China to curb hybrid exports to the EU, Brussels says
The EU trade chief announced a first deal after two days in Beijing. He did not say how the cut would work, and EU leaders still have to endorse it.
European Union trade commissioner Maroš Šefčovič announced on Oct. 9 that China will moderate its exports of hybrid and plug-in hybrid cars to the bloc. According to Eunews, the understanding opens the possibility of cutting those shipments by more than 50%. Šefčovič spoke at the end of two days of meetings in Beijing with Chinese Commerce Minister Wang Wentao.
The key question is how. The commissioner gave no detail on the mechanism and said the technical procedures are still to be discussed. There is no public text of the cut either. Borderlex reports that the reduction would be measured against four-year projections, which would keep "several million" vehicles out of the European market. Šefčovič said it is the first time Beijing has curbed its shipments without Brussels opening a trade investigation.
That point matters because of trade rules. The World Trade Organization bans voluntary export restraints, and Borderlex points to two possible routes, neither confirmed: an anti-subsidy investigation with minimum prices, or a safeguard investigation with a quota for a single country. So far, Brussels has not opened either one on hybrids.
What else was agreed
The package includes two other understandings, according to Eunews:
- China will lower most-favored-nation tariffs on European products such as auto parts, olive oil and footwear. Those sales add up to almost 4 billion euros, and the lower tariffs would save at least 225 million euros.
- Beijing will make export licenses for rare earths and permanent magnets easier to obtain.
Market pressure is behind the deal. Using data from ACEA, the European carmakers' association, Borderlex reports that Europe bought almost three times as many Chinese hybrids from January to July: 6 690 million euros worth. Šefčovič called the EU's trade deficit with China, more than 1 billion euros a day, "unsustainable."
The commissioner himself said the agreement is "only a first step" and "far from the end." ACEA described it as an "interim deal" while it waits to see the details.
Some issues have no result yet, such as cosmetics, pharmaceuticals and the European ban on Chinese investors in clean energy. The European Council meets in Brussels on Oct. 15 and 16, and leaders will first review the negotiated solutions on Thursday, Oct. 15. Šefčovič and Wang Wentao are due to meet again at ministerial level by January 2027 at the latest.
