To preserve climate progress amid rising economic rivalry, the EU and China should anchor their relationship in structured industrial cooperation, particularly in the solar sector. Managing interdependence—rather than retreating from it—will be essential to sustaining joint decarbonization momentum.
This article is part of a series on “EU-China relations: Bound by Clean Tech or Divided by it?”. The articles reflect the opinions of their respective authors and should be read in the context of this series.
The EU Is Overshadowed by China’s Dominance in the Solar Industry
The EU’s inadequate climate action is frequently justified by pointing to allegedly insufficient Chinese ambition, as if European efforts were futile without stronger Chinese engagement. In reality, China has expanded renewable energy capacity so rapidly that its carbon dioxide emissions have recently begun to plateau, with China having installed in the first half of 2025 more than twice as much photovoltaics (PV) capacity as Germany has deployed over the past twenty‑five years.
The EU has ceded industrial leadership in solar manufacturing to China.
The EU – and Germany in particular – once played a pioneering role through the Renewable Energy Sources Act and its feed‑in tariffs, which were crucial in driving the global diffusion and cost reduction of photovoltaic technology. Instead of building on this early‑mover advantage, however, it has subsequently ceded industrial leadership in solar manufacturing to China, which by 2023 accounted for around 98 percent of global solar PV wafer production. Although it manufactures “only” about 85 percent of the world’s solar PV panels, this dominance effectively gives China a decisive degree of control over the remainder of the solar supply chain.
Prospects for Cooperation Between the EU and China on PV Are Being Complicated
Against this background, it is not especially conducive to closer EU-China cooperation that a document published by the European Commission in December 2025 lists reliance on Chinese solar inverters as a risk both for the supply chain and from potential cybersecurity infiltration. While some critics in the EU now argue that the EU should phase out and exclude Chinese components from Connecting Europe Facility for Energy-funded projects, it should also not be forgotten that most parts of the solar sector present lower levels of risk, at least in this respect.
A more constructive approach would be to explore avenues for a complementary division of labor.
Without disregarding EU security concerns, this suggests that a more constructive approach would be to explore avenues for a complementary division of labor, particularly in those segments, such as wafers, cells and modules, where risks are lower.
EU-China Industrial Ties in PV Need to Be Strengthened
Initial steps in this direction are already evident. In summer 2025, under an agreement with the Austrian company Verbund Green Power, the Chinese PV company Trina Solar agreed to supply more than 700 MW of high‑efficiency modules for projects in Italy and Spain. In addition, the Chinese manufacturer Huasun and the Italian developer New Time have announced plans to jointly establish a 1 GW heterojunction–perovskite tandem solar production line in Italy by the end of this year.
Moreover, in December 2025, Trina Solar and Holosolis, a French startup founded in 2022, signed a cooperation agreement for a French gigafactory, identified by the French government as a “national interest” project and therefore eligible for state support. The plant is expected to reach an annual capacity of 5 GW of cells and modules and to create around 2,000 direct jobs. This agreement builds on the technological collaboration initiated in summer 2025, when Holosolis agreed to acquire a TOPCon patent license from Trina Solar. These developments also point towards another closely related dimension of cooperation.
New Pathways for Deeper EU-China Collaboration in PV Open Up
Ongoing advances in materials, smart grid technologies, and storage integration are likely to keep photovoltaic technologies a vibrant source of intellectual property for the foreseeable future. While Europe remains a comparatively small arena for PV patent filings, it is nonetheless an innovative one, with more than 300 European startups and universities seeking protection for PV inventions between 2010 and 2023.
Thanks not least to renowned research institutes such as the Fraunhofer Institute for Solar Energy Systems, Europe offers a strong IP portfolio that could be leveraged more effectively through appropriate licensing models. Against this backdrop, it is encouraging that China is stepping up efforts to strengthen the protection of intellectual property (IP) in the solar sector: in December 2025, China’s National Intellectual Property Administration and the Ministry of Industry and Information Technology unveiled a package of measures to reinforce IP protection in the PV industry.
A framework in which both sides respect and actively use each other’s IP could inject fresh dynamism into the sector.
A framework in which both sides respect and actively use each other’s IP could inject fresh dynamism into the sector – for example, by enabling new European technologies to be deployed at scale through partnerships with major state‑owned enterprises in China.
Beyond these efforts, recent changes in China’s fiscal policy towards solar exports are also likely to reshape the conditions for EU-China collaboration in manufacturing. China will eliminate value‑added tax export rebates for PV products from 1 April 2026. This move is likely to have repercussions across global markets, as Chinese manufacturers may raise prices to protect their margins. As a result, global project costs may increase, particularly in markets that are heavily dependent on Chinese imports. At the same time, the termination of these rebates could encourage some Chinese manufacturers to establish additional production facilities overseas, including in the EU.
The Playing Field for Chinese PV in Europe Is Changing
The EU has also recently published legislative changes that are likely to impact China-EU relations in the PV sector. The Net‑Zero Industry Act aims to enhance European manufacturing capacity for net‑zero technologies and their key components. Its goal is to manufacture at least 40 percent of the EU’s strategic net‑zero technology needs – including solar PV – within the EU by 2030. As a result, in public tenders and subsidy schemes, non‑price criteria (resilience, sustainability, responsible business conduct, etc.) are to be taken into account. These criteria make it more difficult for Chinese manufacturers to compete solely on the basis of very low module prices. They compound pre-existing pressures on leading Chinese photovoltaic manufacturers, which have recently reported substantial losses, driven by ongoing module price erosion, a silver price at an unprecedented all‑time high, and elevated inventory levels along the value chain.
As the EU has hardly enough capacity of its own in the short term – especially in the cell and wafer sector – it is therefore beneficial that, as outlined above, many Chinese PV companies are attempting to build “localized” value creation through joint ventures, production sites, or technology partnerships in the EU or in third countries with market access in order to be compatible with NZIA criteria.
A pragmatic mix of security safeguards, industrial policy, and cross‑border partnerships could help transform the relationship.
What It Takes to Transform the EU-China Relations
By better aligning China’s manufacturing capacity and technological scaling with Europe’s cutting‑edge innovation ecosystem and evolving sustainability and supply‑chain due‑diligence standards, global decarbonization could be significantly accelerated. A pragmatic mix of security safeguards, industrial policy, and cross‑border partnerships could help transform the relationship from one framed by vulnerability into one of mutual advantage.
