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Spain Bets on China as Europe Hardens

Sino Despatch 23 min read
Spain Bets on China as Europe Hardens

On a September evening in Barcelona, a red-and-gold Chinese dragon wound its way through the crowds of La Mercè, the city’s great autumn festival, while acrobats from Shanghai tossed glowing paper lanterns into the air and caught them without ever letting the candles inside tip over. Alongside them walked the familiar figures of Catalan street culture: velvet-clad pipers, fire-breathing beasts and the giant papier-mâché kings and queens that have processed through the old city for centuries. Shanghai was this year’s guest city, the first from anywhere in Asia to be given the honour, and the occasion marked twenty-five years since the two cities were twinned. Barcelona’s own programme promised more than a hundred artists from Shanghai and the local Chinese community, a Chinese dragon among the city’s traditional bestiary, and a show of 750 drones over the beach titled El fil vermell, “The red thread”, running from Barcelona to Shanghai.

The BBC’s Europe editor, Katya Adler, was in the crowd, and her report, “Spain and China are cosying up – to the anger of many in the EU”, used the scene as a way into a bigger story. Spain and China, she wrote, are enjoying “a period of mutual appreciation”, but that bonhomie “is far from shared across the EU”. Her piece is the starting point here. What follows puts the embrace in a longer frame: four centuries of contact that began with Mexican silver and Fujianese silk in Manila, the factories and freight trains that now give it physical form, and a European Union whose biggest members are moving the other way.

Four visits in four years

The political centre of the story is Pedro Sánchez. Spain’s Socialist prime minister went to China in March 2023, again in September 2024, again in April 2025, and once more from 11 to 15 April 2026. On that fourth trip he told Xi Jinping in the Great Hall of the People that Spain wanted an economic relationship that was “much closer, much healthier and much more balanced”, and the two governments signed nineteen agreements, among them a new mechanism for a regular strategic dialogue between foreign ministries. He also visited Tsinghua University and Xiaomi’s headquarters. Xi, according to accounts of the meeting, said the two countries stood on “the right side of history” and should jointly resist “the law of the jungle”, language that analysts at CSIS in Washington read as a pointed message to the Trump administration.

The prime minister was not the only senior Spaniard in Beijing. King Felipe VI and Queen Letizia made a state visit in November 2025, the first by a Spanish monarch in eighteen years, and watched ten agreements being signed. One of them, a technical protocol on animal health, would prove its worth within weeks. Sánchez said in 2026 that political contact with China had reached “the highest level in the last fifty-three years”.

Mario Esteban, a China specialist at Madrid’s Autonomous University and the Elcano Royal Institute, told Euractiv before the April visit that “no Spanish prime minister has ever taken this approach towards China”. He also argued that Spain was largely catching up in a relationship that had been neglected, and that its ties with the United States, still its largest foreign investor and its main defence partner, remained “far more significant at all levels”. Both halves of that judgement matter for what follows.

Silver, silk and a Jesuit at the Ming court

Spain’s contact with China is among the oldest of any European state, and for two and a half centuries it ran not through Madrid but through Manila. After Miguel López de Legazpi made Manila the capital of the Spanish Philippines in 1571, the city became the western terminus of the Manila galleon, the annual sailing that linked Acapulco in New Spain to Asia from 1565 until 1815. The galleons carried silver from the mines of Mexico and Peru westward; they came back laden with Chinese silk, porcelain and lacquer. Most of those goods were brought to Manila by junks from southern Fujian, the coast that had once made Quanzhou the centre of the maritime world. Spain’s silver dollars became a currency of the South China coast for centuries afterwards.

The Sangleys of Manila

The Chinese traders and craftsmen who settled in Spanish Manila were known as Sangleys, a term usually traced to a Hokkien word for trade. The colonial authorities confined many of them to the Parián, a Chinese quarter just outside the walls of Intramuros, and depended on them for food, crafts and much of the city’s retail trade. The arrangement was uneasy. Spaniards were vastly outnumbered by the Chinese community, and fear of that imbalance, together with rumours of an invasion from China, fed periodic violence. In 1603 a Sangley rising was crushed with a massacre in which estimates of the Chinese dead run from about 15,000 to 25,000; further killings followed later in the century. The pattern, a colonial economy that relied on Chinese labour while fearing Chinese numbers, anticipated anxieties that would later surface in Europe and America as the “Yellow Peril”.

