China’s Five-Year Plan and the Case for Europe’s Industry Accelerator Act

The publication of China’s 15th Five-Year Plan (2026-2030) offers an unusually clear illustration of how major economies are organising the intersection between industrial policy, energy transition and geopolitical strategy. While formally presented as a development framework, the plan confirms that China’s energy transition is inseparable from a broader strategy aimed at consolidating leadership in clean technologies and strengthening industrial competitiveness.

Another dimension of the Plan is the growing emphasis placed on domestic demand as a driver of industrial development. The plan repeatedly stresses the need to "expand domestic demand as a strategic foundation" and to build a "strong domestic market" capable of supporting economic growth and technological upgrading. This framing reflects Beijing’s intention to use the scale of China’s internal market to accelerate the deployment of new technologies and support even more the emergence of national industrial champions. At the same time, the emphasis should not be overstated as a structural shift.

China’s growth model has long relied on large-scale domestic investment and infrastructure deployment, and with this plan, exports remain a central component of its industrial strategy. In practice, the renewed focus on domestic demand reflects a constraint: household consumption remains comparatively weak and external demand has become more uncertain. Emphasising the role of the internal market therefore serves both as a policy objective and as a narrative response to these structural limitations.

The concomitance between these two policy frameworks highlights a growing asymmetry from the two sides of Eurasia. China’s planning system integrates industrial policy, infrastructure development, and energy strategy at a scale and level of coordination that remains difficult for the European Union to replicate.

At the same time, in a world increasingly structured by industrial competition, Europe is beginning to reconsider one of the central features of its economic model: the assumption that market access can remain largely neutral. China’s new Five-Year Plan illustrates why this assumption is becoming more difficult to sustain.

China’s Climate Policy as Industrial Strategy

China’s 15th Five-Year Plan confirms that the country’s energy transition is being organised primarily through industrial expansion and infrastructure development rather than strict emissions constraints.

The plan sets a modest target of reducing carbon intensity by 17 percent between 2026 and 2030, slightly lower than the 18 percent target for the previous five-year period, which China ultimately failed to meet under the original methodology.

Crucially, the plan does not establish a binding cap on absolute emissions; the 17 percent carbon-intensity target could eventually allow emissions to rise by 3-6 percent over the five-year period if economic growth remains around 4.5-5 percent.

Instead of constraining fossil fuel consumption directly, China’s strategy relies primarily on rapidly expanding clean energy supply. The plan targets an increase in the share of non-fossil energy from around 21.7 percent of total energy consumption in 2025 to 25 percent by 2030, while simultaneously expanding domestic energy production capacity to 58 billion tonnes of standard coal equivalent in order to reinforce energy security.

This dual approach reflects a "pragmatic" balance between decarbonisation, energy security, and economic growth. On the one hand, China is massively expanding renewable energy capacity. The country has already exceeded its previous target of 1,200 GW of combined solar and wind capacity by 2024, and current planning suggests a trajectory toward 3,600 GW by 2035, implying annual additions of roughly 200-300 GW of new renewable capacity. 

On the other hand, the plan maintains coal as a structural component of the energy system. Coal remains framed as a "ballast" ensuring system reliability and energy security, and the document avoids setting a clear timeline for phasing down coal consumption in power generation and even less in the industrial sectors.

In practice, the Chinese energy transition remains driven by massive expansion of clean energy infrastructure rather than contraction of fossil fuel capacity. This strategy relies on building a massive stock of clean infrastructure first, allowing emissions reductions to occur later without disrupting economic growth. Late for the climate objective, but less painful for China’s much-needed economic growth.

Industrial Scale and Cleantech Leadership

The Five-Year Plan also confirms the central role of clean technologies in China’s economic growth strategy. Sectors such as electric vehicles, advanced solar technologies, battery storage, hydrogen infrastructure and nuclear power are explicitly identified as strategic growth industries.

