The European Commission on Wednesday unveiled its long-awaited industrial plan, rolling out a “European Preference” that shuts China out of European public funding and tightens the screws on Beijing’s future investments in the European Union.
The move comes after 200,000 European jobs were wiped out in energy-intensive industries and the automotive sector since 2024, with 600,000 losses projected this decade in carmaking alone, as China floods Europe with exports while building plants that create scant local employment.
“Facing unprecedented global uncertainty and unfair competition, European industry can count on the provisions of this act to boost demand and guarantee resilient supply chains in strategic sectors,” EU Industry Commissioner Stéphane Séjourné said, presenting the EU executive’s much-anticipated Industrial Accelerator Act (IAA).
The strategy targets three strategic sectors: clean technologies, car manufacturers, and energy-intensive industries such as aluminium, steel and cement.
It introduces “Made in Europe” thresholds, including a 70% EU-content requirement for electric vehicles –with notable exceptions for most battery components – 25% for aluminium and 25% for cement.
“It will create jobs by directing taxpayers’ money to European production, decreasing our dependencies and enhancing our economic security and sovereignty,” Séjourné added.
China targeted by tougher investment rules
The IAA’s creation has seen fierce infighting between member states and Commission departments.
A bloc of Nordic and Baltic countries warned the new rules could undermine investment and limit EU countries’ access to foreign technologies, while Germany has pushed to open the “Made in Europe” label to include goods and components from like-minded partners. Meanwhile, France has taken a more protectionist line.
In the end, the Commission has proposed extending EU-origin status to products coming from trading partners with free trade agreements that apply reciprocity, notably in public procurement contracts.
“We will consider union-origin products that are manufactured in third countries with which we have an international commitment,” a Commission official said.
That excludes China and the US, which do not enjoy any such agreements with the bloc, but it might also exclude more like-minded partners such as Canada, where a Buy Canadian policy might apply soon to EU companies.
“The proposal also says that we will check later if these countries are not open to us on the same list of categories of technologies even when they were supposed to,” the EU official added.
New conditions will also apply to foreign direct investment over €100 millions in batteries, electric vehicles, solar panels and critical raw materials – again, with China in focus.
“They basically come on a piece of a European land, build their factories, come with thousands of Chinese workers and run the factory on their own with little local added value,” another EU official said, explaining the Commission’s decision to restrict access to its market.
From now on, if an investor comes from a country holding 40% of the global market share in a given sector, 50% will have to be attributed to EU workers. Some other conditions will also apply, such as foreign ownership remaining below 49%, joint ventures with European entities, technology transfers, 1% of the company’s global revenue channelled into EU R&D, and 30% of production carried out in the bloc.
“Europe is not a supermarket,” the same EU official said, “it has to be a factory.”
The proposal must now be approved by the EU’s co-legislators – the European Parliament and the Council of the EU, which represents member states.