Manila was also the base for Spain’s first attempts at diplomacy with China itself. In 1575 the Augustinian friar Martín de Rada led a small embassy to Fujian, landing near Xiamen and travelling to Quanzhou and Fuzhou. His account fed into Juan González de Mendoza’s History of the Great Kingdom of China (Rome, 1585), which shaped how Europeans imagined the Ming empire for a generation.

Pantoja and the friars

The most remarkable Spaniard of that era in China was Diego de Pantoja, a Jesuit from Valdemoro, near Madrid. Born in 1571, he joined Matteo Ricci in Nanjing in 1600 and entered Beijing with him in January 1601, bringing the gifts, including clocks and a clavichord, that won the Jesuits access to the court of the Wanli emperor. Pantoja, known in Chinese as Pang Diwo, taught music to palace eunuchs, wrote moral treatises in classical Chinese and sent home a long letter, published in Spain in 1605, that was among the first eyewitness accounts of Ming Beijing to reach European readers. Spanish Dominicans and Franciscans, arriving later through Manila and working in Fujian, took a far less accommodating view of Confucian rituals than the Jesuits, and their objections did much to ignite the Rites Controversy that eventually set pope against emperor over Confucius.

From Franco to a strategic partnership

The modern relationship began late and, at first, oddly. Spain recognised the People’s Republic on 9 March 1973, while General Franco, a fierce anti-communist, was still in power, and cut its ties with Taipei. Italy, West Germany, the Netherlands and Britain had all established or upgraded relations with Beijing in the preceding three years. In June 1978, King Juan Carlos and Queen Sofía made the first visit to China by Spanish monarchs, meeting Deng Xiaoping as he prepared to open the country to the world. The king returned in 2007. Hu Jintao’s visit to Madrid in 2005 produced the comprehensive strategic partnership, and Xi Jinping’s state visit in November 2018, the first by a Chinese president in thirteen years, yielded about twenty agreements. Notably, Spain declined on that occasion to sign a memorandum endorsing the Belt and Road Initiative, preferring, it said, to work through the EU’s own connectivity framework. Italy signed one four months later and withdrew in 2023. Spain’s caution then is worth remembering when it is accused of naivety now.

The numbers behind the friendship

For all the warmth, the trade relationship is lopsided. According to figures compiled from Spanish government data by the Spain–China Council Foundation, Spain imported goods worth €50.25bn from China in 2025 and exported €7.97bn, a deficit of a little over €42bn, up from about €37.7bn the year before. Spain’s exports covered barely 16% of its imports. China supplied 11% of everything Spain bought abroad, making it the country’s second-largest supplier, but took only about 2% of Spain’s exports. On Sánchez’s own figures, the deficit with China accounts for about three quarters of Spain’s entire goods trade deficit.

What Spain does sell is revealing. Chemicals and pharmaceuticals lead, followed by ores and minerals and, above all in the public imagination, food. Spain is one of the world’s great pork producers and China, as a country whose politics turn partly on the price of pig meat, has been its most important customer outside Europe. In 2025, according to Spanish customs data compiled by the Llotja de Vic market, Spain shipped 503,870 tonnes of pork and pig products to China worth just under €1bn. China was the top destination by volume and the second by value after France.

That trade has been a lever in both directions. In June 2024, days after the EU announced provisional tariffs on Chinese electric cars, Beijing opened an anti-dumping investigation into European pork, a move widely read as aimed at Spain, the Netherlands and Denmark. When China’s commerce ministry issued its final ruling in December 2025, the duties were lower than many in the industry had feared, ranging from 4.9% to 19.8% for five years, and most large Spanish exporters landed at 9.8%. Weeks earlier, African swine fever had been found in wild boar in the Collserola hills above Barcelona. Under the regionalisation protocol signed during the king’s visit, China restricted pork only from the province of Barcelona rather than from the whole of Spain. Spanish producers drew the obvious lesson about the value of good relations.

People move as well as goods. Turespaña, the national tourist board, recorded 795,484 visitors from China in 2025, a record, up 22.6% on 2024 and 13.5% above the pre-pandemic peak of 2019, with total spending of about €2.2bn.

