The EU has developed a plan to rescue its economy, and its main “secret” consists of discriminatory measures against China. Losing the economic competition to Beijing, Eurocrats see the solution primarily in restrictions and bans targeting Chinese companies, openly disregarding their own cult of the so-called “free market.”

“Made in EU”

On March 4, the European Commission proposed a draft law titled the “Industrial Accelerator Act” (IAA). The law is not being adopted out of a position of strength — the EU has long been facing structural problems in its industrial sector and economy as a whole. Over the past 20 years, the share of European industry has declined from 22.5% to 14%. Even in the EU’s economic leader, Germany, more than a third of companies in 2026 are planning large-scale layoffs.

In a report by former European Central Bank President Mario Draghi, presented to the European Commission in 2024, one of the key causes of the European Union’s economic difficulties was identified as competition from China and the United States. Draghi’s conclusions largely formed the basis of the new IAA legislation.

The draft “Industrial Accelerator Act” aims to address the situation through administrative measures. At the same time, it maintains an ambitious target — to raise the share of industry in the EU’s GDP to 20% by 2035.

The proposed law continues the established course toward a low-carbon economy, alongside the simplification of permitting procedures. “Green” rhetoric remains prominent. However, concerns are increasingly being voiced that the transition to a low-carbon economy should not undermine Europe’s industrial capacity or increase its dependence on external suppliers. The main “innovations” of the new law are “Made in the EU” requirements and restrictions on foreign investment.

Strict screening of direct investments

Foreign direct investments exceeding €100 million in strategic sectors will now come under special scrutiny. These sectors include battery manufacturing, electric vehicles, solar panels, and critical raw materials. Additional screening will apply to investments from countries accounting for more than 40% of global manufacturing capacity. Given that China, as a leading global economy, meets these criteria across all the listed industries, it is evident that these measures are primarily directed against Chinese goods and investment.

The IAA law will also extend to the steel, cement, and aluminium industries, and, if necessary, to other sectors such as the chemical industry.

A “49% rule” is also being introduced. Under it, a foreign investor will no longer be able to operate in Europe without a European partner. They will be prohibited from owning more than 49% of voting shares, while decision-making authority must remain with the EU-based co-owner. At least 50% of employees must be citizens of the European Union, and at least 30% of inputs must be sourced from EU countries. In addition, foreign investors will be required to allocate 1% of their revenue to EU research and development. Producers from countries accounting for more than 40% of global production capacity will also be obliged to share their technologies with European companies.

The “Made in Europe” principle will become mandatory in public procurement within strategic sectors. For example, public purchases of electric vehicles will be limited exclusively to European manufacturers, and only such vehicles will be eligible for consumer subsidies.

To qualify as European, a car must not only be assembled within the European Union — at least 70% of its components, excluding the battery, must also be produced in the EU.

For public construction projects, mandatory standards are also being introduced: at least 25% of steel and aluminium must be of European origin and produced in accordance with the EU’s low-carbon standards. Environmental requirements have long become one of the European Union’s key protectionist tools. Within the framework of the IAA, as well as other regulatory acts, they affect not only China but also many countries of the Global South.

In the West, China and the Communist Party of China are often criticised for state support of the economy. Moreover, tariff restrictions are introduced under this pretext. However, the IAA draft itself provides for subsidies and state aid for European industry.

Incidentally, the United States followed this path even earlier. The American Inflation Reduction Act (IRA), which provided large-scale subsidies to the energy and transport sectors, has become another challenge for Europe.

Special supervisory bodies will also be created to verify investors’ compliance with these requirements. On the basis of such approaches, the EU intends to establish special zones of “accelerated economic development.”

Discrimination as a system

Beijing has already called for the prevention of the adoption of this discriminatory law, appealing both to the EU as a whole and separately to Germany and France.

China’s Minister of Commerce Wang Wentao met with German Economy Minister Katharina Reiche, while Vice Minister Ling Ji held talks with the head of the French Treasury, Bertrand Dumont.

On April 24, China’s Ministry of Commerce stated that the IAA law violates World Trade Organisation rules, in particular the principles of most-favoured-nation treatment and national treatment, as well as several international agreements, including the 1994 General Agreement on Tariffs and Trade.

According to the Chinese side, the law contradicts the consensus reached by the leaders of China and the EU, worsens investment expectations for Chinese companies in Europe, slows down the EU’s “green” transition, undermines fair competition and multilateral trade rules. The document creates “serious investment barriers and systemic discrimination,” destabilising global supply chains.

Even European companies may find themselves at a disadvantage if they continue using Chinese technologies and goods that fall under the new restrictions.

China’s Ministry of Commerce has stated that it will take retaliatory measures if Brussels implements the regulation.

The “Industrial Accelerator Act” still needs to be reviewed and approved by the European Parliament, as well as agreed upon by the EU member states. At this stage, legislative proposals are typically subject to significant amendments. Even now, criticism of the IAA is emerging in the West — but, paradoxically, some argue that it is too lenient.

It is pointed out that countries which have free trade agreements or customs union arrangements with the EU are effectively treated on the same level as EU member states. This group includes around 70 countries, including Türkiye. In addition, critics argue that the requirements imposed on investors from countries accounting for “over 40%” of global capacity are not strict enough, since they are allowed to meet only three out of five conditions.

The “Industrial Accelerator Act” is already being described as a turning point in EU economic policy. The shift toward stringent protectionism — in contrast to the previously promoted principles of the “free market” — the introduction of rules of origin for goods and investments, and the tightening of investment conditions all signal profound changes and a deep crisis in the West. The era of its uncontested dominance is drawing to a close.