Spain Opens Its Doors to China as a European Trade War Looms

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Spain Opens Its Doors to China as a ********* Trade War Looms

In January, the Catalan regional government in Spain

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a specialized desk dedicated to increasing investment and

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, the world’s second-largest economy.

In July, the Port of Barcelona approved plans to build a terminal with direct access to the port’s railway for

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that China is exporting to Europe.

Last month, during a visit to Beijing by Prime Minister Pedro Sánchez, the ******** wind turbine giant Envision Energy agreed to team up with his government and invest $1 billion to build a

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.

The activity is a sign of how Spain is trying to expand its economic ties with China when tensions with the West are growing.

“China is a key economic partner” for the ********* Union and Spain, Carlos Cuerpo, Spain’s economic minister, said from his office in Madrid. “Europe has to find its own way.”

It is a hard path to locate these days. On Thursday, Europe is set to increase tariffs on ******** electric vehicles to as much as 45 percent. The ********* Union maintains that government subsidies have enabled ******** companies to sell their cars at cut-rate prices, threatening the bloc’s own industry.

The vote splintered the ********* Union’s 27 members, drawing support from France and opposition from Germany. Spain, the union’s fourth-largest economy, was among 12 countries that abstained, reflecting how China is viewed as both an economic opportunity and a threat.

To skeptics, China’s attempts to inundate Europe with cheap, subsidized solar panels and electric vehicles imperil industries that are essential to the continent’s prosperity. Meanwhile, its support for Russia since the invasion of Ukraine undermines Europe’s security.

“This is not only about commercial interests but also geopolitical interests,” said Liana Fix, a fellow at the Council on Foreign Relations in Washington. Europe has to be careful not to become too dependent on ******** industry and materials, she said.

In her view, Spain is taking a pragmatic approach by engaging in ****** ventures that give its companies access to China’s advanced technology.

When it comes to critical industries including automobiles and agriculture, Mr. Cuerpo, the economics minister, said, “Spain has to do its own analysis.”

Such assessments are happening in capitals around the world as officials and businesses try to figure out how to keep their economies pumping when rivalries between the world’s superpowers are sharpening.

The freewheeling global economic system that turbocharged international trade and investment has been profoundly shaken, first by the pandemic and then by wars in Ukraine and the Middle East. And governments are struggling to balance their ******* for economic growth with concerns about national security, international alliances and supply chain resilience.

The

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between the ******* States and China that began in 2018 under President Donald J. Trump has escalated to affect hundreds of billions of dollars of goods. In May, the Biden administration placed a 100 percent tariff on electric vehicles from China.

The effects are rippling throughout the world’s economy.

Nonaligned countries like Mexico and Vietnam have experienced rapid jumps in ******** trade and investment and, in turn, have increased their exports to the ******* States. Such so-called

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serve “as a bridge between blocs,” a way for ******** firms to get their goods into the ******* States but avoid import duties, said Gita Gopinath, the first deputy managing director at the International Monetary Fund.

A similar dynamic can be seen in Europe.

“China’s strategy is clear,” said Josep Maria Gomes, international business manager at the chamber of commerce in Barcelona. “******** companies are coming to Europe to solve the problems with trade barriers.”

China has been increasing foreign direct investment and completing more mergers and acquisitions.

This spring, Chery, a carmaker owned by China’s Wuhu municipal government, signed a 400-million-euro agreement with the Spanish company Ebro-EV Motors. The two will produce electric vehicles at a shuttered Nissan plant in Barcelona.

Mr. Gomes is optimistic that Spain will beat out competitors and land another deal with the state-owned ********

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to build an electric automobile factory.

******** auto manufacturers have also struck agreements to produce electric vehicle plants in Turkey, Hungary and

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By producing cars on the continent, ******** companies can sidestep tariffs. Local manufacturers get access to China’s know-how.

******** producers clearly have “superior technology,” said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Brussels. ********* firms that steer clear of them risk “missing out.”

Cooperation, though, can also give China leverage. After the ********* Union voted to impose tariffs, Chery announced that production in Spain would be

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for a year. Spanish government officials dismissed the idea that the delay was meant to signal displeasure.

Spain has long been overshadowed by the larger economies of Germany, France and Italy, but grew more than three times as much as the ********* Union’s average last year. Last week, the International Monetary Fund estimated that Spain’s economy would grow 2.9 percent this year, the largest increase of any major advanced industrialized nation in the West. The estimate for Germany, traditionally the engine of ********* growth, was

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The automobile industry is considered essential to Spain’s economic success. Already the second-largest manufacturer in Europe after Germany, Spain exported 87 percent of its automotive production last year.

Investment and trade with the ******* States still dwarf investment and trade between Spain and China. And there is a risk that ********* cars produced with ******** technology could be shut out of the ********* market because of security concerns.

Still, there is “huge potential” in the relationship with China, said Marta Blanco, president of the international relations committee at the

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, a trade association that represents more than two million companies and businesspeople.

And for ******** investors, Spain’s longstanding cultural and economic ties to other Spanish-speaking countries mean that it can also serve as a gateway to ****** America — a region where countries engage with China despite concerns about its flooding their markets with exports.

******** direct investment in Spain has been growing over the last decade, more than doubling to

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since 2017. The agreement with Envision followed an announcement by the ********-owned manufacturer Hygreen Energy to invest more than

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on hydrogen generation projects in southern Spain.

Spain, which already generates more than 60 percent of its electricity from renewable sources, wants to become a leader in producing

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for Europe.

Maintaining good relations with China is also a major concern for many agricultural producers in Spain.

“China is an essential market,” said Daniel de Miguel, deputy director of Interporc, the association of pork producers. Spain exported more than 500,000 tons of white pork to China last year, a quarter of the sector’s total exports, according to the association.

And worries about an escalating trade war between Europe and China are palpable.

Within days of the vote to impose tariffs on ******** electric vehicles, Beijing announced a temporary tariff on ********* brandy. The ******** government has also opened an investigation into whether the ********* pork industry is exporting to China at low prices that violate trade rules.

“We are really nervous,” said Mr. de Miguel, who was part of a delegation that accompanied Spain’s prime minister on his trip in September. After the visit, Mr. Sánchez switched his position on the ********* Union’s electric vehicle tariffs, which he previously publicly said he supported.

Like other ********* countries whose economies depend on global exports and supply chains, Spain is trying to walk a thin line between cooperation and competition with China.

“We have to be open but not naïve,” Mr. Cuerpo, the economics minister, said.

Rachel Chaundler contributed reporting from Zaragoza, Spain.

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