Investment is the newest strand and the one that has changed fastest. Official data from Spain’s trade ministry show gross Chinese direct investment of €643m in 2025, up from €149m in 2024 and the highest since 2018. That is a fourfold jump, larger than the doubling cited in the BBC piece, though the absolute sums remain modest beside American or European investment, and annual flows are volatile. The US is still Spain’s largest single foreign investor, although, according to the BBC, Spain’s Economy Ministry reports that net US investment fell by around €1bn. The stock of Chinese investment in Spain stood at about €10.9bn in 2023, supporting roughly 13,500 jobs. Earlier waves went into energy and logistics: in 2017 COSCO Shipping Ports bought control of Noatum’s container terminals in Valencia and Bilbao. The new wave is about batteries and cars.

Factories with Chinese names

Spain makes more cars than any European country except Germany, but almost all of them are built by foreign-owned groups: Stellantis, Volkswagen, Renault, Ford, Mercedes-Benz. It has no national champion to protect in the way that Germany has Volkswagen or France has Renault. For a government in Madrid, a Chinese owner is in some ways just one more foreign owner, and the question is less “whose brand?” than “whose jobs?”. That is perhaps the single most important structural reason why Spain reads the rise of Chinese carmakers differently from Paris or Berlin.

The biggest project is in Aragón. At Figueruelas, outside Zaragoza, beside the plant where Stellantis builds Opel and Peugeot models, CATL and Stellantis are building a lithium iron phosphate battery gigafactory as a 50:50 joint venture. Announced in December 2024 at a cost of €4.1bn, with planned capacity of up to 50 gigawatt-hours a year, it is the largest Chinese industrial investment in Spain to date. Construction began in late 2025; the last environmental and administrative permits were reported as granted in July 2026. Reports in Spanish and European trade media say the start of production has slipped from the end of 2026 into 2027, and the plan to bring in large numbers of Chinese technicians during construction and commissioning has caused local unease. LFP chemistry is the technology in which CATL and China dominate world output, which is precisely why Europe wants the know-how on its own soil, and precisely why Beijing has tightened controls on exporting it.

Stellantis has also brought in its Chinese partner Leapmotor, in which it holds a large stake. The Leapmotor B10 electric SUV entered pre-series production at Figueruelas in September 2026, with full series output due in mid-October, making it the first Chinese-designed car built by Stellantis in Spain.

In Barcelona, Chery took over part of the former Nissan plant in the Zona Franca in a joint venture with Ebro, reviving a Spanish brand that had built lorries and tractors until the 1980s. The deal was signed in April 2024, and Ebro-badged SUVs based on Chery designs have been assembled there since the end of that year, at first largely from kits shipped from China. The plant has been rehiring former Nissan workers, but Chery-branded production has been repeatedly delayed; in May 2026 Ebro said the first Chery model would come off the line between late 2026 and early 2027. In Navarra, the energy-storage firm Hithium signed a commitment in Beijing on 15 April 2026, in Sánchez’s presence, to invest about €405m in a plant at Esquíroz, near Pamplona, on the site of a former BSH appliance factory, with around 700 jobs and production pencilled in for 2027. In Extremadura, AESC, the battery maker controlled by China’s Envision, is still awaiting environmental approval for a gigafactory at Navalmoral de la Mata, where cell production is now planned for late 2028.

Victor Cortizo, a lawyer and academic who works on Sino-Spanish relations, put the Spanish view simply to the BBC: “Chinese companies are investing in car manufacturing in Spain, filling the gaps we had.” Critics see something else. Because the EU’s countervailing duties apply to cars made in China, they argue, plants in Spain risk becoming a route for Chinese firms to sidestep tariffs, especially when the work is mainly final assembly of imported components. The CSIS analysis made the point that Spain’s investment-screening rules are built around security and do not require local content or technology transfer, so the “conditions” Madrid says it attaches to Chinese money remain loosely defined.

The longest train in the world

Adler spoke to Cortizo among stacks of containers at the Madrid end of the Yiwu–Madrid rail service, often described as the longest freight route in the world. The first train left Yiwu, the small-commodities trading city south of Shanghai, on 18 November 2014 and pulled into the Abroñigal intermodal terminal in Madrid on 9 December, where the Spanish development minister, Ana Pastor, was waiting. It had covered about 13,000km in 21 days through Kazakhstan, Russia, Belarus, Poland, Germany and France, carrying thirty containers of Christmas goods, toys and stationery.

