As Brussels tightens its rules on foreign investment, a new geopolitical and economic fault line is emerging over China’s expanding industrial footprint in Europe, raising questions about whether the continent should embrace or repel Beijing’s capital and technology. This report, based on analysis originally published by the Finanacil Times, examines how the so-called “China shock 2.0” is reshaping Europe’s manufacturing strategy, exposing tensions between job creation, technological dependence, and strategic autonomy.
In northern Spain’s Navarra region, the abandoned Bosch dishwasher factory outside Pamplona stands as a stark symbol of Europe’s industrial transition. Once a humming production site employing hundreds, it was shut down last year after the German appliances giant lost competitiveness to cheaper Chinese manufacturing hubs. Today, the site is silent, its walls marked by graffiti reflecting local anger over more than 600 job losses. The closure encapsulates the broader deindustrialisation pressures facing parts of Europe, where traditional manufacturing bases are struggling to compete with Asia’s rapidly scaling industrial ecosystems.
Yet the irony is that the same site may soon be revived by a Chinese company. Hithium, one of China’s major battery manufacturers, has shortlisted the former Bosch plant for a €400mn investment project focused on energy storage batteries. The development is part of a broader surge in Chinese interest in European manufacturing assets, as firms seek to expand overseas amid shifting global trade dynamics and policy incentives. Spain, in particular, has positioned itself as a leading gateway for Chinese industrial investment, with Prime Minister Pedro Sánchez repeatedly engaging with President Xi Jinping to deepen economic ties.
For Spain, the strategy is driven by a belief that Chinese high-tech manufacturing knowhow could help reverse its deindustrialisation trend and accelerate its role in Europe’s green transition. The planned Hithium facility is expected to create around 700 jobs and operate in partnership with local stakeholders, marking one of the first major battery cell production initiatives on EU soil where European firms have yet to match China’s technological lead. Supporters argue that such projects are essential for building capacity in strategic sectors like electric mobility and energy storage.
However, the growing reliance on Chinese investment is triggering unease across other parts of Europe. Critics warn that while these projects may bring jobs and capital, they could also deepen structural dependencies on China at a time when the EU is pursuing “strategic autonomy.” Beijing’s industrial policy is explicitly designed to strengthen its global leverage through advanced manufacturing dominance, raising concerns that Europe could become locked into a subordinate role in critical supply chains.
In response, the European Commission has unveiled a new regulatory approach through its proposed “Made in Europe” framework, formally known as the Industrial Accelerator Act. The policy aims to ensure that foreign direct investment contributes more directly to European industrial capacity rather than simply using the region as an assembly base. It introduces requirements for local employment, joint ventures, intellectual property sharing, and minimum research and development spending within the EU.
Foreign investment patterns suggest why the debate has intensified. Chinese greenfield investment in Europe has rebounded sharply in recent years, reaching nearly $12bn last year, according to Rhodium Group data, driven largely by sectors such as batteries, electric vehicles, and renewable energy components. Hungary has emerged as a key destination, reflecting its openness to Chinese capital and its willingness under former leadership to prioritise investment over geopolitical concerns. Similar projects across Europe highlight China’s strategy of diversifying production bases while retaining technological control.
At the same time, France and other EU states have pushed for tighter oversight. President Emmanuel Macron has supported conditional openness, arguing that investment should be welcomed only when it clearly benefits European employment and innovation. Meanwhile, major projects like CATL’s €4bn battery plant in Spain, developed in partnership with Stellantis, have raised questions about whether promised technology transfer and workforce training will fully materialise, with labour unions remaining skeptical.
The Industrial Accelerator Act seeks to formalise these expectations. It allows member states to block large investments in strategic sectors if they come from countries that dominate global manufacturing, a category that includes China in areas like batteries and solar panels. It also sets thresholds requiring that at least half of jobs be filled by EU workers and encourages joint ownership structures that limit foreign control. However, business leaders warn that excessive restrictions could deter investment and slow innovation.
Reactions across Europe remain divided. Some policymakers argue that the framework is essential to prevent Europe from becoming a passive assembly hub, while others fear it could discourage the very investment needed to rebuild industrial capacity. Critics such as BMW’s incoming chief executive Milan Nedeljković have warned that overly restrictive rules could undermine supply chains, reduce competitiveness, and ultimately slow economic growth across the bloc. China, for its part, has accused the EU of protectionism and warned of retaliatory measures.
Analysts describe the evolving policy as a “managed embrace” of Chinese investment rather than a full embrace or outright rejection. The outcome will depend on how strictly rules are enforced and whether member states prioritise national deals over collective EU strategy. In places like Navarra, however, the immediate reality is pragmatic: with limited alternatives for large-scale industrial investment, local authorities continue to court Chinese firms as a means of reviving dormant factories and restoring employment, even as the broader geopolitical debate intensifies over the future shape of Europe’s industrial base.
