China Power | Diplomacy | East Asia

Move Over, Hungary: Spain Is China’s New Best Friend in the EU

With Viktor Orban’s election loss, Pedro Sanchez is now Beijing’s most useful European leader.

Spain’s Prime Minister Pedro Sanchez meets with Chinese President during a visit to Beijing, China, Apr. 11, 2025.

As Hungarian Prime Minister Viktor Orban goes into political exile and China loses this close European friend, Spanish Prime Minister Pedro Sanchez was in Beijing for the fourth time, seeking investment deals and pushing for the European Union (EU) to consider China a “strategic partner.” Forget Hungary – it is Spain that is increasingly looking like China’s best friend in the EU.

Orban’s massive electoral loss to Peter Magyar last weekend was followed by analysis suggesting that this is a blow for China, representing the loss of its “best friend in the EU.” Hungary, for a long time, has been considered a gateway for Chinese investment into the EU. Beyond that, Hungary became a disruptive voice in the European Council, preventing a unified China policy, and an eager partner in China’s Global Security Initiative, welcoming joint patrols of Chinese police and adopting Chinese surveillance technology. While this certainly has been useful for Beijing, it also has a deepening relationship with Spain – which is arguably even more valuable for China. 

Spain’s enthusiastic overtures to China are well noted. Sanchez has visited Beijing once a year since 2023, and last year the Spanish King visited China alongside a business delegation for the first time. As with Hungary, Spain has been keen to welcome Chinese green investment, which has included Chinese automaker Chery building a European Operations Center and R&D Institute in Barcelona, Chinese battery manufacturer CATL building a lithium iron phosphate (LFP) battery gigafactory in Zaragoza, and plans for Chinese battery and stationary energy storage systems company Hithium to invest in Navarre. These projects are all part of Chinese firms’ efforts to localize their production inside the EU and bypass tariffs on Chinese electric vehicles. Sanchez also used his latest trip to Beijing to court Chinese wind-turbine manufacturer Ming Yang, who had just had a planned investment blocked in the United Kingdom on national security grounds.

Similarly, Spain has diverged from Germany, France, and the U.K., which have all imposed export controls on collaboration with China in the field of emerging technology. Instead, in April 2025, Spain launched a strategic agreement with Chinese quantum company Origin Quantum to develop Europe’s largest quantum computer.  

Chinese investment in Spain has grown by 50 percent in the last two years (2024-2025) compared to the previous two years (2022-2023). China’s investment in Spain now stands at $3 billion, according to data from the American Enterprise Institute. This is a significant increase, but still smaller than the $5.2 billion of Chinese investment Hungary received over the same period.

Despite the left-wing Sanchez government’s strong commitment to labor rights, Spain has been happy to accept China’s investment model, which depends on bringing Chinese workers to European sites, violating workers’ rights with exploitative hours and conditions, in order to meet tight margins and remain competitive. These investments are also backed by Beijing, making them unfairly competitive in contrast to European companies. At the time of writing, CATL is preparing to send 2,000 Chinese workers to build its factory in Spain. 

Spain also has its own controversies related to Chinese investment bleeding into law enforcement. Last year it awarded a contract to Chinese telecommunications company Huawei to store judicial wire taps, which has led to criticism from members of the European Parliament. Spain’s decision came amid debate around the new EU Cybersecurity Act, which would require EU member states to remove Huawei from their telecommunications networks.

From Beijing’s perspective, Sanchez is a far more effective and influential operator in the EU than the outgoing Orban. Sanchez has not only avoided the kind of political isolation that Orban and Hungary endured for years among other European capitals, but is popular in Brussels across a range of policy and political positions. Sanchez recently received praise for his criticism of U.S. President Donald Trump and refusal to allow the United States to use Spanish military bases. 

It was Sanchez, and not Orban, who led the opposition against the EU imposing tariffs on Chinese electric vehicles, and Sanchez who has fashioned himself as a bridge between the EU and China on trade tensions. Sanchez’s leadership of European opposition to the U.S. war in the Middle East also reflects a closer position to Beijing. 

Spain is similarly a stronger voice and partner for China in the European Council, as the fourth-largest contributor to the EU budget and with forecasts that it will be the fastest-growing major European country in 2026. The Southern European country, which received 10 percent of its energy supply from renewables in 2024, is further strengthened by its leadership in the adoption of renewables at a moment when Europe faces an energy crisis as a result of rising oil and gas prices.

Unlike France and Germany, Spain seems less exercised by China’s excess manufacturing or the “China Shock 2.0”. While Sanchez paid lip service to addressing trade imbalances with the EU during his trip to Beijing, this contradicted language welcoming further Chinese investment and keeping Europe’s markets open to China’s state-subsidized goods. 

Spain, for its part, lost its textiles industry in the first “China Shock” after China joined the World Trade Organization in 2001. Te Eurozone crisis saw Beijing throw Spain a lifeline by purchasing its government bonds, and Chinese state-owned enterprises made an indirect entry into its energy market via China Three Gorges Corporation taking a controlling stake in EDP, which is one of the leading energy providers in Spain. This history matters, not least when considering the Spanish government’s response to proposed European economic security measures. Spanish officials remember that it was China which rescued their country from the Brussels-imposed austerity. 

Even with Orban gone. It would be wrong to assume that China’s influence in the EU will weaken, not least because Magyar has already said he is open to visiting Beijing and will continue to welcome Chinese investment. But it is clear that Beijing already has a more useful partner within the EU for the battles ahead: Spain’s Pedro Sanchez. 

