In Europe, stricter restrictions on Chinese enterprises may lead to a "lose-lose" situation, as the European Union announces legislation to strongly promote "EU manufacturing."

On the 4th, the European Commission officially announced the long-awaited "Industrial Accelerator Act" (IAA), which aims to enhance the competitiveness of the EU manufacturing sector and is considered to have strong implications for China, displaying a significant protectionist tone. In response, the EU Chamber of Commerce in China issued a position statement on the 4th, stating that while it understands the EU's strategic goals of enhancing competitiveness, promoting green transformation, and ensuring economic security, it expresses concerns and opposition regarding the potential far-reaching impacts of the relevant provisions in the act on market openness, fair competition, and China-EU economic and trade cooperation. A Multi-Faceted Approach to Strengthen "EU Manufacturing" After weeks of disputes and delays, the European Commission announced the aforementioned act on the 4th. According to a press release from the EU on the same day, the IAA is a legislative proposal aimed at strengthening the European industrial base by promoting manufacturing development, expanding enterprises, and creating job opportunities, with a focus on industries that are strategically significant to the EU economy and currently facing immense competition and structural pressures, such as energy-intensive industries (steel, cement, aluminum, chemicals), net-zero emission technologies, and automotive parts manufacturing. The EU hopes that through a series of measures under the IAA, the share of manufacturing in the EU GDP will increase from 14.3% in 2024 to 20% by 2035, enhancing Europe's resilience, competitiveness, and economic security. The press release indicates that the EU proposes to introduce "EU manufacturing" localization and low-carbon standards in public procurement and public support programs through the IAA. Companies participating in public procurement or receiving relevant subsidies must meet these requirements, such as a stipulation that 25% of aluminum used in aluminum projects must be produced within the EU and utilize low-carbon technologies. The act also sets additional conditions for significant investments exceeding 100 million euros in strategic EU industries: if a single third country accounts for more than 40% of global production capacity in electric vehicles, batteries, solar energy, and critical raw materials, investment projects must ensure that foreign ownership does not exceed 49%, involve technology transfer, and that the proportion of EU employees hired is no less than 50%. Additionally, the IAA establishes an exclusive "trusted partner" system, whereby products from third countries that have signed free trade agreements with the EU or are parties to the Government Procurement Agreement may be considered "equivalent to EU origin" if they meet specific conditions, with China not included on this list. Nikkei Chinese reported on the 5th that the act announced by the EU is heavily protectionist, aimed at excluding low-priced Chinese products and strengthening European industrial competitiveness. The Hong Kong South China Morning Post described the IAA as a "political bomb," overturning the free trade and economic principles that the EU has adhered to for decades. The report pointed out that all policy measures in the IAA point to a common goal: imposing stricter restrictions on Chinese enterprises. The report believes that the IAA reveals three major anxieties of the EU: how to deal with high-quality and low-cost Chinese products, increasing security concerns regarding Chinese investments, and the urgency to take immediate action. According to "Deutsche Welle," European Commission Executive Vice President Margrethe Vestager, who is leading the push for the act, warned at a press conference: "If we do nothing, it is clear that soon 100% of clean technology products will be produced in China... In the coming years, our cement and steel industries may all relocate abroad." Reported Modifications Before Announcement The final implementation of the IAA remains uncertain. According to Reuters, after the bill is announced, EU member states and the European Parliament must negotiate and finalize the legislation. Given the differing positions of various governments, the content of the bill may still undergo further modifications. The IAA currently has strong support from France, but Sweden and the Czech Republic oppose stringent legislative rules, warning that this could deter investment and increase costs. Germany's stance is cautious; Chancellor Merz stated last month that "European priority" rules should be a "last resort" and should include other trading partners. According to reports from German television, the content of the IAA has faced strong criticism from the German industrial sector, with many lobbying groups believing that these proposals are overly bureaucratic and have a protectionist tone. According to the European edition of Politico on the 3rd, this bill faced opposition from as many as nine departments of the European Commission last month. By last weekend, the number of objections had decreased to three, including the trade department. The bill underwent numerous modifications right up to its announcement—such as excluding entire industries like technology from the legislative scope—critics argue that the bill is far from mature and is likely to face significant revisions when submitted to the EU Council (representing the 27 EU member states) and the European Parliament for review. EU Chamber of Commerce in China Expresses Concerns and Opposition Regarding this controversial bill, the EU Chamber of Commerce in China voiced concerns and opposition on the 4th regarding the content of the bill and its far-reaching impacts. "We regret to see that the bill is reshaping the EU market access rules by introducing broad 'EU manufacturing' localization requirements, mandatory technology transfer clauses, and strict scrutiny of foreign investment. While we understand the EU's intention to strengthen supply chain resilience, the current design of the bill may shift towards a more exclusive protectionist system, sending uncertain signals to global investors, including Chinese companies," the EU Chamber of Commerce in China emphasized in a statement. It pointed out that China's advantages in clean energy, electric vehicles, and battery supply chains are the result of long-term market competition and full innovation, not unfair competition. It also noted that the restrictive clauses in the bill could hinder the EU's own decarbonization process, leading to a "lose-lose" situation where Europe loses quality partners and cost advantages, while Chinese companies face uncertainties in market access. The EU Chamber of Commerce in China calls for the EU to effectively uphold the principles of fairness, justice, and non-discrimination in the investment environment while advancing the relevant legislative process, continuously providing an open, transparent, and predictable business environment for all market entities, including foreign investment. Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk