Announcement on Governing Disordered Price Competition and Maintaining a Sound Market Pricing Order

No. 4 of 2025

Price competition is one of the key methods of market competition, but disorderly competition can negatively impact industry development, product innovation, and quality and safety—ultimately hindering the healthy growth of the national economy. To regulate market pricing practices, maintain a sound market price order, and support high-quality development, we hereby announce the following relevant matters.

I. For goods and services subject to market-regulated pricing, operators shall, in accordance with the "Price Law of the People's Republic of China," adhere to the principles of fairness, legality, and good faith. Based on production and operating costs as well as market supply and demand conditions, they should exercise their autonomous pricing rights in compliance with the law, proactively safeguarding market price order and jointly fostering a fair, orderly competitive market environment.

II. For key industries where disorderly price competition is particularly prominent, industry associations and other relevant organizations, under the guidance of the National Development and Reform Commission, the State Administration for Market Regulation, and the competent industry authorities, may conduct surveys and assessments of the industry's average costs, providing operators with a reference for setting reasonable prices.

III. The development and reform authorities, along with market regulatory departments, shall collaborate with industry regulators to strengthen policy communication, remind operators to conduct business in compliance with the law, and enhance product quality and service standards. Operators suspected of engaging in disorderly price competition will be promptly warned and advised to voluntarily regulate their pricing practices and firmly uphold the bottom line of fair price competition.

IV. The development and reform authorities, along with market regulators, will closely monitor operators who fail to comply with price regulations even after receiving reminders and warnings. If necessary, they will conduct cost investigations and price supervision inspections. Any violations of pricing laws or regulations discovered will be promptly addressed in accordance with the law.

V. Operators shall strictly comply with the provisions of the "Tendering and Bidding Law of the People's Republic of China" and the "Implementation Regulations of the Tendering and Bidding Law of the People's Republic of China," consciously regulating their tendering and bidding practices. They must not submit bids below cost, ensuring the quality of products and services.

6. Industry associations shall strictly comply with the provisions of the "Price Law of the People's Republic of China" and the "Anti-Monopoly Law of the People's Republic of China," promote industry self-discipline, and guide operators to jointly uphold a fair competitive order within the industry.

7. The National Development and Reform Commission and the State Administration for Market Regulation, together with relevant departments, will closely monitor market price competition and safeguard price order in key areas. They will also fully leverage the role of credit-based regulation, implementing penalties for dishonesty in accordance with laws and regulations.

National Development and Reform Commission
State Administration for Market Regulation
September 28, 2025

National Development and Reform Commission, State Administration for Market Regulation: Addressing Disordered Price Competition and Upholding a Sound Market Pricing Order

To thoroughly implement the decisions and arrangements of the CPC Central Committee and the State Council, and to address enterprises' disorderly competition in accordance with laws and regulations, the National Development and Reform Commission and the State Administration for Market Regulation recently issued the "Announcement on Governing Price Disorderly Competition and Maintaining a Sound Market Pricing Order" (hereinafter referred to as the "Announcement").

The "Notice" states that price competition is one of the vital mechanisms in market competition; however, disorderly competition can negatively impact industry development, product innovation, and quality and safety standards, ultimately hindering the healthy growth of the national economy. The state supports fair, transparent, and lawful market competition while safeguarding a stable pricing environment. For goods and services subject to market-regulated pricing, operators must adhere to the principles of fairness, legality, and good faith—as stipulated by the Price Law—and base their pricing decisions on production and operational costs as well as prevailing market supply and demand conditions. They are encouraged to exercise their autonomous pricing rights in accordance with the law, proactively uphold market pricing order, and collectively foster a competitive yet orderly market environment characterized by fair and healthy competition.

The "Notice" outlines several governance measures, grounded in current laws and regulations and guided by a combined approach of pre-emptive guidance and ongoing, post-event oversight. It calls for conducting research to assess the industry's average costs. For key sectors where disorderly price competition is particularly pronounced, the notice directs industry associations and other relevant organizations to conduct such assessments, providing operators with valuable reference points for setting reasonable prices. Moreover, industry associations are urged to strictly adhere to the Price Law and the Anti-Monopoly Law, fostering self-regulation within the industry and encouraging operators to jointly uphold fair competition practices. To address potential issues, the notice also emphasizes the importance of issuing timely reminders and warnings to businesses suspected of engaging in disorderly price competition, urging them to voluntarily align their pricing practices with legal standards and firmly maintain the boundaries of competitive behavior. In addition, regulatory enforcement will be strengthened. Operators who fail to comply with guidelines even after receiving reminders and warnings will be closely monitored, with targeted cost investigations and price inspections conducted as necessary. Any violations of pricing laws or regulations discovered during these checks will be rigorously addressed according to the law. Finally, the notice highlights the critical role of credit-based regulation, ensuring that penalties for dishonest behavior are enforced in strict accordance with legal frameworks. At the same time, operators are reminded to fully comply with the Tendering and Bidding Law and its implementing rules, actively promoting transparent and lawful bidding practices.

The National Development and Reform Commission and the State Administration for Market Regulation, together with relevant industry authorities, will guide local areas in strengthening policy communication and implementation, reminding operators to conduct business in strict compliance with the law, standardize pricing practices, and safeguard a healthy market price order.

