Spain-China Relations Deepen Amid Sánchez’s Visit to Beijing

• Spain is deepening engagement with China despite structural imbalances, with Sánchez’s April 2026 visit institutionalizing bilateral dialogue and expanding cooperation in investment, agrifood, and industrial sectors, even as a large trade deficit persists.
• Economic ties remain asymmetric but strategically significant, with Chinese investment flowing into Spain’s clean-tech and manufacturing sectors, while Spanish investment in China stays limited, reflecting regulatory constraints and a market-focused rather than capital-intensive approach.
• Spain is pursuing a pragmatic middle-ground within the EU, balancing commercial opportunities with growing regulatory and geopolitical risks, as pressure from the European Union and the United States intensifies over supply chains, technology exposure, and trade policy alignment.

Spanish Prime Minister Pedro Sánchez’s fourth visit to China in four years, concluded on April 15, 2026, institutionalized a bilateral dialogue that now stands apart from Germany’s and France’s more confrontational postures.

For European and Spanish companies, the meeting confirmed Madrid as the preferred European Union landing zone for Chinese clean-tech capital, but left unresolved a EUR 42 billion (US$49.5 billion) trade deficit, contested investment-screening rules, and mounting pressure from the EU and the United States on the commercial relationship.

Spain-China relations entered an inflection point on April 14, 2026, when Sánchez and Xi agreed at the Great Hall of the People to establish a Permanent Strategic Dialogue and concluded roughly 19 bilateral agreements spanning investment, education, agrifood, and technology. This upgrade builds on a broader trajectory in which Spain has emerged as one of China’s most visible political counterparts within the EU and has attracted one of the largest shares of Chinese foreign direct investment (FDI) in Europe in 2024, driven by major clean-tech and industrial projects, and adopted a notably softer stance on EU trade defense measures than Germany, France, or Italy.

For companies with exposure to Spain or China, the significance of the visit lies less in its diplomatic choreography than in what it signals about market access, capital flows, and regulatory risk over the next two to three years.

Spain-China Relations at a Glance

Key outcomes from Sánchez’s visit to China

The April 2026 visit, Sánchez’s first with full “official visit” protocol status, unfolded against a backdrop of US Section 301 and Section 232 investigations targeting the EU, escalating tensions in the Gulf, and a public rupture between Spain and the US over base access.

Sánchez used a Tsinghua University address on April 13 to call on China to “open up so that Europe does not have to close itself off,” describing a deficit that “grew by a further 18 percent last year alone” as “unsustainable.” On April 14, Xi told Sánchez that China and Spain should “reject any backslide into the law of the jungle” and “safeguard the United Nations-centered international system,” language that Chinese Ministry of Foreign Affairs readouts framed as a response to unilateral tariff actions.

The substantive deliverables were concentrated in three areas:

• First, the two governments moved to finalize a High Quality Investment Agreement, which would condition Chinese investments on technology transfer to Spanish firms, local supplier contracts, and regional employment creation.
• Second, a regionalization protocol for Spanish poultry exports (following the template used for pork) partially insulated bilateral agrifood flows from future avian influenza outbreaks.
• Third, Spain’s Foreign Minister José Manuel Albares and China’s Foreign Minister Wang Yi signed a Strategic Diplomatic Dialogue Mechanism, institutionalizing high-level political contact between summits.

Spain-China trade relations

Bilateral goods trade between China and Spain reached over US$55 billion in 2025, up from roughly US$52 billion in 2024, with Spain’s imports from China exceeding its exports and thus driving a widening trade imbalance. China is estimated to account for roughly three-quarters of Spain’s external merchandise deficit, a gap that policymakers increasingly view as economically unsustainable

The composition of the deficit mirrors the EU-wide pattern. Machinery and transport equipment, consumer electronics, textiles, and increasingly electric vehicles (EVs) and batteries dominate Chinese sales into Spain. By July 2025, BYD plug-in hybrids had become the best-selling vehicles in Spain, capturing roughly 10 percent of the market. On the export side, Spain is China’s largest EU pork supplier (approximately EUR 1.1 billion, or US$1.29 billion, in 2024), alongside copper concentrates, chemicals, olive oil, and wine.

