China’s Xi Jinping is pushing back on the country’s hyper-focus on electric vehicles and AI.
At a Beijing meeting Monday, Xi challenged the industrial strategy that’s zoomed in on "artificial intelligence, computing power, and new energy vehicles."
Xi asked bluntly: 
"Do all provinces in the country have to develop industries in these areas?"
The move signals a rare public questioning from China’s top leader on the tech sectors Beijing has heavily invested in.
This comes amid official efforts to cool down “involution” — intense competition that’s hurting businesses and squeezing profits, especially in the EV market.
Beijing is now pushing for market consolidation and cracking down on unhealthy practices like forcing companies to sell below cost, said Lynn Song, ING’s chief China economist.
China’s producer price index plunged 3.6% in June, its sharpest drop in nearly two years. That deflationary pressure threatens long-term growth and could stoke trade tensions by flooding global markets with cheap Chinese exports.
China managed 5.3% GDP growth in H1, but economists warn it’s mostly due to export frontloading and short-term consumption boosts. Consumer confidence is weak, youth unemployment remains high, and deflation is catching Beijing’s full attention, according to Nomura analysts.
