China unveils new oversight guidelines seen as a strategic ‘anti-involution effort’
Amid cutthroat competition, China’s economic planner takes aim at how government-backed investment funds are being spent, especially in crowded industries
China’s top economic planner has unveiled new draft guidelines aimed at tightening oversight of government-backed investment funds, urging a sharper focus on advanced manufacturing and strategic emerging industries.
The warning against overlapping investments marks the latest push to rein in redundant spending that has intensified cutthroat competition and added to deflationary pressure – a key concern for policymakers seeking to steer capital toward high-impact, innovation-driven sectors.
On Wednesday, the National Development and Reform Commission (NDRC) released two draft documents for public comment, laying out guidance on how government funds should be deployed and evaluated.
The new rules call for stronger top-down planning, better coordination between central and local funds, and a sharper focus on key industries such as advanced manufacturing, future tech and the digital economy.
“The government will enhance the planning and guidance of government investment fund allocation, highlight policy orientation and the guiding role of the state, avoid homogeneous competition and the crowding out of private capital,” according to one of the draft guidelines.
It will also promote the formation of a development pattern that is moderate in scale, rationally distributed, standardised in operation, efficient in execution, and risk-controlled, the document said.
The guidelines also emphasise the role of public capital as “patient, long-term funding” to stabilise investments across economic cycles.