China’s 2026 Work Report previews new economic plan through 2030, as Europe faces record deficits and declining business confidence
On 5 March 2026, China published the Work Report 2026, the document that defines Beijing’s political and economic priorities for the current year and which represents, above all, a preview of the 15th Five-Year Plan, intended to guide the country’s development until 2030. For Europe, the document arrives at a time of growing concern for the future of economic relations with China.
European business confidence has been declining for years and reached one of its lowest levels in 2025. According to the latest Business Confidence Survey from the European Chamber of Commerce, 73% of companies interviewed reported a more difficult operating environment in China. Only 12% said they were optimistic about profitability in the short and medium term, while just 29% expressed confidence in future growth prospects.
Trade dynamics also confirm these concerns. The European Union’s trade deficit with China reached around 400 billion euros in 2025. At the same time, the European industrial base has progressively shrunk. In 1990, the manufacturing sector contributed 20% of EU GDP, which has fallen to 14% in 2024. Some sectors clearly illustrate this trend. Between 2000 and 2020, European car production decreased by five million vehicles per year, while Chinese production increased by 25 million units. Furthermore, the European steel industry has lost around 30% of its production capacity and 100,000 jobs since 2008, just as demand could begin to grow again in light of increased defense spending.
In this context, it is not surprising that the European Union is placing greater emphasis on protecting its industrial future. At the beginning of March, the European Commission presented the “Industrial Accelerator Act”, an initiative that aims to bring the share of manufacturing in European GDP back to 20% by 2035, introducing several measures to incentivize production within the EU.
However, China’s Work Report 2026 also contains some positive signs.
First, the Chinese economic slowdown, indicated in 2025 as the main critical issue by members of the European Chamber of Commerce, is closely linked to structural problems, including forms of excessive and unsustainable competition, which the government has reiterated that it intends to continue to address.
Secondly, the report highlights the need to “strengthen imports to promote more balanced trade”. This is a sign that China has taken into consideration the concerns of its main trading partners, including the European Union, regarding persistent trade imbalances, therefore intending to adopt measures to address this problem.
Third element, the document recalls the protection of the principle of national treatment for foreign-invested enterprises (FIE), a commitment that has now been present in government reports for five consecutive years. This year’s report also highlights that “a new Catalog of Sectors Encouraged for Foreign Investment will be implemented”. This is a positive development, although further details on how this will be implemented will be needed.
However, some reasons for caution remain. The report explicitly encourages foreign-invested enterprises to expand production within China. Many European companies are already deeply integrated into the country’s manufacturing ecosystem and continue to invest in the Chinese market. However, such decisions should be driven primarily by commercial logic.
In fact, more and more often, European companies report that pressures related to localization, both through formal requirements and implicit incentives linked to access to tenders or regulatory treatment, are influencing investment choices. Policies that push companies to localize production risk distorting business decisions, rather than strengthening China’s attractiveness as an investment destination.
If China intends to remain a magnet for global capital in an era of growing economic competition, the path appears clear: openness, predictability and balanced competitive conditions. Some signals contained in the Work Report point in this direction. What matters now is to see whether policy implementation will actually follow this line.
By: Avv. Carlo Diego D’Andrea, Managing Partner of D’Andrea & Partners Legal Counsel, National Vice President of the European Union Chamber of Commerce in China (EUCCC).
