As the EU races to meet its Green Deal targets, it faces a simple question: can it go green fast enough — and affordably? At first glance, Chinese companies hold part of the answer. However, Europe’s plan aims to increase domestic production and cut reliance on Chinese green tech imports. Consequently, Chinese exports will face tighter trade regulations and restrictions.
Still, the story is not one of containment only. For some products, such as solar panels, Chinese firms hold an overwhelming advantage in the European market. Due to political apprehensions, the European Union will likely choose a path of careful balancing when it comes to Chinese imports and investment in green tech. Firms in these industries need to evaluate potential risks and adapt their supply chains to stay resilient amid these developments.
China’s Environmental Jackpot
In less than 20 years, China has become a global leader in key green technologies. It supplies most components for lithium-ion batteries, held 60% of the global EV battery market in 2023, and boosted exports by 30%. It also dominates in green hydrogen, hosting the world’s largest project and 40% of refuelling stations. In solar and wind, China added more solar capacity in 2023 than the rest of the world did in 2022 and accounted for 75% of global wind installations. (1)
China’s newfound prowess in green tech and related projects has been labeled by state media as “ecological miracles.” 绿水青山就是金山银山 — “Green mountains and clear waters are as valuable as gold and silver,” or in spirit, “green is the new gold.” In line with this, China continues to call for deeper Sino-European cooperation in green technologies.
Capitalizing on its impressive global success, Chinese companies like CATL, BYD, and Envision are already expanding into Europe, offering ready-made solutions for the continent’s energy transition. However, the Chinese state-backed green tech industry is met with apprehension in Europe, which struggles to strike a balance between cheaper Chinese products and the protection of its own industries.
EU’s Push for Autonomy
The EU wants to build its own green tech capacity, reduce dependence on China, and enforce strict environmental and reporting standards. At the same time, both Europe and China are seeking to de-risk their supply chains and become more self-reliant in green technologies. But this transition will require time and significant investment from both sides.
One major point of political tension in green tech has been Chinese EVs. On one hand, electric vehicles offer significant advantages over traditional combustion engine cars, including lower emissions. On the other, China’s state-supported dominance in EV manufacturing raises serious economic and security concerns for the EU, which fears losing its competitive edge. This has led to tariffs on Chinese EVs in late 2024, ranging from 17% to 35.3%.
Nonetheless, despite political frictions, Chinese FDI in Europe rebounded in 2024 for the first time since 2016. Projects related to electric vehicles dominated Chinese FDI in Europe (including the UK), accounting for 83% of all Chinese greenfield investments in 2024. (2) At the same time, the year also saw a notable drop in new Chinese EV projects in Europe, with several cancelled. This suggests that long-term Chinese green investment in Europe remains uncertain.
Where Opportunity Lies
From China’s perspective, Europe needs Chinese cooperation to counterbalance its growing reliance on the United States — especially in the context of the second Trump presidency. For the EU, the picture is more complex. According to former European Central Bank chief Mario Draghi, relying on China’s supply of green products might be the most cost-effective way for the EU to meet its climate goals. However, to protect its own clean tech jobs, Europe must take a more balanced approach toward China’s state-backed industry.
Draghi rejects the idea of “blanket protectionism.” For example, the EU remains heavily dependent on Chinese clean energy technology, with 98% of its solar panel imports coming from China. As a result, most solar-related jobs in the EU are focused on installation rather than manufacturing. (3)
Despite geopolitical caution, Chinese firms that localize operations, meet EU standards, and engage in joint ventures still have room to grow in Europe. Traditionally, the top recipients of Chinese FDI were the UK, Germany, and France. More recently, Hungary has emerged as a key entry point for Chinese green investments, with projects like CATL’s battery plant.
Crucially, Chinese companies will have to meet increasingly stringent environmental standards when producing or selling goods in the EU. The European Green Deal aims to make sustainability the norm, with initiatives such as the Ecodesign for Sustainable Products Regulation (ESPR) introducing detailed requirements for carbon footprint management and circularity across product lifecycles. (4)
Conclusion: Collaboration or Conflict?
With climate deadlines looming, pragmatism may outweigh politics. A selective partnership with Chinese green tech could help Europe stay on track — if both sides are willing to engage on new terms.
For the EU, cooperating with China where interests align — especially in decarbonization, affordable technology, and innovation — may not just be an opportunity, but a necessity. At the same time, Europe must continue strengthening its own capacity and resilience to avoid overdependence.
Ultimately, the way forward will require flexible engagement, transparent standards, and mutual accountability. Whether the EU and China can strike this balance will shape not only the future of their green industries — but the broader landscape of global climate leadership.
Data Sources:
(1) World Economic Forum. (2025, January). Why China matters to the world’s green transition. https://www.weforum.org/stories/2025/01/why-china-matters-to-the-worlds-green-transition/ Accessed 19.06.2025
(2) MERICS & Rhodium Group. (2024). Chinese investment rebounds despite growing frictions: Chinese FDI in Europe – 2024 update. Mercator Institute for China Studies. https://merics.org/en/report/chinese-investment-rebounds-despite-growing-frictions-chinese-fdi-europe-2024-update Accessed 19.06.2025
(3) Europrospects. (n.d.). China’s green technology bid: The Western containment policy and the European Green Deal. https://europrospects.eu/chinas-green-technology-bid-the-western-containment-policy-and-the-european-green-deal/ Accessed 19.06.2025
(4) The Conference Board. (n.d.). How the EU Green Deal will impact China business: Main report. https://www.conference-board.org/publications/How-the-EU-Green-Deal-Will-Impact-China-Business-Main-Report Accessed 19.06.2025
