The European Commission is preparing to revise public procurement rules to allow member state governments and local authorities to prioritize European companies in public contracts and legally exclude companies from third countries (mainly China) that do not open their public procurement markets. This move aims to reduce the EU’s dependence on China, mitigate the impact of Chinese goods flooding European industries, and consequently shrink the substantial trade deficit.
The draft proposal is expected to be announced on Wednesday (September 9). Public procurement accounts for about 14% to 15% of the EU’s GDP (approximately 2 to 2.5 trillion euros). While the new rules will not set mandatory percentage requirements or mandate excluding bidders from other countries, they will provide clear legal grounds for authorities to give preference to European companies.
An EU official mentioned that this public procurement provision may not apply to trade partners who have already opened their public procurement markets, with the UK and the European Economic Area (EEA) expected to remain unaffected.
According to data released by Eurostat earlier this year, the EU’s trade deficit with China in goods reached around 360 billion euros (about 418 billion dollars) in 2025, equivalent to a deficit of nearly 1 billion euros (approximately 1.16 billion dollars) per day.
This trade deficit trend is also reflected in Germany. In 2025, Germany’s trade deficit with its largest trading partner, China, reached 89.3 billion euros (approximately 104 billion dollars), primarily due to an 8.8% increase in imports and a 9.7% decline in exports.
A report by the Organization for Economic Cooperation and Development (OECD) in June this year pointed out that Chinese manufacturers receive government subsidies that are 3 to 8 times higher than their OECD counterparts (measured by revenue ratio), contributing to nearly 60% of China’s global market share growth.
Despite continuous denials from the Chinese Communist Party about unfair subsidies and currency manipulation practices, the Federation of German Industries (BDI) estimates that due to the dual impact of the renminbi exchange rate and Chinese subsidy policies, Chinese product prices could be about 30% to 40% lower than German products.
Wolfgang Niedermark, a BDI executive committee member, stated that “the significant price pressure from Chinese suppliers is escalating the situation,” emphasizing that Europe should not be subject to potential countermeasures.
Oliver Blume, CEO of Volkswagen, has called for the establishment of a “fair competitive environment” in Europe, proposing tariffs on Chinese plug-in hybrid cars and implementing “European Manufacturing” rules to increase the share of European-made components.
Christian Bruch, CEO of Siemens Energy, bluntly stated that treating Chinese imported products on par with European products is “unacceptable,” and urged considering regulations and local content quotas.
The Italian Machine Tool Manufacturers’ Association (UCIMU-SISTEMI PER PRODURRE) also advocates for applying the same technical and safety standards regulations to Chinese imported machinery as to European manufacturers to ensure fair competition. They also hope that the EU can address the issue of Chinese machine tool exports within the bloc.
This amendment differs from the Industrial Accelerator Act proposed in March this year, which focuses on strategic industries like steel, cement, aluminum, electric vehicles, and net-zero technology, setting requirements for “European manufacturing” content and low carbon, effectively excluding countries without relevant agreements.
The Financial Times analysis suggests that this move may further escalate tensions between Europe and China and prompt trade partners such as Canada and Japan to lobby for exemptions.
Currently, the public procurement rules still need to be approved by the European Parliament and Council, so adjustments to the content are possible. Additionally, the EU already has tools such as the Foreign Subsidy Regulation (FSR), anti-dumping, anti-subsidy investigations, and the International Procurement Instrument (IPI), gradually advancing a “risk mitigation” policy towards Chinese goods.