BeijingHitsBackatEUFundingBlockforProjectsUsingChineseInverters

China accused the European Union of stigmatizing Chinese products after Brussels decided to block funding for renewable-energy projects using Chinese-made inverters, opening a new front in Europe’s tightening scrutiny of China’s clean-tech supply chain.

A Chinese commerce ministry spokesperson said on Thursday that the EU had labeled China a “high-risk country” without any concrete evidence and was using that designation to restrict Chinese products. The ministry said it “firmly opposes” the move, warning that it could damage China-Europe trust, disrupt global supply chains and raise the risk of decoupling.

Siobhan McGarry, a spokesperson for the European Commission, said at a media briefing on May 4 that the EU has developed guidance on restricting the use of EU funds for projects involving inverters from “high-risk suppliers.”

Multiple European media outlets reported that the commission has instructed public lenders including the European Investment Bank and European Bank for Reconstruction and Development to halt financing for renewable-energy projects involving grid equipment from designated “high-risk countries” including China, Russia and Iran starting Nov. 1.

Inverters connect solar power systems to the grid by converting direct current into alternating current, and Chinese suppliers have built a commanding position in the global market. The EU's restrictions could ultimately undermine the bloc’s own green transition and energy security, the commerce ministry spokesperson said.

Targeting inverters

The financing restrictions mark the latest escalation in Europe’s tightening scrutiny over China’s dominant renewable energy supply chain, broadening a regulatory dragnet that has already targeted Chinese electric vehicles (EVs), wind turbines, and solar panels over security and subsidy concerns.

Between 2018 and 2024, Chinese inverters grew from 45% to 61% of the EU’s import market, according to data from Loom Strategy Centre. A January 2026 report by consulting firm Wood Mackenzie ranked Huawei Technologies Co. Ltd. and Shenzhen-listed Sungrow Power Supply Co. Ltd. (300274.SZ +3.00%) as the top two global solar inverter companies in the first half of 2025, ahead of European rivals.

Sungrow downplayed the potential fallout during an April 27 investor event. The company estimated that projects subsidized by the two European policy banks account for roughly 10% to 20% of total European projects, adding that it generally avoids such developments. Sungrow also said it is building a factory in Poland and ensuring cybersecurity and transparent operations to meet compliance requirements.

The China Chamber of Commerce to the EU warned in a May 4 statement that expanding such market restrictions based on a company’s country of origin will raise market entry barriers and drive up electricity costs for European households and businesses.

The move follows a series of recent actions against Chinese renewable-energy firms across Europe. On March 26, the U.K. government announced it would not support the use of turbines made by Ming Yang Smart Energy Group Ltd. (601615.SH +2.82%) in British offshore wind projects, citing national security concerns. Earlier in February, the European Commission launched an investigation into Shenzhen-listed Goldwind Science & Technology Co. Ltd. (002202.SZ -1.16%) under its Foreign Subsidies Regulation, marking the first such probe into a single Chinese wind turbine manufacturer.

In April 2024, the EU used the same regulation to investigate subsidiaries of LONGi Green Energy Technology Co. Ltd. (601012.SH +1.53%) and Shanghai Electric Group Co. Ltd. (601727.SH +9.47%), prompting the Chinese companies to withdraw from a public tender a month later due to extensive disclosure requirements. These actions follow a broader anti-subsidy investigation into Chinese EVs that the EU formally initiated in October 2023.

Contact editor Kelsey Cheng (kelseycheng@caixin.com)