Spain Is Moving Closer to China. What It Reveals About Europe’s Strategic Divide

Barcelona offers the first clue

Barcelona spent five days in September doing something that would have been unusual in an earlier phase of Europe-China relations.

Shanghai was the guest city at La Mercè, Barcelona's main annual festival and the first time an Asian city had taken that role. More than 100 Shanghai performers joined the September 23-27 program, including the rolling-lantern performance known as Fengxian gundeng. The event also marked 25 years of the friendship-city relationship between Shanghai and Barcelona.

There was nothing especially strategic about the performance itself. That is precisely why it is useful.

The relationship between Spain and China is becoming increasingly visible through ordinary economic and institutional channels: factories, batteries, automobiles, logistics, city partnerships and political visits.

Pedro Sánchez has travelled to China four times in four years. His April 2026 visit followed trips in 2023, 2024 and 2025, underscoring how much more frequently Madrid has been engaging Beijing than it did in the past.

At the same time, the rest of Europe is becoming more cautious about Chinese industrial capacity, subsidies and strategic dependencies. Ursula von der Leyen said in September that the EU's trade deficit with China had reached €1 billion a day and warned that Europe was already experiencing what she called a second China shock.

The tension is therefore not difficult to see.

Spain wants a closer economic relationship with China while remaining inside an EU increasingly concerned about Chinese competition.

The interesting question is how long those two objectives can comfortably coexist.

Why Madrid wants Chinese investment

The economic case is concrete.

The most visible example is the battery industry. CATL and Stellantis are investing up to €4.1 billion in an LFP battery plant at Stellantis' Zaragoza site, with planned capacity of up to 50 GWh and production targeted for the end of 2026.

Chinese investment is appearing elsewhere in the European auto supply chain as well. In September, Gotion High-Tech agreed to invest €1.1 billion in Volkswagen's battery operation in Valencia, taking a 49% stake.

Reuters reported in July that Spain was actively courting Chinese electric-vehicle and battery manufacturers. Spanish officials were simultaneously asking Brussels for EU-wide rules governing foreign investment, including requirements around local employment, technology transfer and domestic content.

This is an important distinction.

Madrid does not necessarily need to choose between Chinese capital and European policy.

Its preference appears to be to bring Chinese manufacturing into Spain while imposing conditions that increase the domestic economic benefit.

That approach fits Spain's industrial position. The country has an established automobile manufacturing base, renewable-energy ambitions and a need for investment in batteries and other industrial infrastructure. Chinese companies, meanwhile, possess mature manufacturing capabilities in several of these areas.

The relationship can therefore be economically complementary.

The political difficulty begins when the same companies become targets of European trade policy.

A Chinese battery plant located in Zaragoza is no longer simply a Chinese export operation. It becomes part of the European industrial base.

That can create jobs and local investment. It can also allow Chinese companies to manufacture inside the EU and sell into the European market without relying on imports from China.

Both facts can be true at the same time.

Spain's argument with Washington matters too

The other force pushing Madrid toward greater strategic flexibility is its increasingly difficult relationship with Washington.

The dispute became particularly sharp in 2026 over Iran and NATO spending. Spain refused to allow the use of the Rota and Morón bases for U.S. military operations connected to the Iran war. Trump also repeatedly criticized Spain for resisting the NATO target of 5% of GDP for defense spending and threatened to cut economic ties.

That dispute matters because it changed the political calculation surrounding foreign policy.

Spain remains a NATO member and continues to cooperate with the United States. But Madrid has demonstrated that it is willing to reject Washington on questions it considers incompatible with its own foreign-policy position.

Public opinion has also moved.

Pew Research Center's 2026 global survey found that 54% of Spanish adults held a favorable view of China, up 17 percentage points from 2025. It was the first time since 2011 that positive views of China had become the majority position in Spain.

That does not mean Spaniards have become politically aligned with Beijing. The same Pew research shows substantial concerns about China's government and its respect for personal freedoms.

It does indicate that the political cost of maintaining economic engagement with China may be lower in Spain than it is in several northern European countries.

That gives Sánchez more room to maneuver.

Brussels sees three different problems

The first is industrial competition.

Europe wants Chinese investment when it creates factories and jobs. It is less comfortable when those factories increase the market share of companies that European manufacturers already view as heavily supported by the Chinese state.

The EU's problem is especially visible in the automobile industry.

The same Chinese companies that Europe worries may be too competitive as exporters can become attractive partners when they build factories inside Europe.

This creates a policy tension that national governments experience differently.

For Spain, Chinese capital can mean a new battery plant.

For a European automaker competing with Chinese EV manufacturers, the same capital can strengthen a future competitor.

For Brussels, the question becomes whether investment into one member state changes the competitive conditions of the single market as a whole.

The second problem is security.

The Huawei controversy illustrates how quickly economic cooperation can become a European security issue.

Spain awarded Huawei a contract worth €12.3 million to manage and store judicial wiretap data. The issue was raised in the European Parliament because information collected by Spanish authorities can intersect with the broader European law-enforcement system. Spain has maintained that the infrastructure is isolated, audited and subject to security requirements.