Policy Interpretation

1. What is the background behind the issuance of the Notice?

Answer: Price competition is one of the crucial methods of market competition. In the socialist market economy, the effective allocation of resources through market mechanisms hinges on the proper functioning of the price mechanism, which in turn depends on healthy price competition. Currently, some industries in China are experiencing disorderly competition, a phenomenon that could lead to "bad money driving out good," negatively impacting industry development, product innovation, and even quality and safety standards—ultimately undermining the healthy growth of the national economy. To address this issue, the government is actively implementing policy measures aimed at resolving structural contradictions in key industries, encouraging outdated and inefficient production capacities to exit the market while simultaneously expanding supply capacity in the mid-to-high-end segments. At the same time, it’s essential for price policies and industrial policies to work in tandem, adopting targeted and effective measures to firmly curb disorderly price competition and safeguard a well-functioning market pricing environment. To this end, the National Development and Reform Commission and the State Administration for Market Regulation have jointly issued the "Notice," based on relevant laws and regulations such as the Price Law and the Bidding and Tendering Law.

The "Notice," while safeguarding operators' autonomy in pricing, adopts a strategy that combines pre-emptive guidance with ongoing and post-event supervision. It implements measures such as conducting surveys to assess industry-wide average costs, strengthening price regulation, and standardizing bidding and tendering practices—all aimed at upholding a fair and competitive market environment.

2. What role can researching and evaluating the industry's average costs play?

Answer: The announcement states that for key industries where price competition has become particularly problematic, industry associations and other relevant organizations, under the guidance of the National Development and Reform Commission, the State Administration for Market Regulation, and the competent authorities in respective sectors, may conduct surveys to assess the average industry costs. Undertaking this initiative can serve three important purposes: First, it provides operators with a reliable reference for setting reasonable prices. By aligning their own cost structures with the industry average, businesses can refine their pricing strategies, establish fair pricing practices, and ensure compliance with market regulations—all without undermining their legal right to set prices independently. It’s crucial to note that when we refer to "prices below cost," we mean below the operator’s own cost, not the industry average. Second, it encourages businesses to enhance their operational and management practices. By gaining insights into the broader industry landscape, companies can further optimize their production processes, drive quality improvements, and ultimately deliver more affordable, high-value goods and services to consumers. Finally, this assessment helps evaluate the overall competitive dynamics within the industry. By comparing industry-wide average costs with prevailing market prices, stakeholders can more accurately monitor and analyze competitive conditions, providing valuable input for effective macroeconomic regulation and policy-making.
Meanwhile, the announcement emphasized that industry associations should strictly comply with the Price Law and the Anti-Monopoly Law, promote self-regulation within the industry, and guide operators to jointly uphold a fair competitive order in the sector.

III. What regulatory measures will be taken against operators engaging in disorderly price competition?

Answer: The state supports and encourages healthy market competition. Regarding operators engaging in disorderly price competition, the "Notice" outlines three key regulatory measures: First, reminders and warnings—operators suspected of engaging in such practices will receive reminders and warnings, urging them to voluntarily regulate their pricing behaviors and strictly adhere to the bottom line of fair price competition. Second, regulatory enforcement—operators who fail to comply with pricing guidelines even after receiving reminders and warnings will be closely monitored. If necessary, authorities will conduct cost investigations and price supervision inspections; any identified price violations or illegal activities will be promptly addressed according to law. Third, credit-based penalties—fully leveraging the role of credit regulation, the government will impose sanctions on untrustworthy entities in accordance with laws and regulations.

IV. What requirements does the "Notice" set forth to regulate the bidding and tendering practices of business operators?

Answer: Current laws and regulations, aimed at standardizing price competition in the field of bidding and tendering, clearly outline the rules governing business operators' bidding activities. For instance, the Bidding and Tendering Law stipulates that bidders must not submit bids below cost; meanwhile, the Implementation Regulations of the Bidding and Tendering Law specify that if a bid price falls below cost, the evaluation committee should reject it. Addressing the issue of low-price, low-quality bids in certain industry sectors, the Notice urges business operators to strictly adhere to the provisions of the Bidding and Tendering Law and its Implementation Regulations, consciously regulating their bidding practices. Specifically, operators are prohibited from submitting bids below cost, ensuring the quality of products and services. It’s important to note, however, that "cost" here refers to the operator’s own production costs. If an operator’s bid price is lower than the industry average cost but still higher than its own individual costs, such a bid would not necessarily be subject to rejection.

5. How can we effectively implement the Notice?

Answer: The National Development and Reform Commission and the State Administration for Market Regulation will guide local authorities to govern enterprises' disorderly competition in accordance with the basic principles and key measures outlined in the "Notice," ensuring compliance with laws and regulations. First, they will carry out extensive policy communication, focusing on addressing price-related disorderly competition by urging operators to conduct business legally and responsibly, enhance product quality and service standards, and uphold a sound market pricing order. Second, they will encourage industry self-regulation by strengthening proactive guidance and leveraging the role of industry associations, motivating leading enterprises to take the initiative in adhering to legal and regulatory requirements and voluntarily standardizing their pricing practices. Third, they will step up market monitoring, closely tracking price trends and competitive dynamics across industries to promptly identify any signs of disorderly pricing behavior. Finally, they will strengthen regulatory enforcement by rigorously implementing the oversight measures specified in the "Notice," firmly tackling price-related violations according to law and safeguarding a fair and competitive market environment.