Abstract: The photovoltaic industry is a key component of strategic emerging industries and an important pillar for advancing the green and low-carbon transition. The involution in China's photovoltaic industry results from a confluence of factors, including insufficient technological differentiation, local development impulses, incomplete market rules, impeded exit mechanisms, weak coordination within the industrial organization, and mismatches between demand and expectations. These factors drive the industry along a cyclic trajectory of "excessive competition --- overcapacity --- homogeneous competition --- price wars --- low-quality innovation --- innovation bubbles", culminating in a low-efficiency competitive equilibrium in which input continues to rise while effective output growth remains inadequate. The associated risks first manifest as declining corporate profits, tightening cash flows, and squeezed research and development investment, which then propagate to the industrial level, reducing resource allocation efficiency and weakening industrial chain resilience, while also eroding brand premiums, international bargaining power, and the capacity to move up the value chain. To address this involution, governance should be guided by the construction of a unified national market, adhere to innovation-driven development, strengthen rule-based governance, optimize industrial organization, regulate local governments' economic promotion behaviors, and refine market-based exit mechanisms as well as multi-stakeholder governance mechanisms. These measures will facilitate the exit of inefficient capacity, enhance industrial chain coordination, reshape the order of market competition, and redirect industrial competition from scale expansion and low-price rivalry toward technological progress, quality improvement, and value creation.

Key words: photovoltaic industry, involution-style competition, low-efficiency competitive equilibrium, strategic emerging industries, green and low-carbon transition