China’s Ministry of Commerce on Friday expressed “grave concern” over the European Union’s proposed Industrial Accelerator Act (IAA), saying the legislation could impose restrictions on foreign investment in sectors such as batteries, electric vehicles, solar photovoltaic technology and critical raw materials.

In a statement, a ministry spokesperson said Beijing would closely monitor the legislative process of the act and carefully evaluate its potential impact on China. The spokesperson added that China would take necessary steps to safeguard the legitimate rights and interests of Chinese companies.

The proposed IAA, unveiled earlier this week, has sparked intense debate within the EU. The legislation aims to promote low-carbon production and introduce “Made in EU” requirements for companies seeking public procurement contracts or subsidies. The rules would apply to industries including aluminium, cement and steel production, as well as technologies such as wind turbines, electrolysers and electric vehicles.

China warned that using industrial development and green transition goals to justify new restrictions could amount to protectionism. According to the ministry spokesperson, such measures risk undermining global trade rules, distorting fair competition and disrupting the stability of international supply chains.

Beijing said it will continue to evaluate the proposal as it moves through the EU’s legislative process and respond accordingly if Chinese business interests are affected.