China has escalated its criticism of the European Union’s push to bolster domestic manufacturing, warning that it may retaliate if the bloc’s Industrial Acceleration Act is not revised. In a statement released Monday, Beijing’s Ministry of Commerce accused Brussels of imposing “numerous restrictive requirements” on foreign investment, arguing that the policy discriminates against non-European companies and could breach World Trade Organisation (WTO) principles.
The European Commission unveiled the Industrial Acceleration Act in March as a cornerstone of its strategy to reduce strategic dependencies and strengthen economic sovereignty. The legislation targets three key sectors: clean technologies, automotive manufacturing, and energy-intensive industries such as aluminium, steel, and cement. Among its provisions are requirements that 70% of an electric vehicle’s content be sourced from the EU, along with 25% thresholds for aluminium and cement products used in public procurement.
A Clash Over Market Access
China’s Ministry of Commerce spokesperson stated that Beijing had formally submitted its feedback to the European Commission on Friday, but chose to make its concerns public on Monday. The spokesperson described the “EU origin” preference embedded in the Act as a form of “institutional discrimination” that creates barriers for foreign investors. “These measures may violate WTO rules and undermine the principles of fair competition,” the spokesperson added.
The statement also signaled that China is prepared to engage in dialogue to mitigate the impact on its businesses, but warned that if negotiations fail, countermeasures would be taken to “firmly safeguard” Beijing’s commercial interests. This rhetoric echoes earlier trade disputes between the two powers, including over solar panels and electric vehicles. For context, Chinese automakers have set ambitious targets to capture 30% of the European market by 2035, a goal that could be jeopardized by the new local-content rules.
European Commissioner for Industry Stéphane Séjourné defended the Act at its launch, stating: “It will create jobs by directing taxpayers’ money to European production, decreasing our dependencies and enhancing our economic security and sovereignty.” The Commission’s proposal comes amid a sharp decline in European industrial employment: over 200,000 jobs have been lost in energy-intensive and automotive sectors since 2024, with projections of 600,000 additional losses in car manufacturing alone this decade.
The Act now requires approval from the European Parliament and the European Council, where member states will negotiate its final form. Some EU capitals, particularly those with strong export-oriented economies like Germany and the Netherlands, may push for softer local-content thresholds to avoid provoking a trade war with Beijing. Others, such as France and Italy, have advocated for more aggressive measures to protect domestic industries.
China’s reaction is part of a broader pattern of friction over industrial policy. The EU has also been working to secure critical mineral supplies through deals like the pact with the United States signed earlier this year, aiming to reduce reliance on Chinese processing. Meanwhile, Beijing has been investing heavily in its own technological capabilities, from cost-effective AI models to advanced manufacturing.
The outcome of this dispute will have significant implications for transatlantic and global trade dynamics. If the EU proceeds with the Act unchanged, China could retaliate by targeting European exports—such as luxury cars, aerospace components, or agricultural products—or by restricting access to critical raw materials. Conversely, a compromise could set a precedent for how the bloc balances industrial revival with international trade commitments.
For now, both sides have left the door open for negotiation, but the rhetoric from Beijing suggests that patience is wearing thin. As the legislative process unfolds in Brussels, European policymakers will need to weigh the benefits of protecting domestic industry against the risks of alienating a major trading partner.