Because Europe’s railways are not built to one standard, containers had to be moved between wagons three times: from Chinese standard gauge to the broad Russian gauge at the Kazakh border, back to standard gauge on the Belarus–Poland border, and onto Spain’s wider Iberian gauge at the French frontier. The service grew out of China–Europe routes such as Chongqing to Duisburg and was soon folded into the Belt and Road story. Westbound wagons carry electrical goods and car parts; eastbound ones carry wine, olive oil and cured ham. The route has never rivalled the sea for volume, and the war in Ukraine complicated transit through Russia and Belarus, but it has survived. Spanish trade press in 2025 described a service of roughly two trains a week, with Madrid’s rail freight activity gradually moving from Abroñigal to a new hub at Vicálvaro.

Why Madrid reads China differently

Spain’s reasoning starts with economics. It wants factories, particularly in regions such as Aragón, Navarra and Extremadura, and it has cheap, abundant renewable electricity to offer. It has fewer firms that compete head-on with Chinese exporters than Germany or France, and more that hope to sell to Chinese consumers, from pig farmers to winemakers. Its choice in the electric-vehicle dispute showed how those interests pull. Spain supported the Commission’s anti-subsidy investigation; then, in September 2024, standing in Kunshan, Sánchez said the EU should “reconsider” the tariffs and that “we don’t need another trade war”. In the decisive vote on 4 October, ten member states backed duties of up to 35.3%, five opposed them, Germany and Hungary among them, and twelve, including Spain, abstained. The tariffs went ahead. The pork investigation, opened in the meantime, made the stakes for Spanish farmers plain.

The second strand is the United States. At NATO’s 2025 summit Spain alone declined to commit to the new target of 5% of GDP for defence, insisting that 2.1% was enough. In March 2026, after Foreign Minister José Manuel Albares said the jointly operated bases at Rota and Morón could not be used for strikes on Iran outside the UN Charter, Donald Trump told reporters in the Oval Office: “We’re going to cut off all trade with Spain.” Because the EU negotiates trade for its members, the threat was hard to execute, but it left a mark. Pew Research Center surveys published in summer 2026 found that only 30% of Spaniards had a favourable view of the US, while 54% had a favourable view of China, up 17 points in a year and the first net-positive reading since 2011. The share of Spaniards calling the US a reliable partner fell from 68% in 2022 to 31%. Italy showed a similar shift towards China, so Spain is an extreme case of a broader European mood rather than an outlier.

Spanish analysts add a third point: that the country is diversifying rather than choosing sides. Miguel Otero of the Elcano Royal Institute told the BBC that France, Italy and Germany “all have their own strategic relationship with China” and that Spain “has been catching up with them”, while also courting Canada, Brazil, India and Africa. Madrid was among the strongest backers of the EU’s trade agreement with the Mercosur countries, and its sense of itself as Europe’s bridge to Latin America, a region where China is now a leading trading partner, colours its view of a multipolar world. Cortizo’s version, to the BBC, was blunter: “Realpolitik is a thing.”

The view from Paris, Berlin and Brussels

The EU’s own line on China has hardened in stages. In 2019 the Commission described China as at once a partner, an economic competitor and a “systemic rival”. In March 2023 Ursula von der Leyen called for “de-risking, not decoupling”. Since then Brussels has built a toolkit: a Foreign Subsidies Regulation that lets it investigate state-backed bidders, an International Procurement Instrument used in 2025 to limit Chinese firms’ access to EU medical-device tenders, the anti-subsidy case on electric cars, and an Anti-Coercion Instrument that has never been used. In March 2026 it proposed an Industrial Accelerator Act to steer public money towards goods “made in Europe”.

The driver is the deficit. The EU’s goods deficit with China reached €360.6bn in 2025, 15% more than in 2024, and widened again in the first half of 2026, which is roughly the “€1bn a day” figure that the Commission and Emmanuel Macron have both used. European industry fears a “second China shock” as China’s surplus industrial capacity looks for buyers abroad, with Chinese carmakers such as BYD now competing hard in Europe. The trade commissioner, Maroš Šefčovič, has asked Beijing for initial steps by early October 2026.

