“Involutionary” competition is a state of low-level, homogeneous competition driven by the combined effects of resource constraints, insufficient effective demand, weak innovation capacity, distorted institutional incentives, and the short-term behavior of market entities. It is characterized by escalating competitive inputs without proportional gains in efficiency, quality, or overall welfare. Contextualized within the development of a unified national market, this paper distinguishes involutionary competition from normal market competition and establishes an analytical framework of “market pressure-capacity constraints-institutional push-behavioral reinforcement.” It identifies key characteristics, low returns, low quality, high consumption, high transmission, and proposes operational identification indicators.Furthermore, the study analyzes the phenomenon’s manifestations in local government policy competition, corporate homogenization, and platform economy algorithms, highlighting its detrimental effects on industry order, corporate innovation, resource allocation, and stakeholder rights. Finally, to dismantle industrial involution, strengthen the foundation of the real economy, and promote high-quality macroeconomic growth, this paper proposes governance strategies across five dimensions: unified market construction, supply-side structural reform, demand expansion, corporate transformation combined with industry self-regulation, and the legal supervision of market competition.