China said it has reached an “understanding” with the European Union on hybrid car exports — a key source of friction between the two sides — without offering any details.
The statement came in a list of outcomes that China’s Ministry of Commerce released Friday following two days of trade talks in Beijing between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic. The EU has yet to offer any readout from the meetings ahead of an upcoming press conference.
China’s statement also said it will use a “green channel” mechanism to facilitate EU export licenses for rare earths and permanent magnets. In return, it added, the EU will work to facilitate key dual-use export licenses for China, which cover products that have both civilian and military purposes.
The two sides agreed to meet again in March 2027, China said. The European Commission, the EU’s executive arm, declined to comment.
The EU and China are reaching a precarious point in their economic relationship. European leaders are anxious about a trade deficit that has exceeded €1 billion ($1.1 billion) a day and want China to stop flooding the continent with subsidized, low-cost goods that are eroding local industries. If negotiators can’t show progress soon, the EU will discuss new powers that could enable it to block China’s market access.
One immediate focus has been China’s rapidly growing exports of hybrid vehicles, which escaped the EU’s 2024 tariffs on Chinese electric vehicles. The EU is currently preparing measures to limit Chinese hybrid cars by placing tariffs on all imports above a certain quota. Officials discussed the topic during their meetings this week.
Chinese-made cars accounted for about a quarter of European hybrid sales in August, even as growth in Chinese EV imports slowed after facing tariffs.
Read More: EU Plans Import Cap on Chinese Hybrid Cars to Protect Sector
France and Germany increased pressure on Beijing even further this week, calling for the EU to significantly expand its retaliatory economic powers — suggesting it should consider severing trade ties with bad actors that launch trade wars. Europe’s two largest economies also want the EU to investigate whether subsidized imports are harming sectors like chemicals and plastics — probes that could produce more tariffs.
Beijing has preemptively warned the EU against adopting what it called protectionist measures.
Europe’s toughening stance reflects its growing awareness that the trade deficit with China, which reached €360 billion last year, is crippling local industry. At the same time, though, China is increasingly relying on those exports to support its own growth.