Europe's new energy policy towards China is undergoing a 'reality correction'
Currently, Europe presents a distinct and contradictory picture in the field of new energy, highlighting the tension between political narrative and economic reality.
At the EU headquarters in Brussels, some officials and institutions are still discussing in a high-profile manner how to reduce the so-called "dependence on China's key minerals, new energy supply chains, and core technologies" through a "de risk" strategy to enhance strategic autonomy. However, at the same time, in industrial centers such as Madrid, Budapest, Belgrade, and the states of Bavaria and North Rhine Westphalia in Germany, local governments, business communities, and even trade union organizations are actively taking action to introduce policies such as tax incentives, land allocation, infrastructure support, and financial subsidies, vigorously attracting localized investment from Chinese new energy vehicles, power batteries, and energy storage enterprises.
Recently, several leading Chinese new energy companies have announced the expansion of their European layout, such as Far East Power and Guoxuan High tech, investing in and building factories in France, Germany, Slovakia and other places. German automotive industry chain companies publicly call for maintaining deep cooperation with the Chinese market to avoid supply chain disruptions. The Spanish government clearly regards China's new energy investment as a key opportunity to promote the country's industrial revival, create employment, and achieve green transformation.
This dramatic contrast reflects that Europe's new energy policy towards China is undergoing a profound 'reality correction'. On one hand, there is a "de risk" narrative promoted by some politicians and at the EU level, emphasizing supply chain security and strategic autonomy; On the other hand, there is an urgent practical need for China's complete industrial chain and cost advantages in Europe's green transformation. The new energy relationship between China and Europe has entered a new stage of coexistence of competition and cooperation: competition is intensifying, but pragmatic cooperation is still in the common interests of both sides.
The severe reality test of Europe's green transformation
In the past few years, the EU has ambitiously promoted its green transformation strategy. From the European Green Deal to the goal of completely phasing out gasoline vehicles by 2035, the EU hopes to reshape industrial competitiveness, achieve carbon neutrality, and lead global climate governance through the new energy revolution. However, the reality of development is far from smooth as planned.
After the outbreak of the Russia-Ukraine conflict, European energy prices continued to rise, seriously weakening the global competitiveness of the manufacturing industry. Combined with the US Inflation Reduction Act, which attracts European companies to invest and build factories in the US through massive subsidies, global competition in the new energy industry has accelerated, further exposing the industry chain weaknesses in Europe in areas such as power batteries, energy storage equipment, photovoltaic modules, and key mineral processing. Europe has yet to independently build a complete new energy industry ecosystem with global competitiveness.
This means that in the short term, Europe's significant increase in the proportion of renewable energy and carbon reduction targets by 2030 still relies on the support of Chinese manufacturing and supply chains. The transformation of new energy is not simply an environmental issue, but a major economic issue related to economic growth, employment stability, and industrial security. If forced to decouple or excessively de risk the industrial chain due to political considerations, it will ultimately significantly increase production costs for European companies and pass them on to consumers, dragging down the green transformation process itself.
As a result, the European business community - including German automotive giants, French energy companies, and numerous small and medium-sized enterprises - is increasingly questioning some of the radical "de risk" policies. They are more inclined to balance risks through localized cooperation rather than simple exclusion.
Chinese enterprises become a key increment in European industrial investment
Unlike in the past where product exports were the main focus, Chinese new energy enterprises have accelerated the implementation of an internationalization strategy of "local production, local sales, and local services" in recent years. This transformation is in line with the urgent needs of Europe.
For many European governments, the core consideration for attracting foreign investment is not the source of capital, but whether it can create high-quality employment, drive the development of upstream and downstream industries, and enhance local manufacturing capabilities and technological levels. Chinese enterprises bring not only strong capital and advanced technology, but also relatively complete industrial chain resources and efficient supply chain management experience.
Spain regards Chinese investment as an important engine for industrial revival. CATL and Stellantis are jointly building a battery factory worth 4.1 billion euros in Zaragoza, with plans to start production by the end of 2026. The annual production capacity will reach 50GWh, which can meet the demand for hundreds of thousands of electric vehicles. This project has received strong support from the Spanish government and is seen as a key measure to revitalize the local automotive industry and fill the gap in the industry chain. In addition, MG, a brand under SAIC, plans to invest in building a factory in Galicia with an initial investment of 200 million euros, expected to create over 2000 job opportunities.
