Made in Europe vs. Made in China: EU’s new rules could challenge Hungary’s investment model

The European Union’s new economic policy initiative could challenge Hungary’s investment-driven growth model, as the proposal may give Brussels greater oversight of foreign investments in strategic industries.

“Made in Europe” – new rules for strategic industries

The European Commission is preparing a new industrial support regulation called the Industrial Accelerator Act, which could be presented by Stéphane Séjourné, the Commission’s Executive Vice-President responsible for industrial policy.

According to the Commission, the main goal of the proposal is to strengthen Europe’s industrial base in the face of growing global competition, particularly from the United States and China. EU policymakers fear that Europe has become overly dependent on external suppliers in several key technologies, including batteries, green energy technologies and electric vehicles.

The draft would therefore reinforce the “Made in Europe” principle, giving preference to European-made products in publicly funded projects and subsidy programmes.

In practice, this could mean that projects receiving public funding would have to source a certain share of their components from European manufacturers.

According to leaked drafts, the measures could affect several sectors, including battery production, the electric vehicle industry, steel and aluminium, as well as various clean-technology industries. The Commission hopes this would reduce Europe’s reliance on external suppliers in critical technologies.

“If we do nothing, then very soon 100% of clean-tech production could end up in China. It is quite possible that our cement and steel industries will be completely offshored within a few years,” said Stéphane Séjourné, Executive Vice-President of the European Commission.

The proposal could also give Brussels a greater role in examining foreign investments in strategic sectors. As reported by the Hungarian outlet Portfolio, the Commission could in some cases take over the assessment from national authorities if a project has significant implications for the single market or for Europe’s economic security.

For Hungary, this could prove particularly sensitive. In recent years, the government’s economic strategy has relied heavily on attracting large-scale foreign investments in precisely these sectors, many of which come from companies based outside the European Union.

A key pillar of Hungary’s economic model

Over the past decade, a central pillar of Hungary’s economic policy has been attracting large industrial investments, particularly in sectors linked to the electric vehicle transition. As a result, several multinational companies have established major production facilities in the country.

Among the largest recent projects are:

• the Chinese CATL battery plant in Debrecen, one of the largest industrial investments in Hungary’s history
• the South Korean Samsung SDI battery plant in Göd and its expansions
• the SK On battery factories in Komárom and Iváncsa
• and the Chinese BYD electric vehicle plant currently under construction in Szeged

These projects represent multi-billion-euro investments and have received significant state support.

If the European Commission gains broader authority to review foreign investments in strategic sectors, however, it could narrow the room for manoeuvre for member states in supporting such projects. In the long term, this could also influence the conditions under which similar industrial investments take place in Hungary.

“We will exclude those who do not play by the rules or who pose a risk to our economic security,” Séjourné said.

The debate is only beginning

For now, the proposal remains a draft and must still go through the EU’s legislative process. Both the member states and the European Parliament will have a say in shaping the final rules, meaning the proposal could still change significantly.

What already appears clear, however, is that Brussels wants to play a more active role in regulating strategic industries and overseeing key technologies – a shift that could have important implications for Hungary, where large foreign-backed industrial investments have become a central element of economic policy.

Chinese companies have also been expanding their presence in Hungary in other sectors: as we previously reported, e-commerce giant Temu has recently partnered with the Hungarian Post.

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