Clean-energy industries already represent a major pillar of China’s economic expansion. Recent estimates suggest that the sector accounted for more than one-third of China’s GDP growth in 2025 and more than 90 percent of the rise in investment, representing 11.4 percent of its GDP. Clean-energy sectors have been a major driver of Chinese growth since around 2020, meaning that activities linked to the energy transition have increasingly become structurally important for sustaining the country’s economic expansion.

The scale of China’s infrastructure deployment is equally significant. The Five-Year Plan foresees the construction of power transmission corridors capable of transporting 420 GW of electricity from renewable bases in western China to coastal demand centres by 2030, supported by the expansion of ultra-high-voltage grid infrastructure.

Offshore wind capacity is expected to exceed 100 GW by 2030, up from roughly 48 GW in 2025, while nuclear capacity is planned to reach 110 GW by 2030, almost doubling from current levels.

At the same time, China continues to invest heavily in emerging technologies such as hydrogen and energy storage, including plans to deploy 100 GW of pumped hydro storage capacity and large-scale stationary battery systems as part of the development of a "new-type power system".

This infrastructure expansion is closely linked to industrial development. Large-scale "zero-carbon industrial parks" and electrified transport corridors are being developed to integrate manufacturing, clean power generation and logistics infrastructure into coordinated industrial ecosystems.

Beyond energy deployment, the Five-Year Plan also emphasises technological self-reliance, digital transformation and the strengthening of domestic demand as pillars of China’s industrial strategy. The energy transition is therefore embedded within a broader project of techno-industrial upgrading and national economic security.

Europe’s Fragmented Industrial Response

Europe has also begun to develop a more active industrial policy framework in response to these dynamics. The Net Zero Industry Act (NZIA), adopted in 2024, aims for the European Union to produce 40 percent of its annual deployment needs for key clean technologies domestically by 2030. These technologies include solar photovoltaics, batteries, heat pumps, hydrogen electrolysers and carbon capture equipment. However, the scale of Europe’s industrial expansion remains significantly smaller and the EU is not on track to meet this target.

The EU currently installs roughly 50-70 GW of solar capacity per year, compared with annual Chinese installations exceeding 200 GW. Similarly, while China is planning renewable additions in the range of 200-300 GW per year, the EU’s combined annual renewable expansion is still remaining far below that level.

The same asymmetry is visible in industrial policy spending. China invests an estimated of at least 4 percent of GDP annually in industrial policy-likely even more when indirect, off-budget and other hidden support mechanisms are taken into account- compared with roughly 1-1.5 percent in the European Union-and when combining EU and national programmes. These differences in scale translate into strong asymmetries in supply chains.

Against this backdrop, China currently dominates global production in several segments of clean-technology value chains:

• Over 80 percent of global solar module manufacturing
• More than 70 percent of battery cell production (entire value chain)
• A majority share of critical mineral refining capacity

As a result, European energy transitions remain heavily dependent on imported technologies and components.

Governing Market Access Is the Real European Debate

These structural asymmetries have been evident within the European market itself for many years. More than 90 percent of solar panels installed in the EU are imported from China, while Chinese firms dominate upstream segments of battery supply chains including cathode and anode materials.

At the same time, Chinese companies are investing in European industrial capacity or scouting projects. Battery manufacturer CATL controls roughly 40 percent of the global battery market and has committed more than €11 billion to European gigafactories, while BYD has surpassed 100,000 annual vehicle sales in Europe and is building its European production footprint through massive investments in Hungary and Turkey. Together, these new plants are projected to reach a combined capacity of 500,000 vehicles per year, with an expected output of around 220,000 vehicles by 2027.

These developments raise a central policy question: how should Europe manage access to its market in a world where industrial policy increasingly shapes global trade? The Industry Accelerator Act represents a first meaningful attempt to address this challenge.

The "Made in EU" framework proposed in the IAA aims to strengthen European industrial capacity in strategic sectors by linking certain public support mechanisms and procurement rules to the presence of European industrial value creation. In practice, the Act introduces criteria allowing products and projects to qualify as "European" when a meaningful share of their manufacturing, processing or technological contribution occurs within the European Union or within partner countries that have a Free Trade Agreement with the EU.

