Spain’s Pragmatic Approach to Chinese Technology: Balancing Opportunities and Risks

By Mario Esteban and Miguel Otero Iglesias

Key Takeaways

• Selective Engagement with Chinese Technology: Spain is strategically limiting Chinese suppliers in sensitive areas like 5G core networks while continuing to utilize them in sectors such as radio access, photovoltaics, and energy storage. The country is also attracting investments in electric vehicles (EVs) and batteries under specific industrial conditions.

• Chinese Investment as a Tool for Industrial Upgrading: Initiatives like the CATL gigafactory in Zaragoza and the Chery–Ebro joint venture in Barcelona are aimed at localizing production, creating jobs, and supporting Spain’s green transition rather than outright exclusion of Chinese investment.

• Shaping a Pragmatic EU-China Policy: Spain is advocating for a European approach that emphasizes risk management over outright bans, aiming to combine openness, resilience, and industrial goals in its dealings with China.

Institutionalizing Technology Relations Amid Growing Strategic Awareness

China’s rise as a technological powerhouse is reshaping discussions across Europe regarding de-risking, technological sovereignty, and strategic dependencies. For Spain, the challenge lies not just in reducing vulnerabilities but also in leveraging engagement with China to bolster industrial modernization and facilitate the green transition. Over the past decade, Spain’s scientific and technological collaboration with China has become more structured, supported by intergovernmental agreements and political dialogues reaffirmed through Joint Commissions on Scientific and Technological Cooperation.

Recent agreements, including those between Spain’s State Research Agency (AEI) and China’s National Natural Science Foundation (NSFC), have laid the groundwork for cooperation in areas like green growth, health technologies, and digital trade. The Spain–China Action Plan for 2025–2028 emphasizes innovation, advanced technologies, and researcher mobility as key pillars of this partnership.

Cooperation takes various forms, including bilateral R&D funding programs like CHINEKA, which supports applied, market-oriented projects involving firms, research centers, and universities. The 7th CHINEKA Joint Call for 2025–2026 targets sustainable cities, clean technologies, advanced materials, and biomedicine, with significant funding from both sides.

Academic collaboration is thriving through joint projects, co-publications, and mobility schemes involving institutions such as the CSIC and the Chinese Academy of Sciences. Company-level cooperation has expanded, particularly in sectors where Chinese firms have a competitive edge, aligning with shared priorities in renewable energy, green technologies, and advanced materials.

Spain’s perception of China has evolved. While still viewed as a valuable innovation partner, there is a growing awareness of risks related to dependence and security, mirroring broader EU discussions. Spain’s pragmatic approach reflects its historical reliance on technology diffusion, seeing China’s rise as a blend of opportunity and vulnerability.

Public sentiment reinforces this dynamic. Chinese technology products are popular in Spain, with Xiaomi holding over 30% of the smartphone market and Chinese car sales surpassing 100,000 units in 2025, particularly in the electric vehicle sector.

Key Case Studies: 5G, Photovoltaics, EVs, and Batteries

Spain’s management of opportunities and risks from China’s technological rise is best illustrated in three sectors: 5G, photovoltaic energy, and electric vehicles and batteries.

5G Networks: Risk Management Rather Than Formal Exclusion

Spain’s approach to Chinese involvement in 5G networks emphasizes incremental risk management instead of outright exclusion. Major telecom operators have effectively excluded Huawei from 5G core networks by early 2026, reflecting heightened security concerns, while still deploying Huawei equipment in less sensitive radio access networks.

This differentiated strategy prioritizes core security while maintaining cost efficiency in less critical areas. However, it raises long-term concerns about vendor lock-in and strategic autonomy. Spain applies the EU’s 5G Security Toolbox through a risk-based approach, considering technical factors and governance structures, which often categorize Chinese suppliers as high-risk. Nevertheless, Spain has avoided legally binding bans, opting instead for guidance and operator-led adjustments.

As the European Commission moves toward mandatory EU-wide derisking of high-risk suppliers, Spain has shown reluctance to support explicit bans, citing proportionality and costs, while also aiming to avoid political tensions that could affect cooperation in other strategic sectors.

Photovoltaic Power and Grid-Scale Storage: Driven by Deployment Needs

In contrast to 5G, Spain’s engagement with China in photovoltaic energy is primarily driven by deployment needs and cost efficiency. Chinese firms dominate key equipment segments, particularly inverters and energy management systems. Companies like Huawei and Sungrow accounted for over half of global solar inverter shipments in 2023, a trend reflected in Spain’s large photovoltaic installations.

