2026-09-22 · equities

China supports automaker investments in Europe, minister says

Source Investing.com UK Equities

Spain's Ministry of Defence said on Aug. 11 that it does not oppose Chinese automaker SAIC Motor's plan to build an auto plant in the autonomous community of Galicia, with Defense Minister Margarita Robles going further by pledging to support the project when it comes before the cabinet for review. The statement signals that SAIC's first European vehicle plant has secured explicit backing from Spain's central government after weathering a security review controversy.

Under the plan, SAIC will invest 200 million euros (approximately $219 million) in the facility, with construction expected to begin next year and production slated for 2028. The plant will primarily manufacture new energy vehicles under the MG brand, with annual capacity of 120,000 units and the creation of approximately 1,000 jobs. The Galician regional government confirmed Robles' commitment, emphasizing that the Ministry of Defence participated in multiple rounds of negotiations with SAIC over the project in recent months and raised no security concerns during that process.

The Defense Ministry's position stands in sharp contrast to earlier internal assessments by Spain's intelligence services. According to Reuters, citing reports from Spanish newspapers El Mundo and El Pais, Spain's National Intelligence Center (CNI) had flagged security risks associated with the project in internal documents. The central point of contention was the site selection: the planned factory sits just 5 kilometers from the Port of Ferrol, a key naval base for F-100 frigates participating in NATO missions.

Military officials had worried that a Chinese automaker establishing a production base so close to a naval port could potentially collect sensitive information such as daily vessel movements. However, the Defense Ministry's latest statement indicates that after months of communication and assessment, defense authorities ultimately concluded the project does not pose an unacceptable security threat.

The ministry also disclosed that the project still requires formal approval from the cabinet and the Strategic Investment Committee, which will establish specific security requirements for the facility. This means that while the Defense Ministry has given a green light, SAIC's plant plan still faces administrative hurdles ahead.

Chinese Foreign Ministry spokesman Guo Jiakun responded at a regular press briefing on Aug. 12, noting that China has taken note of the positive statements from both Spain's central and regional governments. Guo said China is willing to continue deepening practical cooperation with Spain based on the principles of mutual respect and mutual benefit, and expressed hope that Spain will provide a fair, just, and non-discriminatory business environment for Chinese companies.

Chinese Automakers Flock to Spain

SAIC is not the only Chinese automaker establishing a presence in Spain. In recent years, as multiple traditional auto plants in Spain have closed or scaled back operations, the entry of Chinese automakers is injecting new vitality into local manufacturing.

Chery Automobile recently began producing the Omoda 5 model at the former Nissan plant in Barcelona, becoming a prime example of Chinese brands utilizing idle European production capacity. Leapmotor, meanwhile, is producing the B10 compact SUV at Stellantis' Zaragoza plant, leveraging the multinational automaker's existing production lines for localized manufacturing.

Note: SAIC project still pending approval from Spain's cabinet and Strategic Investment Committee.

These investments are generating significant economic ripple effects in parts of Spain's traditional industrial regions. Against the backdrop of aging auto plant closures, Chinese companies taking over idle capacity or building new facilities are preserving large numbers of manufacturing jobs locally, while also forcing the Spanish government to strike a balance between security reviews of Chinese investment and economic benefits.

Chinese Automakers Accelerate European Capacity Buildout

SAIC's Spanish plant plan is a microcosm of Chinese automakers' broader European strategy. Facing EU tariffs on Chinese electric vehicles, localized production is becoming a critical pathway for Chinese automakers to circumvent trade barriers and deepen their presence in the European market.

BYD's plant in Szeged, Hungary, has entered trial production, making it the first Chinese new energy vehicle maker with its own vehicle production capacity in Europe. In Germany, discussions are also underway regarding Chinese companies utilizing idle production facilities. From Hungary to Spain, from wholly-owned plants to contract manufacturing partnerships, Chinese automakers' European expansion is taking on a multi-pronged, multi-model approach.

As Europe's second-largest auto producer, Spain boasts a mature automotive supply chain and skilled industrial workforce, while its relatively lower operating costs also hold appeal for Chinese automakers. If SAIC successfully lands in Galicia, it will further consolidate the company's production foundation in the European market, providing localized support for the MG brand's long-term competitiveness in Europe.

However, uncertainty around security reviews persists. The specific security requirements that Spain's Strategic Investment Committee will eventually set for the SAIC project will directly affect the plant's operating model and information management arrangements. Finding the right balance between addressing security concerns and ensuring commercial efficiency will be a core issue SAIC must navigate going forward.

Once added, BigGo Finance appears first in Google Search Top Stories, so you get the broadest, most up-to-the-minute, and most comprehensive global financial news first.