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Finbarr Bermingham

The European Union unveiled a sweeping raft of policies on Wednesday aimed at kick-starting its sluggish industry and protecting its critical infrastructure.
A common thread through each is that the screws will be turned ever tighter on Chinese firms in Europe.
Combined, the proposals reveal anxiety over the bloc’s ability to compete with cut-price and increasingly high-quality Chinese products, the heightened security fears connected to Chinese investments, and a new-found urgency to do something about both.
The Industrial Accelerator Act, which was proposed to great fanfare, is a political bombshell that blows away decades of adherence to free trade and laissez-faire economics.
It aims to increase manufacturing’s contribution to the EU economy from 14.3 per cent in 2024 to 20 per cent by 2035. Production volumes are estimated to have fallen by almost 20 per cent since 2019, much of it lost to China.
Stephane Sejourne, the EU’s industry chief, underscored the drastic shift.
“What I’m talking to you about isn’t just a change in our modus operandi – it’s actually a change in doctrine. This is something that was unthinkable even just a few months ago,” Sejourne said at a press conference in Brussels.

The European Commission estimates that if urgent action is not taken, 600,000 jobs could be lost in Europe’s automotive sector in the next decade.
Half the batteries and inverters used in the EU are made in China, as are 94 per cent of solar panels, a dependence officials describe as unsustainable.
“If we do nothing, then it’s quite clear that very soon, 100 per cent of clean technology will be produced in China in the coming years. It’s quite possible that our cement, steel industries will be offshored completely in the next few years,” Sejourne said.
The act seeks to force companies from China and other third markets to hand over technology and intellectual property if they wish to make investments over €100 million (US$116 million) in the EU’s batteries, electric vehicle (EV), solar or critical raw materials supply chains, should they wish to access government support or contracts.
It will insist that companies from countries which do not allow EU firms to access their own procurement markets are excluded from the bloc’s tenders in sectors including steel, cement, automotive, solar, wind and nuclear – going further than existing rules.
It will also aggressively promote “made in EU” products across sectors crucial to heavy industry, military rearmament and the clean and hi-tech industries of the future.
“We have no commitment with China, meaning public authorities will not accept bids from Chinese operators operating in the EU,” a senior official said on condition of anonymity.
They explained that the proposed laws “go one step further” than existing procurement rules, which “say you may be closed [to Chinese bidders] … this says you shall be closed”.
New EU ports and maritime industrial strategies – also unveiled on Wednesday – will further squeeze Chinese investors in infrastructure at a time when their port holdings in the West are under scrutiny.
Under the ports strategy, the European Commission will develop guidance for member states on assessing foreign investments, with a focus on strategic port assets and dual-use infrastructure such as port cranes.
It will not affect the existing Chinese holdings of ports across the continent, including in the Netherlands, Greece and Spain, but it means that future bids will be under the microscope in a Europe that is much more concerned about security risks.
Through the maritime industrial strategy, meanwhile, Brussels is considering a sector-specific trade instrument that would deal with unfair competition in industries like ferries and offshore wind installation vessels.
It will also push for a level playing field in export credits for ships to counter Chinese state-backed financing advantages, and use public procurement to prioritise “made in EU” vessels and technologies – potentially excluding Chinese suppliers in sectors like naval and research vessels.


The proposals will now be sent to the European Parliament and the Council of the EU – made up of the 27 member states – which will each draw up their own draft versions.
This will lead to lengthy negotiations before a final draft is agreed, which will eventually become law.
This means it could be years before any of the proposals take effect, while many of the elements of the industrial accelerator come with years-long bedding-in periods designed to soften any negative impact on industry.
They reflect a philosophical shift in Europe, away from the open markets approach of the last 35 years, and provide a snapshot of a continent in a state of flux.
Of most consequence is the industrial act, which was postponed seven times before finally being proposed – an indication of how much controversy it has stoked internally.
It was championed by France and opposed by a rearguard of 10 member states led by Germany, meaning it has already been significantly watered down from earlier drafts.


