOver time, this could harm the sustainable development of human resources and diminish residents' quality of life.

Ultimately, the "price-for-volume" phenomenon is a passive response of market participants to the pressing reality of demand contraction

On a macroeconomic level, this situation manifests a unique economic dynamic characterized by relatively stable GDP growth, juxtaposed with low or even negative price growthSuch price movements more accurately reflect the underlying economic conditions, indicating that the economy is operating below its potential growth rate, leading to a negative output gapThis scenario often signals that the overall economy is in a fragile and unstable state.

A deeper investigation reveals that these conditions frequently arise during significant adjustments in the real estate sectorAs a pillar of the national economy, real estate's fluctuations can have cascading effects on various upstream and downstream industriesWhen the real estate market experiences major downturns—such as falling prices, reduced investment, and sluggish sales—related sectors like construction, building materials, and home appliances also suffer

This contraction in market demand triggers a cycle of intensifying "involutionary" competition across various fields, posing numerous challenges and uncertainties for healthy economic development.

The Need for Extraordinary Policies

Historically, a common pattern emerges across nations: as low prices persist, the expectations of microeconomic actors tend to become "stabilized." In China, for example, persistent market predictions have overestimated prices, highlighting the sticky nature of low prices.

International experience suggests that changing this dynamic requires extraordinary counter-cyclical measuresSuch measures should include significant public funding interventions in the real estate market, particularly targeting "problem assets." Given the quasi-financial characteristics of real estate companies under the pre-sale system, the risks associated with bad loans may not initially manifest within the banking system

Instead, they often surface as delays in developers fulfilling obligations to homebuyers or settling payments with suppliers.

Looking ahead to the coming year, the implementation of "more proactive macroeconomic policies" could help achieve critical economic and social development goals represented by actual GDPHowever, overcoming the price deflation represented by the GDP deflator and reversing the "price-for-volume" trend will not be easyAchieving these goals will require a dual approach: extraordinary total demand policies alongside relief strategies for the real estate sectorOnly through this comprehensive strategy can the economy transition to a healthier, more stable, and sustainable trajectory.

To avoid long-term constraints on economic development caused by price stickiness and challenges in the real estate market, it is imperative to promote coordinated development across various industries and reshape market expectations positively