China’s Economic Roadmap for 2026 and What It Means for Europe
This article was originally published in Italian in Panorama on April 2nd 2026.
Please note that this is a courtesy translation of the Italian language article originally published in the Panorama Magazine Issue at:
https://www.panorama.it/attualita/economia/la-roadmap-economica-cinese-per-il-2026-e-il-suo-significato-per-leuropa
On 5 March 2026, China released its Work Report 2026—Beijing’s policy roadmap for the year and, more importantly, a prelude to the forthcoming 15th Five-Year Plan, which will shape the country’s development trajectory through 2030. For Europe, the document arrives amid growing unease about the future of its economic relationship with China.
European business confidence has been sliding for years, hitting a low in 2025. According to the European Chamber’s latest Business Confidence Survey, 73% of respondents reported a more challenging business environment in China. Only 12% expressed optimism about their short- and medium-term profitability, and just 29% about future growth.
Trade dynamics reinforce those concerns. The EU’s trade deficit with China reached roughly €400 billion in 2025. At the same time, Europe’s industrial base has gradually eroded. Manufacturing accounted for 20% of EU GDP in 1990; by 2024, it had fallen to 14%. Certain sectors clearly illustrate the trend. Between 2000 and 2020, Europe’s annual car production fell by five million units while China’s output surged by 25 million vehicles. The European steel industry, meanwhile, has lost around 30% of its capacity and 100,000 jobs since 2008—just as demand may rise again amid higher defence spending.
Against this backdrop, it should come as no surprise to China that the EU is placing more emphasising securing its own industrial future. In early March, the European Commission introduced the “Industrial Accelerator Act”, which aims to restore the manufacturing share of EU GDP to 20% by 2035 and includes several measures to incentivise manufacturing within the EU.
China’s Work Report 2026 contains several positive signs.
First, China’s economic slowdown, which was the top issue reported by European Chamber members in 2025, is interlinked with underlying structural issues, such as unhealthy, unsustainable competition, that the government has pledged to continue addressing.
Second, the report calls to “boost imports to promote balanced trade”. This is a signal that China has taken into consideration concerns held by its key trading partners, including the European Union, about persistent trade imbalances and that it intends to take measures to address this issue.
Third, the report is calling for the protection of national treatment of FIEs, which has now been included in government work reports for five consecutive years. This year’s report notes that “a new Catalogue of Encouraged Industries for Foreign Investment will be implemented.” It is a welcome development, although further details about its implementation will be necessary.
Yet there are also reasons for caution. The report explicitly encourages foreign-invested enterprises to expand production within China. Many European companies are already deeply embedded in the country’s manufacturing ecosystem and continue to invest there. But such decisions should ultimately be driven by commercial logic.
Increasingly, European firms report that localisation pressures—whether formal requirements or implicit incentives tied to procurement access and regulatory treatment—are influencing investment choices. Policies that nudge companies to localise production risk distorting business decisions rather than strengthening China’s attractiveness as an investment destination.
If China seeks to remain a magnet for global capital in an era of intensifying economic competition, the path forward is clear: openness, predictability, and a level playing field. Some signals in the Work Report point in that direction. What matters now is whether policy implementation follows suit.
By: Avv. Carlo D’Andrea, National Vice President of the European Union Chamber of Commerce in China and Chairman of the Board of the Shanghai Chapter, Founder and Managing Partner of D’Andrea & Partners Legal Counsel