While concerns about dependence exist, they are not as pronounced. The EU has begun exploring cybersecurity risks linked to reliance on a few inverter suppliers, but in Spain, discussions focus more on rapid deployment and industrial competitiveness than on supply-chain security. This creates potential critical dependencies in inverters and long-term maintenance of energy infrastructure, yet Spain’s discourse remains less securitized compared to the EU’s emerging economic-security framing.

Electric Vehicles and Batteries: Industrial Priority and Vulnerability

The automotive transition is a prominent manifestation of China’s technological rise in Spain. Electric mobility represents both an industrial priority and a vulnerability, as Spain seeks to maintain its status as a major European vehicle producer amid China’s dominance in EV supply chains.

China’s advantages in battery technology, raw material control, and competitive EV models have led to rapid market expansion in Spain, particularly in the battery electric vehicle (BEV) segment, where Chinese brands account for over 20% of sales. Investment is a critical aspect of this dynamic, with Spain positioning itself as a hub for battery and EV manufacturing, leveraging EU recovery funds and the PERTE program.

The CATL gigafactory in Zaragoza, in collaboration with Stellantis, aims to strengthen Spain’s role in battery production while deepening reliance on Chinese technology. The Chery–Ebro joint venture in Barcelona, linked to the former Nissan plant, exemplifies Spain’s strategy to localize production, create jobs, and facilitate technology transfer, albeit with informal commitments due to a lack of strong legal frameworks.

Spain’s approach foreshadows a broader European strategy: neither excluding Chinese investment nor accepting it on purely market terms, but embedding it within industrial and governance frameworks.

Policy Adjustment: A Pragmatic Stance Towards China

Spain’s strategy remains rooted in economic pragmatism, increasingly attentive to risk. Unlike more security-focused EU member states, Spain views Chinese technology and investment as vital for industrial modernization and the green transition. Its approach is characterized by managing duality rather than reversing engagement.

Currently, Spain lacks a comprehensive national strategy towards China. Instead, policy is evolving through incremental shifts influenced by EU de-risking discussions, while official rhetoric continues to emphasize partnership and opportunity. Concepts like resilience and technological sovereignty are gaining traction, indicating a recognition that some cooperation requires differentiated governance.

Spain broadly aligns with the EU’s de-risking framework, focusing on risk management rather than decoupling. The most significant policy evolution has been in investment screening, with Spain expanding its ability to review foreign investments in strategic sectors since 2020. While these mechanisms are country-neutral, they are increasingly relevant for Chinese investments in green and digital sectors.

Spain applies screening selectively, treating it as a risk-management tool rather than a presumption against Chinese capital. This is particularly evident in sectors like batteries, EVs, and renewables, where Chinese firms often lead in competitiveness.

On export controls, Spain has implemented national measures covering specific dual-use technologies that exceed the EU’s common control list. This includes an autonomous national control list, subjecting certain technologies to licensing requirements.

Research cooperation remains one of the most open areas of Spain–China relations. While awareness of dual-use risks is growing, Spain lacks a consolidated research security framework, leaving institutions to manage risks individually.

Alongside defensive measures, Spain actively pursues selective investment attraction. The Chery–Ebro project illustrates an effort to tie Chinese investment to localization and employment goals through informal mechanisms. If successful, this model could help balance green-transition needs with dependency risks.

Outlook: Shaping an EU-China Policy

Spain’s engagement with China encapsulates a broader European dilemma: how to harness cooperation and investment without deepening dependency. Projects like the CATL gigafactory and the Chery–Ebro joint venture reflect Spain’s preference for managing Chinese industrial presence rather than excluding it.

As EU-level discussions intensify regarding high-risk suppliers and clean-tech dependencies, Spain’s current trajectory aligns with the EU’s de-risking rhetoric. However, a more stringent EU stance could force Spain to navigate difficult trade-offs between investment attraction and security concerns.

Given the stakes for Spain’s industrial base, particularly in the automotive sector, Madrid is unlikely to adopt a passive approach. Instead, Spain may seek to shape an EU-China policy that allows for continued investment and cooperation while bolstering resilience in critical technologies.

This article was originally published as a chapter in the report Fragmented Europe: Dealing with China as a Technology and Innovation Power, by the European Think-tank Network on China (ETNC), published in June 2026 by Ifri, the Elcano Royal Institute, and MERICS.