Beijing versus Brussels: China poses a threat to the ‘Made in Europe’ initiative

As the European Union seeks to protect its strategic industries from Chinese competition, Beijing has toughened its stance by announcing that it would take "countermeasures" should its companies suffer as a result of the Industrial Accelerator Act, the European bill dubbed "Made in Europe". The Chinese Ministry of Commerce has described the bill as discriminatory towards foreign investors, arguing that it contravenes the basic principles of a market economy, namely free competition and commercial voluntarism.

The bill is one of the EU’s most serious attempts to respond to the rise of Chinese imports in key sectors such as the automotive industry, solar panels and batteries. It plans to impose restrictions on foreign investments exceeding €100 million in strategic sectors where a single country accounts for more than 40% of global production. The companies concerned will also have to ensure that at least 50% of their employees are from the EU, that they involve local players in their manufacturing processes, and that they transfer their technological know-how to European partners.

These requirements lie at the heart of China’s criticism: Beijing views them as a violation of WTO rules and international agreements on intellectual property. For Beijing, the text “will hinder the EU’s green transition, undermine fair competition in the European market and deal further blows to multilateral trade rules”.

The geopolitical context lends particular significance to this confrontation. Whilst Washington and Beijing are negotiating an extension of their trade truce, China is seeking to preserve its relations with Europe, a vital market. It says it wishes to “engage in dialogue” with Brussels, but unless the EU backs down from its requirements deemed discriminatory, the tone is hardening.

On the European side, the draft legislation follows a clear logic: for decades, foreign companies wishing to set up operations in China were required to partner with local firms and transfer their technology. Now that Chinese manufacturers have acquired this know-how and can produce high value-added goods, European competitors find themselves facing what they consider to be unfair competition, particularly due to massive subsidies, estimated to be between three and nine times higher than those granted in rich countries, according to the OECD.

The text still needs to be negotiated with Member States and the European Parliament before it becomes law. Financial Times

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