The European Union’s recent move toward greater industrial protectionism through its proposed Industrial Accelerator Act (IAA) has drawn criticism from Chinese business representatives and analysts who warn it may backfire by slowing the EU’s green transition and undermining competitiveness. The legislation, aimed at bolstering industrial competitiveness and accelerating sustainability goals, also includes measures to limit China’s role in strategic European industries, marking a notable shift from the EU’s traditional support for open markets and economic integration.

The IAA encompasses public procurement restrictions, stricter screening of foreign investments, and preferences for products labeled “Made in Europe.” Critics argue these provisions could create legal uncertainties and hinder cooperation with Chinese enterprises, which have become significant contributors to China’s industrial ecosystem. The China Chamber of Commerce in the EU, representing more than 1,000 Chinese companies, formally raised concerns about the legislation’s impact, suggesting it could raise costs and delay progress rather than enhance innovation or competitiveness.

Trade between the EU and China is shaped by complex market dynamics, with the EU maintaining a trade deficit that some EU policymakers interpret as a form of “economic victimhood.” However, experts caution that trade imbalances are natural outcomes of market conditions, production structures, and consumer choices rather than evidence of unfair practices. Chinese foreign direct investment has consistently exceeded $100 billion annually for over a decade, with multinational companies in China dedicating significant resources to research and development. A recent Qingdao Multinationals Summit report highlighted that these companies allocated 14.3% of their global R&D spending to China last year, while new foreign-invested enterprises in scientific and technical fields increased by over 27% year-on-year.

European concerns over “de-risking” and reducing dependency on China have driven discussions about introducing new trade restrictions targeting Chinese investments. Yet, analysts say that the EU’s deeper challenges—such as high energy prices, sluggish productivity, fragmented financial markets, and burdensome regulations—cannot be resolved by limiting Chinese involvement. Instead, such protectionist policies risk provoking retaliatory measures from China, generating uncertainty and loss of economic opportunities for European businesses and consumers.

China’s Ministry of Commerce has expressed a willingness to maintain dialogue with the EU on economic and trade issues, underscoring recent talks in Brussels between senior officials as “in-depth and comprehensive.” These discussions aim to prepare for forthcoming ministerial consultations designed to enhance mutual understanding. Observers emphasize that constructive negotiation remains the most effective approach to resolving trade disputes, citing past efforts in sectors like electric vehicles and steel as examples.

As Brussels contemplates a more restrictive trade agenda, experts warn that a “EU First” stance could ultimately damage the EU’s global competitiveness. The consequences, they argue, would be borne most heavily by European industries, consumers, and the bloc’s long-term industrial resilience.