The South China Morning Post reported on Tuesday that sectors including artificial intelligence, chips, quantum computing and robotics were dropped from a list of strategic technologies that must be “made in Europe” to tap billions in government funds, as free market-loving governments and commissioners attempted to narrow its scope.
Instead, the proposal focuses on heavy industrial products such as steel, cement, aluminium and chemicals, as well as paper, refined petroleum and plastics.
Some of these industries have complained that they are being hit by Chinese overcapacity.
The document also lists technologies essential to the EU’s net-zero production plans, including EVs, solar photovoltaic, onshore and offshore wind, battery storage, heat pumps, hydrogen electrolysers and nuclear fission, many of which face intense competition from China.
In the case of EVs, at least 70 per cent of local content must be made in Europe if they are to qualify for public procurement contracts or state support, which is essential to ensuring inclusion in, for example, government fleets.
The 70 per cent figure excludes the value of the EV’s battery, a significant carve-out given that this can account for 40 per cent of a vehicle’s cost.
However, the rules still demand that three key battery components – including cells – be made in Europe within six months of the act’s adoption, rising to five components within three years.
Furthermore, it stipulates that foreign entities from countries that hold more than 40 per cent of the market for specific products should meet four of six named criteria if they are to participate in government contracts, procurement markets and tap subsidies.
These are: transferring technology to local partners, employing more than 50 per cent of the project staff in the EU, limiting joint venture participation to 49 per cent for foreign owners, having at least one EU-based partner, investing at least 1 per cent of global revenue in research and development in the EU, and sourcing a minimum of 30 per cent of components within the bloc.
It’s not about being negative – Europe is just doing what other partners have been doing for years now
Stephane Sejourne, EU industry chief
This could hit Chinese EV and battery makers’ investment plans for Europe. Some of the tenets – including tech transfer – represent the first major legislative attempt in Europe to mirror a model pioneered by Beijing over decades.
Nicknamed a “reverse Deng” after China’s late paramount leader Deng Xiaoping, the flex is likely to encounter pushback from Chinese businesses and government alike.
Sejourne claimed that the plan was not “anti-China” when asked, saying that it would allow market-leading Chinese firms to invest in Europe if they met the criteria.
“This isn’t something against certain countries, it is for certain countries. It’s not about being negative – Europe is just doing what other partners have been doing for years now,” he said.
“In China it’s not possible to enter the market without a Chinese partner. You need a joint venture and you’re a minority stakeholder. These are criteria which are pretty much standard in international business,” Sejourne added.
“When you change the conditions in Europe of course there’s a legitimate debate. But when you actually compare us to other regions around the world, we can see what we’re proposing is very much in line with what many of our partners have been doing for a long time.”


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Stephane Sejourne gives a press conference to unveil the Industrial Accelerator Act, at the European Commission headquarters in Brussels on Wednesday. Photo: AFP

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European Commission President Ursula von der Leyen addresses a debate on the urgent action required to boost EU competitiveness, deepen the single market and reduce the cost of living, at the European Parliament in Strasbourg, France, on Wednesday. Photo: AFP

The Alden Biesen Castle is the backdrop for EU leaders’ talks on competitiveness in Bilzen, central Belgium on Thursday. Photo: AFP

News

China

Diplomacy

Proposals reveal EU anxiety over competing with Chinese products, security fears linked to Chinese investments and urgency to act


Proposals reveal EU anxiety over competing with Chinese products, security fears linked to Chinese investments and urgency to act.


European Union

Germany

Deng Xiaoping

China in the crosshairs as EU launches sweeping plans to save its industrial future

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Proposals reveal EU anxiety over competing with Chinese products, security fears linked to Chinese investments and urgency to act

Proposals reveal EU anxiety over competing with Chinese products, security fears linked to Chinese investments and urgency to act