China's Ministry of Commerce has officially warned that the European Union's proposed Industrial Accelerator Act (IAA) is a form of "institutional discrimination."
At its core, the IAA is the EU's ambitious plan to rebuild its industrial base, aiming to increase manufacturing's share of GDP from about 14% to 20% by 2035. To achieve this, the proposal introduces powerful new tools: preferences for 'Made-in-EU' and low-carbon products in public contracts and subsidy programs. It also imposes strict conditions on large foreign investments in strategic sectors like EVs, batteries, and solar panels, especially from countries that dominate the global supply chain. For Beijing, these rules are not about fair competition; they are seen as targeted barriers designed to push Chinese companies out of the European market.
This sharp reaction from China didn't arise in a vacuum, but is the result of a series of escalating EU measures. First, the immediate trigger was the IAA proposal itself in March 2026, which explicitly laid out these preferential terms. Second, this came on the heels of other policies that were already creating friction. The financial phase of the Carbon Border Adjustment Mechanism (CBAM) began in January 2026, increasing costs for carbon-intensive imports from China. Around the same time, the EU imposed definitive anti-subsidy duties on Chinese-made electric vehicles, establishing a clear line of conflict.
These actions are part of a broader strategic shift in Brussels. The IAA builds upon previous legislation like the Net-Zero Industry Act (NZIA) and the Critical Raw Materials Act (CRMA), which focus on strengthening Europe's supply-chain resilience. Together, these policies create a comprehensive framework that favors local production—a clear signal that the EU is moving towards what it calls 'strategic autonomy'. China perceives this combination of supply-side support and demand-side protectionism as a coordinated strategy to curb its economic influence.
Therefore, China's threat of countermeasures should be taken seriously. Beijing has previously demonstrated its willingness to retaliate, such as by imposing tariffs on EU agricultural products or restricting exports of critical raw materials like gallium and graphite. Today's warning signals that Beijing views the IAA not as a single policy, but as the culmination of a structural shift in EU-China relations, potentially leading to a new phase of targeted economic conflict.
- Glossary -
- Industrial Accelerator Act (IAA): A proposed EU law aimed at boosting the EU's manufacturing sector by giving preference to 'Made-in-EU' and low-carbon products in public procurement and setting conditions for foreign investment.
- Carbon Border Adjustment Mechanism (CBAM): A tariff on carbon-intensive products imported into the EU, designed to prevent 'carbon leakage' where companies move production to countries with less strict climate policies.
- Strategic Autonomy: A policy objective of the European Union to enhance its capacity to act autonomously in strategic areas, reducing its dependence on other countries.