Investors look to China’s Politburo meeting for signs of fighting industrial overcapacity
All eyes will be on how gathered leaders address hyper-competition in industries including solar and lithium batteries, EVs and e-commerce
Equity investors are shifting their attention to China’s coming Politburo meeting for any clues on whether top leaders will introduce measures to fight back against overcapacity in some of the nation’s emerging industries.
While expectations are low that the Politburo conclave will yield sweeping stimulus measures that would be a boon for equities, investors were hoping for a repeat of an anti-overcapacity campaign in 2016 that took on bloat among coal, steel and commodity producers. On Thursday, HSBC said the solar industry would benefit most from an anti-involution drive because the need for a revamp was urgent due to low utilisation and nagging losses at leading firms.
“There’s no obvious inflection point for the macroeconomy and [related] policies,” said Huang Hongwei, an analyst at Chasing Securities. “But if the policy of anti-involution is effectively implemented, it will improve profitability.”
Prices of silicon wafers and panels, critical components in the photovoltaic industry, have slumped nearly 90 per cent since 2023, while profits in the automotive industry declined 12 per cent in the first five months of 2025, with companies like BYD rolling out rounds of price cuts to retain market share, Soochow Securities said.