Abstract: Decoding the occurrence mechanism and countermeasures of vicious involutionary competition in China's manufacturing industry is a crucial practical issue that cannot be avoided in promoting the construction of a modern industrial system and enhancing the resilience and security level of industrial and supply chains. Currently, vicious involutionary competition in China's manufacturing industry is manifested explicitly in the problems of industrial homogeneity and relative overcapacity, as well as new connotations including technology, market, and institution. Based on the three-dimensional analysis framework of technology-market-system, this article suggests that the occurrence mechanism of vicious involutionary competition in China's manufacturing industry is mainly manifested as follows. In terms of technological dimension, there are medium-tech trap that affects the transformation and upgrading of the manufacturing industry. In terms of market dimension, there is a structural contradiction that affects the balance between supply and demand sides in both domestic and international markets. In terms of institutional dimension, there are institutional barriers that affect the domestic industrial cycle and technological innovation. Based on this, to prevent vicious involutionary competition in China's manufacturing industry, we should take the following measures. In the aspect of technological innovation, we should consolidate the long-term material foundation, inject long-term transformation forces, and provide long-term systematic support to overcome the medium-tech trap. In the aspect of market innovation, we should solve the structural contradiction between the supply and demand sides, and activate the market potential of domestic and international dual circulation. In the aspect of institutional innovation, innovative industrial policy design and implementation methods should be established to promote technological innovation and breakthroughs.
