China vows countermeasures if EU enacts 'Made in Europe' plan

China formally warned the European Union that it will take countermeasures if the EU enacts its proposed "Industrial Accelerator Act" (IAA), which Beijing ha...

What Happened

China formally warned the European Union that it will take countermeasures if the EU enacts its proposed "Industrial Accelerator Act" (IAA), which Beijing has characterised as "systemic discrimination."
The Chinese Ministry of Commerce submitted formal comments to the European Commission on April 24, 2026, expressing "serious concerns" and warning that the Act "poses serious investment barriers."
The EU unveiled the IAA in March 2026, requiring companies seeking access to public funds in strategic sectors — batteries, electric vehicles (EVs), solar photovoltaics, and critical raw materials — to meet minimum thresholds for EU-manufactured components.
Foreign acquisitions of EU companies in these sectors exceeding €100 million require mandatory pre-approval from member state investment authorities, a threshold that in practice applies almost exclusively to Chinese investors.
The EU's trade deficit with China reached €359.3 billion in 2025, which EU officials called "simply unsustainable."

Static Topic Bridges

Industrial Policy and Strategic Sector Protection

Industrial policy refers to government interventions designed to promote specific industries or sectors considered strategically important for national competitiveness, security, or long-term growth. A global resurgence of industrial policy has been underway since the mid-2010s, accelerated by supply chain disruptions during the COVID-19 pandemic.

The EU's IAA is modelled partly on the U.S. Inflation Reduction Act (IRA) of 2022, which mandated domestic content requirements for clean energy subsidies, triggering its own wave of allied-country concerns.
China's "Made in China 2025" plan, announced in 2015, set targets for domestic market dominance in ten high-tech industries — making it a precedent that EU and U.S. policymakers frequently cite when justifying their own industrial strategies.
The EU's Critical Raw Materials Act (2024) and the Net Zero Industry Act (2024) are precursor frameworks to the IAA, all aimed at reducing strategic dependencies on China.
India's Production-Linked Incentive (PLI) scheme, launched across 14 sectors in 2020–21, is a comparable domestic industrial policy approach.

Connection to this news: The EU's IAA represents the bloc's most assertive step yet in decoupling strategic industries from Chinese supply chains, and China's countermeasure threat signals a new phase of geoeconomic competition.

Electric Vehicle Trade Disputes: EU–China

The EV sector has become a flashpoint in EU–China trade relations, reflecting the broader tension between green energy goals and economic security concerns.

In October 2024, the EU imposed provisional countervailing duties on Chinese-made EVs ranging from 17.4% to 38.1% (in addition to the existing 10% MFN tariff), following an anti-subsidy investigation launched in September 2023.
Chinese EV makers — including BYD, SAIC, and Geely — had expanded rapidly into European markets, where their vehicles were priced significantly below European and other manufacturers' offerings.
China challenged the EU's EV duties at the WTO, arguing they violated most-favoured-nation (MFN) and non-discrimination principles.
The EU argued the duties were a legitimate response to distorting state subsidies that gave Chinese producers an unfair competitive advantage.

Connection to this news: The IAA's domestic content requirements would layer additional structural barriers on top of existing tariff measures, effectively creating a two-track defence of the European EV market.

Foreign Direct Investment Screening

FDI screening allows governments to review and potentially block foreign acquisitions of domestic companies on national security or public order grounds. It has become increasingly common as geopolitical competition with China has intensified.

The EU's FDI Screening Regulation, in force since October 2020, created a cooperation framework among member states to share information on foreign investments with potential security implications — but did not give the EU Commission power to block deals unilaterally.
The IAA's mandatory pre-approval requirement for acquisitions above €100 million in strategic sectors significantly strengthens the EU's screening regime.
Germany, France, and Italy have their own national FDI screening mechanisms that have been used to block or condition Chinese acquisitions in semiconductor, energy, and port sectors.
In India, FDI from countries sharing a land border (primarily China) requires mandatory government approval under Press Note 3 (2020).

Connection to this news: The IAA's investment screening threshold directly targets the acquisition channel through which Chinese companies have historically accessed European technology and market share.

WTO Rules and Trade Remedy Mechanisms

The World Trade Organization (WTO) provides a rules-based framework for international trade, including disciplines on subsidies, countervailing duties, and anti-dumping measures.

WTO Agreement on Subsidies and Countervailing Measures (ASCM): Prohibits subsidies contingent on export performance or use of domestic over imported goods ("prohibited subsidies"); allows countervailing duties to offset other subsidies that cause material injury.
WTO's Most-Favoured-Nation (MFN) principle: Members must grant each other the same trade treatment they give to their most-favoured trading partner.
China joined the WTO in December 2001; its state-capitalist model has long been seen as incompatible with WTO disciplines designed for market economies.
The WTO Appellate Body has been functionally paralysed since December 2019 due to the U.S. blocking appointments of new members, weakening dispute resolution.

Connection to this news: If China follows through on countermeasures, both sides could face prolonged WTO disputes — though the impaired Appellate Body means effective enforcement would be delayed or blocked.

Key Facts & Data

EU's Industrial Accelerator Act: Unveiled March 2026; targets batteries, EVs, solar PV, critical raw materials
EU–China trade deficit (2025): €359.3 billion
IAA investment screening threshold: Foreign acquisitions exceeding €100 million in strategic sectors require pre-approval
Chinese MoC submission to European Commission: April 24, 2026
EU EV duties on Chinese manufacturers (October 2024): 17.4%–38.1% additional countervailing duties
EU FDI Screening Regulation: In force since October 2020
China's "Made in China 2025": Announced 2015; targeted 10 high-tech sectors for domestic dominance
U.S. Inflation Reduction Act (2022): Precedent for domestic content requirements in clean energy subsidies
India's PLI Scheme: Launched 2020–21 across 14 strategic sectors
WTO Appellate Body: Non-functional since December 2019 due to vacancy blockage