‘Made in Europe’ law sets stage for an economic showdown with China

Amid the trade war with the United States, the last thing China needs is an economic confrontation with the European Union – Beijing’s major export destination. But with the EU seemingly determined to protect its market by introducing measures that many see as controversial, an economic stand-off appears inevitable.When European Commission President Ursula von der Leyen blamed China last June for showing an “unwillingness to live within the constraints of the rules-based international system”, it was a clear indication that the 27-nation bloc was dissatisfied with relations with Beijing. In 2024, the EU imposed tariffs of up to 35.3 per cent on Chinese electric vehicles (EVs), citing unfair state subsidies that allow China to position itself as a key player in the European car market.Although Brussels and Beijing agreed in January to take steps towards resolving their dispute, things have not returned to normal. The European Commission is pushing a “Made in Europe” law – formally known as the Industrial Accelerator Act – designed to bolster local industries against competition from China. The legislation also aims to strengthen the EU’s industrial base in response to rising global economic rivalry and a growing reliance on non-EU suppliers in key sectors.