Two specific trade frictions frame the commercial environment. In December 2025, China’s Ministry of Commerce (MOFCOM) imposed final anti-dumping duties of 4.9 to 19.8 percent for five years on EU pork, with most Spanish firms facing a 9.8 percent rate. The final duties were materially below the September 2025 provisional deposits (15.6-62.4 percent), a softening that Spanish officials privately attribute to Sánchez’s April 2025 visit. Separately, Spain abstained from the October 2024 Council vote imposing countervailing duties of up to 45 percent on Chinese EVs.

Bilateral investment

Two-way investment ties between Spain and China have expanded steadily in recent years, with combined investment stock estimated at approximately EUR 11 billion (US$12 billion) as of April 2026.

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While still modest relative to Spain’s global investment footprint, bilateral capital flows are increasingly concentrated in strategic sectors such as clean energy, advanced manufacturing, and industrial technology. Against the backdrop of a persistent trade imbalance, Spain has sought to deepen economic engagement with China by encouraging investment in high-value industries, including petrochemicals, advanced materials, and green industrial supply chains.

Where Chinese investment is landing in Spain

Chinese companies committed roughly EUR 4.2 billion (US$4.6 billion) in investment in Spain in 2024, one of the largest single-country totals in the EU, according to the Rhodium Group–MERICS Chinese FDI Monitor. Flows normalized to EUR 643 million (US$700 million) in 2025 following major gigafactory announcements, while cumulative investment stock since 2010 stands at approximately EUR 9.7 billion (US$10.6 billion).

Investment activity is heavily concentrated in the green-industrial value chain:

• CATL-Stellantis joint venture, Zaragoza: A 50:50 EUR 4.1 billion (US$4.5 billion) LFP gigafactory announced in December 2024, with construction beginning in November 2025 and a target capacity of 50 GWh by 2028.
• Envision AESC, Extremadura: A 30 GWh LFP facility supported by approximately EUR 300 million (US$327 million) in Spanish public incentives, with total investment expected to reach EUR 2.5 billion (US$2.7 billion).
• Chery-EV Motors joint venture, Barcelona: A EUR 400 million (US$436 million) project at the former Nissan Zona Franca plant, producing the Ebro-branded S700 SUV since November 2024 and targeting annual output of 150,000 vehicles by 2029.
• Hygreen Energy, Andalusia: A EUR 2 billion (US$2.2 billion) project combining electrolyzer manufacturing in Málaga with hydrogen production in Huelva.
• COSCO Shipping Ports: Holds a controlling 51 percent stake in Noatum Ports, Spain’s largest container operator, with operations spanning Valencia (4.8 million TEU), Bilbao, and inland logistics hubs in Zaragoza and Madrid.

Spanish investment into China

Spanish outward investment into China remains comparatively limited. Available estimates place Spanish investment stock in China at approximately EUR 5.6 billion (US$6.1 billion), according to Spanish government data, but annual flows remain volatile and often minimal, reflecting structural constraints, regulatory complexity, and shifting corporate strategies. Rather than pursuing large-scale capital expansion, Spanish firms have tended to adopt a more selective approach to the Chinese market, prioritizing commercial presence, partnerships, and supply chain integration over significant new capital commitments.

Despite relatively modest investment volumes, more than 400 Spanish companies are estimated to maintain operations in China, underscoring the market’s continued strategic importance. These include major multinational firms such as Inditex, Gestamp, BBVA, Banco Santander, Iberdrola, Acciona, Talgo, and Roca. For these companies, China functions less as a primary destination for outward investment and more as a key market for revenue generation, manufacturing integration, and long-term positioning within global value chains.

Spain’s position within the European Union on China

Spain’s positioning within the EU’s “partner, competitor, systemic rival” framework remains distinctive but aligned with broader EU policy. Analysts at the Real Instituto Elcano note that Spain’s relatively lower exposure to China, compared to Germany’s automotive sector or France’s luxury exports, has enabled a more balanced and less politically charged approach. This is consistent with broader data showing that China accounts for only a small share of Spain’s outward foreign direct investment, estimated at around 0.7 percent of total flows, underscoring Spain’s limited economic dependency on the Chinese market.