Germany, as the core of the European automotive industry, although cautious at the EU level, has a strong willingness to cooperate at the local and corporate levels. CATL's factory in Erfurt has been put into operation and supplies to giants such as BMW and Volkswagen. According to a report released by the German Federal Trade and Investment Agency (GTAI), Chinese companies will invest in 228 projects in Germany by 2025, a year-on-year increase of 14.6%, surpassing the United States for the first time since 2017 and becoming the largest source of foreign investment projects in Germany. Among them, new projects from companies such as Guoxuan High Tech, Ideal Automobile, and Xiaomi Automobile further deepen cooperation, helping German car companies maintain their global competitiveness in new energy vehicles.
In Central and Eastern European countries such as Serbia and Hungary, Chinese projects have also brought significant economic growth; In France, Far East Power's battery factories also receive government subsidies and support. These cases indicate that Chinese new energy enterprises are increasingly becoming important partners for European industrial transformation.
Despite political and trade disputes such as anti subsidy tariffs at the EU level, the enthusiasm for cooperation among member states and local governments continues to rise. Local governments are more pragmatic and regard Chinese new energy enterprises as important partners in industrial transformation and economic recovery. This pattern of "EU talks about risks, countries seize opportunities" is becoming a distinctive feature of Europe's new energy policy towards China.
The increasingly clear differentiation of perception towards China within Europe
There has been a significant divergence in the attitude towards industrial cooperation with China within Europe, which is also the underlying reason for the policy shift.
At the EU institutional level, there is a greater emphasis on supply chain security, strategic autonomy, and fair competition, with a tendency to use foreign investment reviews, anti subsidy investigations, and trade defense tools to reduce dependence on China. The industry and local governments of various countries prioritize economic interests, employment data, and transformation effectiveness, adopting a more pragmatic stance.
Specifically, German car companies are concerned about losing China, the world's largest market for new energy vehicles; French energy companies hope to expand technological collaboration in the fields of energy storage and hydrogen energy through cooperation; Spain and other southern European countries urgently need external investment to stimulate economic growth and industrial revitalization; Hungary and other Central and Eastern European countries see Chinese investment as an important lever to promote industrial upgrading and narrow the gap with Western Europe.
This structural differentiation means that it is difficult for Europe to form a highly unified and long-term strong industrial restriction policy towards China in the short term. Economic laws and local interests are exerting increasingly strong constraints on political decision-making. For many European countries, China is not only a strong competitor, but also an important investor, consumer market, and technology partner.
The new energy revolution is essentially a global industrial transformation and technological iteration. Faced with the common challenge of climate change, no country or region can achieve sustainable development goals through closed markets or unilateral barriers.
China has the world's most complete new energy industry system, a large-scale application market, and efficient manufacturing capabilities; Europe has a strong industrial foundation, advanced research and development innovation capabilities, and globally renowned brand influence. Both parties have both market competition and extensive and complementary cooperation space.
The potential for cooperation is reflected in multiple dimensions. Joint research and development of power batteries and intelligent connected vehicles, technical standard docking of energy storage systems, cross-border support for green finance, joint development of third-party markets (such as Africa and Latin America), and coordinated formulation of international climate governance rules. The practice of globalization in the past few decades has fully demonstrated that open cooperation can significantly reduce transformation costs, accelerate technology diffusion, and create more employment and development opportunities.
In today's world where green transformation has become a consensus, artificially creating industrial barriers, provoking subsidy competitions, or technological blockades cannot truly enhance competitiveness, but may instead slow down the overall global transformation process and harm the interests of all parties.
The future of China Europe new energy industry is not about who ultimately "replaces" whom, but about how to achieve higher levels of cooperation in competition and jointly lead development in cooperation. This is in line with the fundamental interests of both China and Europe, as well as the long-term direction of global efforts to address climate change and promote sustainable development.
(Author Zhu Shuai is the Director and Researcher of the Research Office at CCID Research Institute)