The European Union and China have agreed to curb Chinese exports of hybrid vehicles to the bloc, potentially cutting shipments by more than half, the EU’s trade chief said on Friday. “We have reached a shared understanding to moderate China’s exports of hybrids and plug-in hybrids to the EU,” Maroš Šefčovič told reporters in Beijing. “This opens the prospect of cutting China’s exports by more than a half,” he added. The two sides also reached an understanding to ease Chinese export licensing for rare earths and permanent magnets, materials vital to Europe's automotive, technology and defense industries. The announcement marks a significant development in trade relations between Brussels and Beijing, which have faced growing tensions over Chinese vehicle exports, trade imbalances and access to critical raw materials. Tariff relief for European goods Šefčovič said China had also agreed in principle to lower tariffs on a range of European products, including car parts, olive oil and footwear. The proposed reductions would cover nearly €4 billion worth of existing EU exports and generate at least €225 million in tariff savings. The agreements follow three months of negotiations aimed at addressing the EU's trade deficit with China, which amounts to more than €1 billion a day. “The trade deficit is a mountain of a challenge for the EU, felt in every Member State. It is unsustainable and it demands a credible path to rebalancing,” Šefčovič said. “We must defend our industries and restore a level playing field that has been distorted by global overcapacity.” ‘This is far from the end’ However, the EU trade chief cautioned that the understandings represented only an initial step toward addressing the broader trade imbalance. “This is far from the end. It is a crucial first step – but only a first step – in the process of rebalancing,” he said. European Commission President Ursula von der Leyen is expected to assess the outcome of the talks and discuss the next steps with EU leaders at the upcoming European Council meeting, where a final decision will be made. Šefčovič has previously warned that Brussels could seek other solutions if negotiations failed to deliver sufficient results. He said ministerial-level talks with China would resume by January, followed by another round of Trade and Investment Consultations in March.