Differences with other major EU economies are more evident in tone than in substance. Germany has maintained a more assertive stance on industrial overcapacity and market access, while France has emphasized geopolitical coordination and economic rebalancing.

By contrast, Sánchez has positioned Spain as a pragmatic interlocutor between the EU and China, avoiding the characterization of Chinese industrial policies as a systemic threat. This approach reflects clear commercial priorities: Spain remains the EU’s largest pork exporter to China, while also emerging as a leading destination for Chinese investment in EVs, batteries, and renewable energy.

Regulatory and geopolitical risks

Spain’s engagement strategy is increasingly subject to scrutiny from both the European Union and the US. Analysts warn that Chinese electric vehicle manufacturing in Europe could function as a mechanism for tariff circumvention if local value-added remains limited, an issue that may trigger additional EU trade defense measures.

Supply chain exposure remains a structural concern. Data from the Bank of Spain and EU institutions indicate that Chinese inputs account for approximately 80 percent of pharmaceutical, 60 percent of IT and electronics, and 40 percent of chemical sector dependencies, with limited evidence of near-term diversification.

Several assets have drawn particular attention. COSCO’s controlling stake in Noatum Ports, including Valencia, the Mediterranean’s largest container hub, has raised concerns within European institutions regarding potential strategic leverage. In parallel, a EUR 12.3 million (US$13.4 million) contract awarded to Huawei between 2021 and 2025 to manage judicially authorized data storage has prompted calls from United States policymakers to reassess intelligence-sharing arrangements.

Pressure from the US has intensified alongside these concerns. US officials have warned that closer economic alignment with China could carry strategic risks, reflecting broader transatlantic concerns over supply chain security and technological dependence.

By attracting significant Chinese investment into high-value industrial sectors, Spain is positioning itself as an important node in global value chains, while Spanish firms in China continue to prioritize market access and operational integration. Looking ahead, there is meaningful scope to deepen this relationship through increased Spanish investment on the ground in China, particularly in sectors linked to innovation and green transformation. This would help reinforce a more reciprocal and sustainable bilateral framework, with Sánchez’s April 2026 visit to Beijing and the establishment of a permanent strategic dialogue providing greater visibility and practical channels for advancing bilateral investment and commercial cooperation. – Patricia Aranguren Moliner, Assistant Manager in the International Business Advisory team at Dezan Shira & Associates’ Europe Desk

Outlook: What businesses should watch

Spain-China relations are unlikely to deliver either a clean break or a genuine rebalancing in short term. The more plausible trajectory is anchored engagement: continued Chinese greenfield FDI into the Spanish clean-tech complex, incremental expansion of Spanish agrifood access, and a growing trade deficit that Madrid publicly labels unsustainable but has few unilateral tools to compress.

Four inflection points will shape the operating environment:

• The European Commission’s decisions on EV price undertakings and potential extension of countervailing duties to plug-in hybrids will determine whether Madrid’s Chinese FDI pipeline faces tightening Brussels scrutiny.
• The rollout of China’s 15th Five-Year Plan will reshape competitive pressure on Spanish industrial incumbents.
• The outcome of US Section 301 and 232 investigations against the EU will determine how much transatlantic cover Madrid retains.
• Finally, the practical implementation of the High Quality Investment Agreement, particularly whether technology transfer and local content commitments become enforceable, will decide whether Spain’s distinctive posture produces durable industrial gains or accelerates a new form of dependency.

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For companies with Spanish or Chinese exposure, the operational implications are concrete. Firms positioning for Chinese market access in agrifood, cosmetics, and selected industrial categories should expect incremental protocol openings rather than broad liberalization. Companies dependent on Chinese inputs should anticipate greater Brussels-level compliance burden even as bilateral flows grow.

And investors evaluating Spanish greenfield exposure in EV, battery, and renewables value chains should factor in both the tailwind of national industrial policy and the headwind of eventual EU anti-circumvention or economic-security intervention.

Sánchez’s own summation captured the underlying tension. A relationship now ‘much closer, much healthier, much more balanced’ in Moncloa’s framing remains, by his own admission, defined by a deficit that cannot continue on its current trajectory. The political upgrade is real; the commercial rebalancing has yet to begin.

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