Draft amendment comes as China confronts reality of cutthroat competition, where companies often slash prices below cost to gain market share.
China is undertaking its first major revision of the Pricing Law since its enactment in 1998. The draft amendment, jointly introduced by the National Development and Reform Commission and the State Administration for Market Regulation, was released for public comment in July. This overhaul addresses widespread concerns over unfair pricing, algorithmic discrimination, and destructive price wars increasingly common in China’s fast-evolving economy.
The revised law aims to stop companies from engaging in below-cost pricing solely to squeeze out competitors. Guo Liyan, deputy director of the Economic Research Institute at the Chinese Academy of Macroeconomic Research, described this as a “malignant form of involution” that undermines profit margins, jobs, and consumer income, particularly for low- and middle-income groups.
A key change expands the law's reach to services and online platforms, sectors previously outside its scope. Revised Article 14 bans pricing below cost unless justified (e.g., for perishable or seasonal goods) and explicitly prohibits platforms from forcing merchants into loss-making pricing strategies. Legal experts say this closes significant regulatory loopholes in sectors like food delivery and e-commerce.
The amendment breaks new ground by tackling algorithmic pricing, data abuse, and tech-driven manipulation—phenomena unheard of when the law was first passed. As pricing becomes increasingly algorithmic and opaque, the new provisions require operators not to use data or tech tools for unfair pricing practices, a move applauded by legal scholars tracking digital discrimination.
The draft introduces tougher enforcement, including higher fines for pricing misconduct, such as failing to disclose costs or obstructing inspections. It also refines the government’s role in price regulation by requiring public consultation and cost reviews before decisions—marking a shift from price-fixing to price-mechanism oversight.
This amendment is part of a broader regulatory upgrade, aligning with recent changes to China’s Anti-Monopoly Law and Anti-Unfair Competition Law. Together, they form a comprehensive oversight framework to address modern market dysfunctions. Officials emphasized that synergy among laws is crucial for tackling “disorderly competition.”
Unrestrained price undercutting has eroded margins across sectors. In the electric vehicle industry, over 60 models slashed prices in early 2025, pushing industry-wide net margins down to 4.3%. Experts warn that such practices not only reduce profitability but also discourage innovation and investment, prompting urgent regulatory intervention.
Ultimately, the amendment supports China's broader push for “high-quality development,” where economic efficiency goes hand in hand with fairness and innovation. Consumers may benefit from clearer pricing and fewer digital tricks, while businesses will face more predictable rules and less pressure to join ruinous price wars.
Source: China Daily