What is new is that Germany has moved. In 2024 Berlin voted against the EV tariffs to protect its carmakers’ sales in China. In July 2026 Macron and Chancellor Friedrich Merz promised a joint “roadmap” on Chinese trade practices, and by late September, according to Noah Barkin of Rhodium Group, their officials were finalising a paper urging the Commission to build an instrument that could, in one official’s words, “cut China off from the European market within 24 hours”, perhaps by making the Anti-Coercion Instrument easier to trigger. Spain’s position has been more ambiguous. It co-signed a French paper on trade defence in May 2026, along with Italy, the Netherlands and Lithuania, then distanced itself days later; its economy minister, Carlos Cuerpo, said the text had only technical, not political, backing, and that Europe must “engage in dialogue as equals with China and the United States”.

Other capitals have their own reasons for caution. The Baltic states and Poland watch China through the lens of Russia. Beijing denies helping Moscow’s war in Ukraine, but, as the BBC notes, defence experts point to Chinese technology and economic support that have helped Russia sustain it. Lithuania endured a Chinese trade boycott after allowing a Taiwanese representative office in Vilnius in 2021. The Netherlands and Sweden have become markedly more cautious over the past decade. Their concern is not so much that Spain trades with China, which they all do, as that bilateral courtship makes a common EU line harder to hold.

The security question

Security is where Spain’s critics are sharpest. In July 2025 the Spanish outlet The Objective reported that the Interior Ministry was paying about €12.3m for Huawei equipment used to store judicially authorised police wiretaps in the SITEL system. Huawei, whose fascination with Europe extends to a mock-European research campus in Dongguan, said the product was standard flash storage hardware and that it had no access to customer data; the ministry said the equipment was bought through Spanish suppliers. MEPs were not reassured. “We risk poisoning the well of European intelligence sharing,” the Czech Pirate MEP Markéta Gregorová said, as quoted by the BBC. Spain has since cancelled several Huawei-related contracts, and the Commission has proposed phasing high-risk suppliers out of critical networks.

On his April 2026 trip, according to the BBC, Sánchez also met the founder of Ming Yang, the Chinese wind-turbine maker whose plan for a £1.5bn factory at Ardersier, near Inverness, had just been blocked by the British government on security grounds. Julianne Smith, a former US ambassador to NATO, told the BBC that Spain’s deepening relationship with China “could further derail the EU’s ability to speak with one voice and create added security vulnerabilities for both Spain and wider Europe”. In May 2026 the US ambassador in Madrid, Benjamin León, urged Spain to keep China out of data, defence and telecommunications.

A friendly door into Europe

Beijing’s view is easy to read. Chinese state media present Spain as proof that Europe can choose pragmatism. A Global Times interview published during Sánchez’s April visit described Spain as able to “play an important role as a bridge between Europe and China”. That role used to belong to Hungary, where Viktor Orbán welcomed BYD and CATL plants and often blocked EU criticism of Beijing. In April 2026, Orbán lost power to Péter Magyar’s Tisza party, which won 141 of 199 seats. Magyar has said Chinese investment remains welcome on condition that it follows Hungarian and EU rules, and existing projects are not expected to be cancelled, but Budapest is no longer likely to act as Beijing’s veto in Brussels. Cortizo told the BBC that Spain could become China’s preferred European destination for investment. That is a prediction, not yet a fact, but it is the role Beijing seems to be offering.

Europe’s age of mini-lateralism

Adler places Spain within a wider pattern of member states picking partners to suit national needs as confidence in Washington falls: Finland buying Israeli air defences, Greece signing its “Achilles Shield” deal with Israel. Small groupings are not new, but the BBC reports fears in NATO and the EU that “rampant ‘mini-lateralism'” helps Europe’s adversaries. Spain’s China policy is the clearest economic example.

What to watch

Several tests are close. Šefčovič’s October deadline and the European Council’s discussion of China will show whether the Franco-German push becomes a real instrument, and whether Spain votes with it, abstains or opposes. The Industrial Accelerator Act will decide whether a Leapmotor built in Zaragoza or a battery made at Figueruelas counts as “made in Europe”; Spain’s proposal for a tiered system of preference is one to follow. On the ground, the first cells from Figueruelas, the first Chery from the Zona Franca and Hithium’s permits in Navarra will show how much of the announced investment turns into lasting industry. And pork, Huawei and the next Pew survey will show whether Spain can keep its friendship with Beijing without paying for it in Brussels or Washington. Four centuries after Pantoja reached the Ming court, Spain is again betting that it can stand between China and the rest of Europe.

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