With the specifics of the 'Made in Europe' legislation still taking shape, Chinese investors were "pre-positioning themselves" in friendly countries to keep options open, according to Frank McCleary, partner at consultancy Arthur D. Little, which works with auto firms across the region.
As things stand, Spain requires investors from non-EU countries in critical infrastructure and technologies to provide a detailed picture of themselves and their planned investment.
The screening form, a public document reviewed by Reuters, includes questions on ownership structures, sources of financing, past investment, outcomes of previous screening processes, and regulatory or judicial penalties. Authorities also request a three-year business plan, details of management, and expected employment and investment commitments in Spain.
Specific commitments on employment, local content or sourcing, or technology transfer are set case-by-case with a view to wider economic benefits, a government source said.
"Spain is committed to attracting productive, high-value-added investment that fosters technological development, innovation, and quality employment while establishing long-term local roots and contributing to more secure and diversified supply chains," an economy ministry spokesperson said.
The government has also set up a Committee for Strategic Investments to assess such deals more closely, which it aims to launch in autumn.
Deals struck so far have included varying commitments.
CATL will bring up to 1,700 Chinese staff to construct its battery plant in Zaragoza but plans to hire and train 4,000 Spanish workers to operate it, the company said. Its investment agreement did not include commitments on local sourcing, but it intends to source over 70% EU content once at full capacity, they added.
In documents seen by Reuters, AESC Battery Spain, majority owned by China's Envision Group, committed to 40% European employment, 40% Spanish management, and worker training programmes for its plant in Extremadura by 2030. The documents did not include signatures but company sources confirmed they had been signed.
In Galicia, where SAIC will build its first European plant, a regional government spokesperson said matters of employment and sourcing were not in the agreement and would be left to the Made-In-Europe law to regulate.
However those new investment rules pan out, Spain's courting of Chinese firms will continue.
"This isn't about good versus bad," said Navarre region's Irujo, who in the past year has made five business trips to China, scoring a 400-million-euro ($460 million) investment from cathode maker Hithium in the process.
"We just want them to locate production in Europe."
($1 = 0.8681 euros)
Officials push for Made in Europe standards
"We are hugely worried for the future of industrial manufacturing in Europe because we are not competitive with China on any level," said Mikel Irujo, who heads business development for the northwestern region of Navarre.
He and other Spanish officials are pushing the EU to speed up passage of a 'Made in Europe' law mandating local content and employment, technology transfer, and limited asset ownership for foreign investors in strategic sectors.
Some regions have attached such conditions for major investments but for now there are no commonly agreed criteria, and details of specific deals often remain undisclosed.
"[The Made in Europe law] is fundamental. We can't be competing between member states - we need common norms for everyone," said Juan Jose Picazo of CCOO industry union in Valencia, where Chinese carmaker Geely signed a deal this week to take over unused factory space in a Ford plant.
Chinese companies deepen their presence in Spain's auto sector
Autonomous communities from Catalonia to Extremadura have declared an ambition to become China's "gateway to Europe", setting up offices in China and China-focused teams in Spain to court investors.
It is working. Carmakers SAIC, Chery and battery-makers CATL and AESC are building EVs and batteries in Spain, alone or in joint ventures with European firms. Some are revitalizing regions where car plant closures left gaping holes in the labour market. Others, including BYD and Hongqi, are eyeing sites.
Spain produces the second-largest number of cars in Europe after Germany, employing 600,000 people in the sector worth 10% of its GDP — but it lacks strong domestic brands, acting instead as a manufacturing base for foreign carmakers.
That has made the country more open to auto investment from China than Germany, where carmakers like Volkswagen VOWG.DE, struggling with overcapacity, have nonetheless dismissed the idea of Chinese competitors taking over plants.
Spain's "more open, pragmatic and accessible market than other European countries" appeals to Chinese firms, said Estela Li, head of KPMG Spain's China practice.
"It is evident the autos sector will change. Adapting will allow us to have many more years of production," Jorge Azcon, president of Aragon, told reporters in July of the approval of CATL and Stellantis' joint battery plant in his region.
Spain seeks Chinese auto investment while backing EU-wide rules
As Spanish regions jostle to draw Chinese battery and carmakers to produce on their turf, many of the same players are also pushing Brussels to lock in tough, EU-wide foreign investment rules to ensure Spain's economy isn't harmed by a race to the bottom.
The two-pronged approach highlights the fine balancing act for Europe in finding a strategy to deal with Chinese firms' surging imports and ambitions to expand European production without becoming a mere assembly site for Chinese technology.
The stakes will rise in coming weeks as European Union countries discuss hardening trade arrangements with Beijing.
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