(April 16): The Chinese government is pressuring Spain to help thwart European Union (EU) proposals aimed at making the bloc’s companies more competitive, according to a person familiar with the matter.
Spanish Prime Minister Pedro Sánchez met with President Xi Jinping in Beijing this week, when Chinese officials complained that Europe was becoming too protectionist, said the person, who spoke on the condition of anonymity. The officials warned that the EU’s policies would harm trade and political ties between the regions.
The EU is struggling to remain competitive after the US launched a trade war with the bloc last year and as China floods the EU’s single market with low-cost goods. The European Commission, the EU’s executive arm, has proposed measures to bolster domestic companies in an attempt to revitalise domestic manufacturing.
Last month, the commission announced the so-called Industrial Accelerator Act, dubbed the “Made in Europe” proposal, which will mandate that EU nations have to favour domestic companies in public procurement contracts. The goal is to ensure that a fifth of the bloc’s economic output comes from manufacturing by 2035.
Spokespeople from the Chinese foreign ministry and Spanish government didn’t immediately respond to requests for comment.
Spain has for years positioned itself close to China, aiming to attract investment and diversify alliances amid competition between the US and the Asian nation. That strategy has at times come into conflict with the EU, which has been seeking to de-risk from China and reduce over-dependence in critical sectors.
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The push comes as China is losing one of its closest EU partners, Prime Minister Viktor Orban, whose party lost a parliamentary election in Hungary on Sunday. Orban had ushered in close economic ties with Beijing, with China becoming a key partner for Budapest in the electric vehicle industry as well as in telecommunications.
Sánchez said that the EU’s trade deficit with China was “unsustainable” and that China played a role in the protectionist measures the bloc is working on.
“We need China to open up so that Europe doesn’t have to close itself,” Sánchez said on Monday in a speech at Tsinghua University. “Help us correct the current trade deficit we have with you.”
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China has been critical of the EU’s Industrial Accelerator Act. Last month, China’s Commerce Ministry expressed “serious concerns”, saying the plan would increase uncertainty for Chinese companies investing in the EU, according to a statement.
The plan is central to the EU’s efforts to step up support for strategic industries, from cars to green steel, as it seeks to stem a wave of plant closures that risk weakening the region in its rivalry with China and the US.
Speaking last week in Madrid, European Commission Vice President Stéphane Séjourné said “Chinese investment in Europe and Spain can be compatible with rebalancing trade”.
“It is possible to use the trade relationship to gain new technologies and the transfer of knowledge and capacity for economic growth in Europe,” he said. “That path is narrow but it can be pursued.”
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