China, EU reach understanding on hybrid car exports

China and the European Union have reached an understanding that will cut Chinese exports of hybrid and plug-in hybrid cars to the bloc by more than half, European Trade Commissioner Maros Sefcovic announced Friday in Beijing. The deal, reached after two days of discussions, aims to rebalance the EU-China trade relationship and reduce the bloc's significant trade deficit.

The EU's trade deficit with China exceeded €1 billion ($1.12 billion) daily last year. Concerns over a sharp rise in Chinese plug-in hybrid electric vehicle imports into the EU, which increased 86% in the year to September with a 20% price decline, were a key driver for the negotiations. Chinese vehicles now account for more than half of these imports.

In addition to moderating hybrid car exports, the understanding includes improved EU market access for products and facilitated Chinese export licensing for rare earths and permanent magnets. The two sides also agreed to continue discussions on price undertakings and review procedures related to the EU's anti-subsidy investigation into Chinese electric vehicles.

Chinese Commerce Minister Wang Wentao stated that China is a partner in solving the EU's problems, not the root cause. The dispute over Chinese EV exports, which began in 2024, has previously impacted sectors like brandy, pork, and dairy.