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As Hungarian Prime Minister Viktor Orban goes into political exile and China loses this close European friend, Spanish Prime Minister Pedro Sanchez was in Beijing for the fourth time, seeking investment deals and pushing for the European Union (EU) to consider China a “strategic partner.” Forget Hungary – it is Spain that is increasingly looking like China’s best friend in the EU.

Orban’s massive electoral loss to Peter Magyar last weekend was followed by analysis suggesting that this is a blow for China, representing the loss of its “best friend in the EU.” Hungary, for a long time, has been considered a gateway for Chinese investment into the EU. Beyond that, Hungary became a disruptive voice in the European Council, preventing a unified China policy, and an eager partner in China’s Global Security Initiative, welcoming joint patrols of Chinese police and adopting Chinese surveillance technology. While this certainly has been useful for Beijing, it also has a deepening relationship with Spain – which is arguably even more valuable for China. 

Spain’s enthusiastic overtures to China are well noted. Sanchez has visited Beijing once a year since 2023, and last year the Spanish King visited China alongside a business delegation for the first time. As with Hungary, Spain has been keen to welcome Chinese green investment, which has included Chinese automaker Chery building a European Operations Center and R&D Institute in Barcelona, Chinese battery manufacturer CATL building a lithium iron phosphate (LFP) battery gigafactory in Zaragoza, and plans for Chinese battery and stationary energy storage systems company Hithium to invest in Navarre. These projects are all part of Chinese firms’ efforts to localize their production inside the EU and bypass tariffs on Chinese electric vehicles. Sanchez also used his latest trip to Beijing to court Chinese wind-turbine manufacturer Ming Yang, who had just had a planned investment blocked in the United Kingdom on national security grounds.

Similarly, Spain has diverged from Germany, France, and the U.K., which have all imposed export controls on collaboration with China in the field of emerging technology. Instead, in April 2025, Spain launched a strategic agreement with Chinese quantum company Origin Quantum to develop Europe’s largest quantum computer.  

Chinese investment in Spain has grown by 50 percent in the last two years (2024-2025) compared to the previous two years (2022-2023). China’s investment in Spain now stands at $3 billion, according to data from the American Enterprise Institute. This is a significant increase, but still smaller than the $5.2 billion of Chinese investment Hungary received over the same period.

Despite the left-wing Sanchez government’s strong commitment to labor rights, Spain has been happy to accept China’s investment model, which depends on bringing Chinese workers to European sites, violating workers’ rights with exploitative hours and conditions, in order to meet tight margins and remain competitive. These investments are also backed by Beijing, making them unfairly competitive in contrast to European companies. At the time of writing, CATL is preparing to send 2,000 Chinese workers to build its factory in Spain. 

Spain also has its own controversies related to Chinese investment bleeding into law enforcement. Last year it awarded a contract to Chinese telecommunications company Huawei to store judicial wire taps, which has led to criticism from members of the European Parliament. Spain’s decision came amid debate around the new EU Cybersecurity Act, which would require EU member states to remove Huawei from their telecommunications networks.

From Beijing’s perspective, Sanchez is a far more effective and influential operator in the EU than the outgoing Orban. Sanchez has not only avoided the kind of political isolation that Orban and Hungary endured for years among other European capitals, but is popular in Brussels across a range of policy and political positions. Sanchez recently received praise for his criticism of U.S. President Donald Trump and refusal to allow the United States to use Spanish military bases. 

It was Sanchez, and not Orban, who led the opposition against the EU imposing tariffs on Chinese electric vehicles, and Sanchez who has fashioned himself as a bridge between the EU and China on trade tensions. Sanchez’s leadership of European opposition to the U.S. war in the Middle East also reflects a closer position to Beijing. 

Spain is similarly a stronger voice and partner for China in the European Council, as the fourth-largest contributor to the EU budget and with forecasts that it will be the fastest-growing major European country in 2026. The Southern European country, which received 10 percent of its energy supply from renewables in 2024, is further strengthened by its leadership in the adoption of renewables at a moment when Europe faces an energy crisis as a result of rising oil and gas prices.

Unlike France and Germany, Spain seems less exercised by China’s excess manufacturing or the “China Shock 2.0”. While Sanchez paid lip service to addressing trade imbalances with the EU during his trip to Beijing, this contradicted language welcoming further Chinese investment and keeping Europe’s markets open to China’s state-subsidized goods. 

Spain, for its part, lost its textiles industry in the first “China Shock” after China joined the World Trade Organization in 2001. Te Eurozone crisis saw Beijing throw Spain a lifeline by purchasing its government bonds, and Chinese state-owned enterprises made an indirect entry into its energy market via China Three Gorges Corporation taking a controlling stake in EDP, which is one of the leading energy providers in Spain. This history matters, not least when considering the Spanish government’s response to proposed European economic security measures. Spanish officials remember that it was China which rescued their country from the Brussels-imposed austerity. 

Even with Orban gone. It would be wrong to assume that China’s influence in the EU will weaken, not least because Magyar has already said he is open to visiting Beijing and will continue to welcome Chinese investment. But it is clear that Beijing already has a more useful partner within the EU for the battles ahead: Spain’s Pedro Sanchez. 

Sam Goodman is the senior policy director of the China Strategic Risks Institute.

Anouk Wear is a research associate at the China Strategic Risks Institute.

China-Hungary relations

China-Spain Relations

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