China's punishment: why China is against the "Made in Europe" plan
The Chinese Ministry of Commerce has officially warned the European Union about a possible response to the "Made in Europe" plan, the main outlines of which were approved in Brussels in March this year. Beijing described the initiative as a "gross violation of world trade rules" and promised to take symmetrical countermeasures. What China doesn't like about new ideas to support the European economy, who loses more from the intensifying conflict of key industrial forces, and how the global market continues to fragment rapidly — in the Izvestia article.
Percentage of sovereignty
The Industrial Accelerator Act ("Made in Europe") is the most radical document of the European Commission in recent decades. The main stumbling block was the localization requirement. According to the plan, in order to qualify for government subsidies or participate in tenders for public procurement, companies must ensure that at least 70% of the added value of the product is created within the EU borders. This rule applies to the strategic sectors of the "green transition": the production of electric vehicles, wind turbines, solar panels, heat pumps and lithium batteries.
From Beijing's point of view, this clause is a direct discrimination against Chinese manufacturers. In recent years, China has invested hundreds of billions of dollars to establish global dominance in these industries. For many of the products (for example, equipment for solar and wind energy), China provides more output than the rest of the world combined. Brussels' clearly protectionist plan actually puts Chinese companies in front of a choice: either to completely shift production and transfer technology to Europe, losing control of supply chains, or to withdraw from the European market, the largest consumer of environmental technologies in the world.
The current conflict did not arise from scratch. Relations between Brussels and Beijing have consistently deteriorated since 2023.
The first serious signal was the European Commission's investigation into subsidizing Chinese electric vehicles, which began in the fall of 2023. At that time, Brussels openly stated for the first time that the advantage of Chinese brands (such as BYD or MG) was due not only to efficiency, but also to massive injections from the PRC state budget. As a result of the investigation, protective duties on imports of electric cars from China were introduced in 2024, reaching 45-48%, depending on the manufacturer.
Beijing's countermeasures have hit the nail on the head: anti-dumping checks have been launched on European brandy, dairy products and pork. These steps have caused maximum damage to the agricultural interests of France and Spain, creating internal tension in the EU. Everyone knows how sensitive European governments are to the problems of local farmers.
In 2025, the standoff expanded to the medical equipment and wind energy sectors. Chinese companies have begun to face restrictions on access to European infrastructure projects. The adoption of the Industrial Accelerator Act in March 2026 was the culmination of this process — instead of "targeted" measures, "carpet" measures were taken.
Who has more to lose
The EU is now under threat from two directions at once. On the one hand, there is an energy crisis. The war in Iran and the blockade of the Strait of Hormuz in the spring of 2026 led to an increase in electricity prices in Europe. The average cost per kilowatt-hour for industry in Germany and France is 3-4 times higher than in the United States or China. Under these conditions, the 70% localization requirement looks like forcing a business to produce in a deliberately unprofitable environment. Without access to cheap Chinese components, the cost of European solar panels or batteries will become prohibitive for the end user, which will put an end to decarbonization plans.
On the other hand, there is a dependence on critical raw materials. China controls 80-90% of the global market for processing lithium, cobalt, graphite and rare earths. These are the basic materials for the "green" industry, which Brussels is trying to protect with the IAA plan.
Beijing has already demonstrated its willingness to use "raw materials weapons" by imposing restrictions on exports of gallium, germanium and antimony in 2024-2025. If China cuts off the supply of lithium or graphite in response to the IAA, the construction of European "gigafactories" for the production of batteries may in principle stop. No amount of "accelerated licensing" of production within Europe, envisaged by the plan, will be able to compensate for this deficit in the next 5-7 years.
At the same time, the conflict will probably be more painful for China in the short term. The loss of the European sales market amid the trade war with the United States and the domestic real estate crisis is a severe blow to GDP and employment in the technology sector. China sells much more to the EU than it buys: last year, the trade surplus with the bloc countries exceeded €300 billion. It is vital for Beijing to maintain export channels to absorb excess production capacity, as the country's turn towards domestic market development and consumption is proceeding too slowly. The new five-year plan provides for a reduction in the pumping of export industries, but the capacities have already been created, and the national market is still underdeveloped, despite all efforts.
However, over a longer time horizon, Europe's risks look bigger. The Old World may finally lose its industrial competitiveness. The United States is already pursuing a policy of actively luring European capital through subsidy mechanisms (the IRA Act). If Europe confronts China at the same time, it will remain technologically isolated with the most expensive energy in the world. No agreements with India and South America (Mercosur) They will not be able to replace the Chinese market and suppliers.
For European majors (for example, the German car industry), the escalation threatens to lose assets inside China. Companies like Volkswagen or Mercedes-Benz still receive a significant share of profits in the Chinese market. Beijing's retaliatory measures may include not only duties, but also regulatory strangulation of European factories in China (painful for both sides, but more so for Europeans).
Every man for himself
The situation around the "Made in Europe" plan once again shows that the era of globalization based on WTO rules and economic efficiency is over. The global economy is fragmented into regional blocks, each of which is trying to build an autonomous industrial circuit.
This process is forced, and States refer to geopolitical considerations. The United States is being shut down by Donald Trump's tariffs, China is forcing a strategy of "double circulation" and self-sufficiency, and Europe is trying at the last moment to save its industrial sovereignty amid a severe industrial crisis (especially in Germany, but far from it). The IAA plan is an attempt by Brussels to stop deindustrialization by administrative means. However, in a situation where not only raw materials, but also many technologies are in the hands of foreign powers, protectionism can only lead to higher living costs for Europeans and a slowdown in technological development. In addition, it is still unclear how the EU is going to deal with its usual ills — bureaucracy, reinsurance, and the dictatorship of compliance for almost everything.
An escalation of Sino-European relations, if not inevitable, is very likely. The parties are entering a period of protracted trade disputes, mutual restrictions and the search for alternative partners. The main outcome of this confrontation will be the final dismantling of the unified technological space. At the moment, political loyalty and security of supply are put higher than the price and quality of goods. In this race for survival, Europe starts from the weakest positions, having neither its own resource base nor a single opinion within the union on how to deal with the "Chinese threat" without collapsing the remnants of its own economy.
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