In addition, the proposal raises the question of how foreign industrial actors operating directly within Europe should be integrated into European supply chains. The IAA introduces the obligation of conditioning market access or public support in certain strategic sectors on the creation of industrial partnerships with significant European participation. In practice, the idea is that foreign companies-particularly from economies with large state-supported industrial ecosystems-could obtain full access to "Made in EU" recognition only if their investments take the form of joint ventures in which European partners hold a majority stake and participate meaningfully in governance, technology development and value creation. Another option would be to invest a minimum of 1 percent of their total global revenues in the EU for R&D.

The current draft gives the European Commission oversight over industrial projects above €1 billion, while smaller investments remain largely under national control. This creates a potential governance challenge: if Member States apply market access conditions differently, the credibility of the entire framework could be weakened.

Energy Security: Similar Concerns, Asymmetric Answers

Escalating tensions in the Middle East and the risk of disruptions to oil and gas shipments through the Strait of Hormuz-which carries roughly 20 percent of global oil trade, and 40 percent of China’s oil imports-highlight the continued vulnerability of global energy markets, including for China. For Europe, which remains heavily dependent on energy imports, such disruptions translate directly into cost shocks.

China’s 15th Five-Year Plan reflects similar concerns to ours, but China addresses them through a fundamentally different strategic architecture. The plan emphasises expanding domestic energy production capacity, maintaining coal as a security buffer, and accelerating electrification across industry and transport in order to reduce vulnerability to imported fossil fuels. Recent geopolitical developments-including tensions around the Strait of Hormuz-are likely to reinforce this logic, further strengthening Beijing’s view of coal as a strategic buffer against external energy shocks. At the same time, China is strengthening its control over critical mineral supply chains, including plans to establish ever-more secretive strategic reserves for what it describes as "scarce energy minerals".

The result is an energy transition embedded within a broader project of industrial power. Massive deployment of renewable infrastructure, expansion of manufacturing capacity and consolidation of technological leadership are treated not as separate policy domains but as mutually reinforcing pillars of national strategy.

A comparison with Europe highlights three structural asymmetries shaping the energy transition versus the energy security approach across the Eurasian continent.

The first is an asymmetry of strategic coherence. China integrates climate policy, industrial upgrading, infrastructure planning and energy security within a unified framework. Europe, by contrast, continues to operate through a combination of sectoral regulations and fragmented industrial instruments, even as initiatives such as the Net-Zero Industry Act, the Critical Raw Materials Act and now the Industry Accelerator Act gradually move toward a more coordinated approach.

The third asymmetry relates to the organisation of economic openness. China’s strategy focuses on building domestic industrial ecosystems powerful enough that global markets become structurally dependent on Chinese production capacities in key sectors such as batteries, solar technologies and electric vehicles. Europe, by contrast, is only beginning to reconsider the role of market access in a world increasingly shaped by industrial imbalance.

In this context, the debate surrounding the Industry Accelerator Act marks an important turning point. By linking certain forms of public support and procurement to the presence of European industrial value creation, the EU is beginning to treat its single market as a strategic economic asset.

The challenge for Europe is not to replicate China’s model of state planning, but to adapt its own economic framework to an era in which industrial policy, energy security, and geopolitical competition are becoming deeply intertwined.

If implemented effectively, the IAA could help Europe move from a model of passive openness towards a system of strategic openness, where access to the world’s largest single market is used to strengthen domestic industrial capabilities while maintaining the openness necessary for global cooperation.

Europe’s ability to organise this balance-between openness and industrial resilience-may ultimately become one of the central determinants of its economic security in the decades ahead.

Copyright Vincent Thian / POOL / AFP
Chinese President Xi Jinping and Premier Li Qiang applaud during a plenary session of China's National People's Congress, in Beijing on March 9, 2026.