When the European Commission's proposal for the Industrial Accelerator Act (IAA) was finally released after much hemming and hawing on March 4, 2026, most of the attention was focused on the “Buy Europe” or “Build with Europe” provisions. Indeed, the proposed act is a good start for a more forceful European industrial policy with notable local content requirements for several strategic sectors, mostly in green technology such as in batteries, wind turbines, and solar panels. The act also explicitly leaves the door open for Chinese companies to participate in the EU’s single market by, for example, licensing their technologies to European partners.
While this approach is sensible, the IAA leaves the EU too weak to engage in the type of negotiations that precede such licensing partnerships. That is because it does too little to deal with a key Chinese control on battery technologies: licensing restrictions imposed under China’s Foreign Trade Law. To meet this challenge, the IAA needs to be amended to incorporate an “information reciprocity” concept. In so doing, the IAA would ensure that whatever information the Chinese state collects through its permitting process will also land in the hands of European governments.
World-Leading and Restricted
In a recent report published by the German Council on Foreign Relations, we drew attention to China’s Foreign Trade Law. On July 15, 2025, Beijing placed several battery technologies on its list of prohibited and restricted technologies. As a result of this designation, Chinese companies now need to get permission and hand over detailed contractual information to the Chinese state providing it with important information with which to weigh the strategic benefits of out-licensing battery technology.
This is especially relevant in the context of lithium iron phosphate (LFP) cathode technologies, in which Chinese companies are world-leading. China placed so-called 4th generation LFP batteries on its list, the exact same generation that is inside Chinese battery maker CATL’s latest Shenxing Pro battery line. It’s one of the company’s flagship products presented at the International Automotive Exhibition in Munich, Europe’s major annual automobile show, in September last year and specifically marketed for Europe as especially safe and durable.
Information Asymmetry
If a European company now wants to license this technology to produce it in the EU, China demands a great deal of information from the licensing parties without any guarantee that a license will be granted.
Information asymmetry is a key strategic advantage the Chinese government enjoys. And there is a growing need to address this issue in all policy initiatives aimed at dealing with the China challenge.
Almost exactly a year ago, the Europeans learned first-hand how frustrating this state of affairs can be. As a result of Chinese export restrictions on rare earths, European companies were compelled to share detailed, often sensitive information with the Chinese Ministry of Commerce. This is information that only went to the Chinese state but not to European governments. This means that China has more visibility when it comes to global supply chains than the EU.
This imbalance needs to be addressed in the IAA as well, which needs to include an “information reciprocity” concept. The idea is simple: Whatever information companies share with Beijing they also need to share with Brussels. The current IAA text does engage with this issue by asking prospective investors or licensees to share information with European investment authorities to the extent “appropriate.” However, this language is too weak. It falls short of the need to level the information playing field. Instead, it should be changed to read “as appropriate and as is equal to information shared with other countries.”
Access to Granular Information
Only by incorporating this language can the EU face the geopolitical challenges of today. Without granular, company-level information the Europeans lack the data they needs for strategic decision-making. Already a small change to the IAA text would ensure that the EU’s growing geopolitical ambitions are fortified with better information and will allow Brussels to more ably engage in negotiations and manage risks in the context of licensing of Chinese battery technology.
This expanded visibility is all the more important, especially since there is no guarantee that such licenses will be extended or once given that they will be renewed.
A recent case from India demonstrates that denial of licenses is not merely a theoretical possibility but is already happening in practice. One of India’s largest battery manufacturers, Reliance, was recently denied access to Chinese LFP cathode technology after the transfer from its Chinese partner Hithium was apparently not approved. Alternatives from Japan and South Korea were evaluated but proved uncompetitive in the Indian market due to higher costs. The company is now pivoting to other market segments. Thus, the Chinese government succeeded in undermining Indian efforts to localize battery value chains.
The Case of TikTok
The centrality of China’s catalogue of restricted or prohibited technologies in the geopolitical contest between China and the United States can be seen in one widely known case of technology transfer from China to America: the divestiture of TikTok to a US-controlled parent company.
In August 2020, Trump signed an executive order that compelled the Chinese parent company ByteDance of TikTok, the social media platform, to either divest or be excluded from the US market. Beijing responded by introducing the list of restricted and prohibited technologies. Only a few weeks after the executive order was signed Beijing added so-called "personalized information recommendation systems" to the list. This formally empowered the Chinese government to monitor contractual negotiations and thus influence the sale of the underlying technology. It was not until December of last year that the years-long conflict could be resolved through a political settlement.
This is not to say that licensing Chinese technology should not be part of the mix of Europe’s green transformation, but it should happen on terms set by the EU with a full picture of the global technology landscape. Amended, the IAA can contribute to this goal by demanding information reciprocity with China.
Michael Laha is a senior research fellow at the German Council on Foreign Relations (DGAP) in Berlin.
