Europe and China: competing in clean technology, cooperating on climate

Last month in Beijing, the EU and China reached a deal to moderate Chinese exports of hybrid and plug-in hybrid vehicles to Europe. The European Commission estimated that the arrangement couldreduce shipments by more than half over four years compared with a no-policy-change scenario, while opening the way to lower tariffs on European exports worth nearly €4bn, ranging from car parts to olive oil. While EU leaders are yet to endorse it, this unexpected and welcome agreement is only the first step, and it sends a powerful message: between unrestricted trade and an escalating tariff war, there is room for negotiated solutions. 

This matters because Europe’s green transition cannot be separated from China. In 2025, China accounted for half of the world’s exports of clean-energy technology, excluding trade between EU countries. Chinese solar panels, batteries and electric cars have made Europe’s transition faster and cheaper. The downside has been a growing overreliance on Chinese clean-energy technologies that sits within a much broader and longstanding trade imbalance: last year, the EU imported €559.4bn of goods from China, while exporting only €199.6bn. Unable to compete with Chinese prices, several European solar panel factories have closed, leaving Europe further dependent on imports for many of the technologies its climate goals rely upon. 

Europe’s challenge 

Europe should neither close the door to China nor leave it open without safeguards. Europe can strengthen its industry, stay on course for climate neutrality and build a more balanced relationship with China, provided it acts on three fronts. 

First, Europe must work towardstrade and investment arrangements that deliver benefits for both sides. Chinese clean technologies are welcome but must be deployed on fair terms. When investing in Europe, Chinese companies should create quality jobs, work with local suppliers, share knowledge and meet high environmental standards. The recent arrangement allowing Chinese carmakers to sell electric vehicles at agreed minimum prices, linked to investment in Europe, instead of paying anti-subsidy duties shows that this can work. But Europe must not be naive. Where Chinese overcapacity floods its market, the EU needs effective tools to respond, and the Jacques Delors think tanks have put forward concrete proposals, ranging from negotiated restraint to a new instrument to tackle lasting trade imbalances. 

Europe should play to its strengths. It does not need to and cannot produce every component itself. Energy storage is a good example. Across Europe, demand for large batteries that store renewable power is growing fast. A project now under development in a French port would combine Chinese batteries with European software and operational expertise. Europe benefits from China’s leading position in battery technology, helping it cut emissions faster, while keeping control over how the system runs, and over data and security. This is the essence of smart competitiveness: concentrating investment where Europe creates the most value and retains strategic control, without allowing interdependence to become dependency. 

Second, Europe should work with China on the global scene when interests clearly converge: in strengthening multilateral rules on climate and maritime transport. At their 2025 summit, the only text the two sides agreed on was a joint statement on climate. Shipping is the next test. In early December, countries meeting at the International Maritime Organization (IMO) are expected to vote on the Net-Zero Framework, which would put the first global price on an entire industry’s greenhouse gas emissions. China is the world’s largest shipbuilder; the EU already prices shipping emissions. A global framework would cut emissions and give European and Chinese companies the same rules, instead of a patchwork of regional schemes. China backed the framework in April 2025, then voted to delay it under strong US pressure. Since then, it has re-engaged in negotiations, supporting a global carbon price and a fund managed by the IMO, and proposing rewards for ships that use zero or near-zero emission fuels. Europe should work with Beijing to get it adopted. 

Third, Europeshould collaborate with China on ocean protection, which represents another testfor the relationship. China ratified the High Seas Treaty last year and tabled its first proposal for a marine protected area in Antarctica this autumn. Yet at the end of October, the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR), which manages Antarctic waters, failed for the tenth consecutive year to agree on a single new protected area. Its decisions require consensus, so progress will require agreement among all members, including the EU and China. 

From dialogue to delivery 

Dialogue helps turn shared interests into practical cooperation. In July, Europe Jacques Delors co-hosted a conference with the Mission of China to the EU on cleaner shipping, bringing together policymakers, shipowners, ports and researchers from both sides. Such exchanges do not erase disagreements, but they build trust and identify areas where progress is possible. 

Competition in clean technology is healthy when it speeds up the transition and rests on fair rules. The coming months will show whether Europe and China can turn dialogue into results: by confirming last month’s trade understandings, securing agreement on a global carbon price for shipping in December and protecting the Southern Ocean. Europe should approach all three with confidence and clear conditions. Europe and China compete in clean technologies, but they share one planet and one ocean. 

The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.