How China’s Woes Resurrected the Economic Term ‘Involution’

Prolonged economic challenges tend to generate their own terminology. When the US struggled with low growth and below-target inflation in the years after the 2008 crisis, the oft-used phrase was “secular stagnation.” Even worse conditions in Japan gave rise to a “deflationary mindset.”

Nowadays, in China, economists, investors and even the government itself are angst-ridden over “involution” — a term likely unfamiliar even to those who took college macroeconomics. It refers to destructive competition, and it popped up again in recent days after BYD Co., China’s biggest electric vehicle maker, triggered “a new round of ‘price-war’ panic,” in the words of the nation’s automobile industry association.