The disagreement is therefore not simply about whether Huawei is safe or unsafe.

It is about who bears the risk when national decisions affect information systems that other European governments depend upon.

The third problem is foreign policy.

European governments do not all assign the same weight to relations with China, Russia, Israel or the United States.

Their geography is different.

Their industries are different.

Their exposure to military threats is different.

That makes a completely unified foreign policy difficult even before China enters the equation.

Spain is not actually outside the European consensus

This is where the original “Europe versus Spain” narrative needs to be softened.

Madrid has not abandoned EU coordination.

On September 30, Sánchez and French President Emmanuel Macron jointly called for stronger European trade defenses against China and argued that Chinese investment, especially in strategic sectors such as automobiles, should come with stronger safeguards.

Spain is therefore pursuing two positions simultaneously.

It wants Chinese companies to invest in Spain.

It also wants Europe to establish common rules governing those investments.

That is not necessarily a contradiction.

For Madrid, a common European rulebook can actually be useful. It prevents member states from competing against one another by offering increasingly favorable conditions to Chinese investors.

Spain can then compete for factories while allowing Brussels to set the minimum conditions.

The problem appears when European restrictions become incompatible with the economic interests of particular member states.

That is where the political fracture begins.

Smaller states are already hedging

The same pattern can be seen in defense.

Finland's relationship with Israel provides one example. Helsinki has extended its defense cooperation agreement with Israel through 2034, covering research, development and procurement of military equipment. The agreement has attracted domestic criticism because of the war in Gaza, while the Finnish government has defended the relationship in terms of national defense requirements.

Greece has gone further.

On August 31, Israel and Greece finalized an approximately €3 billion agreement to build Greece a multi-layered air-defense system incorporating David's Sling, SPYDER and BARAK MX, together with radar and command-and-control infrastructure.

These arrangements do not mean Finland or Greece are abandoning NATO or the EU.

They show something else.

When governments believe their own security requirements are urgent, they seek additional bilateral relationships even when those choices create political complications elsewhere.

That is a form of hedging.

The same logic is visible in Spain's economic relationship with China.

Madrid does not need to regard Beijing as a strategic ally to decide that Chinese factories are useful.

It does not need to regard Washington as an adversary to reject particular American demands.

And it does not need to reject European institutions to defend national economic interests.

The underlying shift is from alliance discipline toward portfolio management.

Countries are trying to maintain several relationships at once and avoid becoming completely dependent on any single partner.

The problem for Brussels is coordination

This is where the European model becomes difficult.

The EU is strongest when member states can pool their market power.

A market of hundreds of millions of consumers gives Brussels considerable negotiating leverage.

But that power becomes harder to use when individual governments make different bilateral arrangements with external powers.

A Chinese company can negotiate with Spain.

An Israeli defense supplier can negotiate with Greece.

Finland can establish its own procurement arrangements.

Germany and France can push for stronger EU trade defenses.

All of these choices may be rational from the perspective of the individual government.

Together, however, they produce a complicated system in which the EU has to coordinate policies that were negotiated separately at national level.

That is the real test of European cohesion.

It is not whether every government reaches the same conclusion about China.

It is whether the EU can establish rules that allow different national interests to coexist without allowing those differences to undermine the single market or common security objectives.

Europe has entered a period of strategic bargaining

The old assumption was that European foreign policy would gradually converge.

The current evidence suggests something more complicated.

Member states are bargaining.

Spain is bargaining over Chinese investment and industrial policy.

Germany is bargaining over Chinese competition and the future of its manufacturing base.

Finland is bargaining over national defense requirements and European political pressure.

Greece is bargaining over the security challenge posed by Turkey.

At the same time, European governments are reassessing how much they can rely on Washington while Russia remains a major security concern.

None of these decisions exists in isolation.

That is why the Spain-China relationship matters beyond Spain.

Spain is testing how much freedom a member state can retain while remaining committed to a common European framework.

The answer is unlikely to be found in whether Madrid becomes “pro-China” or “anti-China.”

The more useful question is institutional.

Can the EU tolerate different national relationships with China while still maintaining common standards for investment, trade, technology and security?

The September meeting between Sánchez and Macron provides one indication of the direction. Spain is willing to attract Chinese capital, but it is also willing to work with France on stronger European trade defenses.

That suggests the dividing line may not run between Spain and Europe.

It may run between two ways of organizing European power.

One approach asks national governments to align their bilateral relationships more closely with a common European strategy.

The other allows countries to build their own relationships first and negotiate the European rules around them.

Spain is testing the second model.

The result will say something larger about the EU's ability to operate as a political unit in a world where economic dependence, military risk and strategic rivalry no longer line up neatly.

Barcelona's Shanghai festival was cultural.

The factories arriving in Zaragoza and Valencia are economic.

The disagreements over Huawei, defense procurement and U.S. policy are strategic.

They are all part of the same transition.

Europe is becoming less willing to assume that one external partner can solve every problem.

The harder question is whether Europe can diversify its relationships without fragmenting its own decision-making power.