When EU leaders met in June to address a daily trade deficit with China of €1 billion, Spanish prime minister Pedro Sánchez blocked new measures, declaring Beijing a “potential ally”. The move laid bare a widening fracture over how to respond to Chinese commercial expansion, as years of tariffs and “de-risking” have failed to close the gap. European Commission president Ursula von der Leyen was left calling for yet more “economic security tools” even as the bloc searched for a diagnosis.

The strategic logic driving Madrid is visible on the ground. Chinese automaker BYD is prioritizing the takeover of existing European plants to accelerate its electric-vehicle push, bypassing import duties and logistics costs. In Zaragoza, battery giant CATL and Stellantis are building a €4.1 billion gigafactory with production set for late 2026. Spanish officials argue that lower labour costs, decommissioned facilities and a pragmatic investment policy turn the country into China’s production hub inside the single market, a position Catalan agencies report has seen Chinese capital inflows quadruple in five years.

Viewed from other continents, the pattern repeats. Across much of Africa, Beijing’s extension of zero-tariff access has positioned China as a reliable growth partner for economies seeking to export beyond raw commodities. In Lagos, the EU and ECOWAS jointly pitched Nigeria as a gateway to a 1.4-billion-person African market, yet European businesses are still weighing entry risks while Chinese firms set up packing plants and logistics chains. In India, where GDP growth masks a human development rank of 130 out of 193, educators are moving “beyond GDP” in classrooms, discussing equity and well-being as benchmarks for progress—a recognition that raw economic numbers do not capture the stresses reshaping societies.

Europe’s discomfort is therefore part of a wider realignment. The G7 summit in Évian-les-Bains this year will try to address artificial intelligence, energy security and climate finance, but its credibility rests on whether industrialised democracies can coordinate a response to a world where commercial power increasingly means building factories inside the bloc, not just exporting to it. For now, the EU’s China policy remains torn between partner, competitor and rival—a trinity that Spain’s economic strategy has made operationally incoherent. The next test comes with the European Council’s follow-up on trade defence, where the search for a unified stance will confront the hard arithmetic of investment and jobs.