In 2025, Spain became one of the primary targets of Chinese investments in Europe, with EV-related commitments up 147 per cent – third in Europe – anchored by CATL’s €4 billion battery plant.
At the same time, Madrid is the most vocal and elaborate among a group of Member States (which includes Hungary and Slovakia) that oppose the new EU cybersecurity act (CSA2), arguing it is a competence overreach by Brussels. Those familiar with the Council discussions on its controversial supply-chain section also discern an eerie similarity between the amendments tabled by Spain and the suggestions by China (that were accidentally leaked).
On paper, the two files have nothing to do with each other. They are different markets with different benefits or risks. The uncomfortable part is the timing and the question it raises: whether Spain may remain neutral on cybersecurity once it receives Chinese investments and cannot afford to irritate Beijing in any sector at all.
Contrary to what many China hawks believe, Spain is right to accept the Chinese investments. Inward FDI in batteries and EVs is legitimate and economically rational. Spain wants the jobs, the technology transfer, and a shot at becoming Europe’s EV hub, and nobody would apologise for hosting a CATL battery plant or Geely joint-venture.
The objection is not that CATL and other Chinese multinationals invest in Spain. Or that the Sánchez administration places an extraordinary trust in Chinese cloud servers. The objection is what Spain believes it must do on the latter to keep the investment in the former.
Madrid cites potential retaliation, including lost projects, withdrawn capital, or litigation before the European Court of Justice or a World Trade Organisation tribunal. However, an LFP gigafactory cannot be packed into a container and shipped to Hungary overnight.
An LFP gigafactory is not a diplomatic demarche that can be undone or forgotten. Battery production and assembly plants are multi-year, multi-billion-euro fixed assets, with projects built on amortisation horizons that last longer than a decade.
And the more Chinese multinationals build in Zaragoza, Ferrol and Barcelona, the less credible the threat of leaving becomes.
While Chinese businesses often write off the EU as laughably unprofitable, they still need the Single Market to cover fixed costs. Chinese EVs cannot tap into any other scalable high-end market outside the home market due to trade restrictions imposed by the US, Canada, Mexico, India, and many of their neighbours in East Asia.
What is at play is not Chinese retaliation, but Spanish self-deterrence. Nobody in Beijing had to ask Madrid for a softer line on upcoming EU regulations on cybersecurity, reindustrialisation (IAA), or safeguard measures against alleged Chinese overcapacity – Madrid is seemingly supplying it unprompted. This has also become a matter for Spain’s National Court, where a notebook seized from a consulting associate of the former PM Zapatero (with references to a public tender for Chinese network equipment) sits in the case file.
However, the case of Spain is not an instance of “weaponisation,” since Madrid is avoiding consequences that Chinese investors never threatened. Nor is it a question of whether Spain should welcome Chinese investment, because it has no alternative offers. Spain is also free to share its security analysis that led to its extraordinary trust in Chinese vendors – but it must not link the two.
Spain has grown so anxious about Chinese investments that it is inadvertently setting a precedent that any EU regulation must be preceded by 27 national stress tests on its relationship with China. And Spain will soon find its agenda on Latin America or Gibraltar subordinated to the preferred strategic exception of every EU government, from Ireland to Czechia and Hungary.