China is warning of retaliation as the European Union moves forward with an aggressive plan to reindustrialize the continent and wall off key sectors from foreign competitors — particularly Beijing.
At the center of the brewing dispute is the Industrial Accelerator Act, also known as the “Made In Europe Act,” a sweeping proposal from the European Commission that would require a significant share of products in strategic industries to be made in Europe when public money is involved.
European officials argue the move is long overdue, as businesses across the bloc have complained they are competing against heavily subsidized Chinese firms — particularly in sectors like electric vehicles, batteries, and industrial materials. According to EU Industry Commissioner Stéphane Séjourné, the act “will create jobs by directing taxpayers’ money to European production, decreasing our dependencies and enhancing our economic security and sovereignty.”
The proposal would impose strict domestic content requirements across strategic industries. Electric vehicles purchased with public funds, for example, would need to be assembled in Europe, with up to 70% of components sourced within the bloc. Similar thresholds would apply to materials like aluminum, cement, and key clean energy technologies.
It also directly targets foreign firms — primarily ubiquitous Chinese manufacturers — by requiring them to partner with European companies, limit ownership stakes, and in some cases transfer valuable technology in order to access EU markets or subsidies.
That has drawn a sharp response from Beijing: “If the EU … presses ahead with the legislation, and thereby harms the interests of Chinese companies, China will have no choice but to take countermeasures to firmly safeguard the legitimate rights and interests of its enterprises,” China’s Ministry of Commerce of the People’s Republic of China warned in a statement.
Chinese officials have accused the EU of erecting discriminatory barriers and violating principles of the World Trade Organization, arguing that the “European preference” system unfairly shuts foreign competitors out of public funding and investment opportunities.
The legislation is part of a broader “European preference” strategy aimed at reversing years of industrial decline. European officials say more than 200,000 jobs have already been lost in energy-intensive industries and the automotive sector since 2024, with hundreds of thousands more projected this decade.
At the same time, China has expanded its export footprint across European markets while building factories that EU officials say generate limited local economic benefit. “They come, build on European land, and run operations with minimal local value,” one EU official said. “Europe is not a supermarket — it has to be a factory.”
Beyond procurement rules, the proposal would impose strict conditions on foreign investment in strategic sectors, particularly targeting countries like China that dominate global manufacturing capacity. Investments exceeding €100 million could face caps on foreign ownership, mandatory technology transfers, and requirements that a substantial share of production and employment remain within Europe.
Chinese officials say they are open to negotiations but have made clear that retaliation remains on the table if talks fail, underscoring a growing economic rift between Brussels and Beijing as Europe joins the United States in reassessing its reliance on Chinese manufacturing.
The plan is not without critics within the Union, Sweden and the Czech Republic have warned the measures could deter investment and raise costs, while Germany has urged a more flexible approach that allows cooperation with allied trade partners. The proposal must still pass through the European Parliament and member states before becoming law, setting up a contentious political fight within the bloc.
Regardless of the final outcome, the direction is clear: Europe is moving to reclaim its industrial base, even at the risk of escalating tensions with China. Beijing, for its part, seems to be prepared to respond in kind.
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