The EU's trade chief came back from Beijing with something to show. Maroš Šefčovič said on Friday that the EU and China have agreed to rein in Chinese exports of hybrid and plug-in hybrid cars, and that the understanding could cut them by more than half. Beijing confirmed an understanding exists. It did not confirm the number.
Šefčovič spent 8 and 9 October in Beijing for the second round of the EU-China Trade and Investment Consultation Mechanism, talks with Commerce Minister Wang Wentao. The two sides signed a joint statement covering three points.
The first is hybrids. Both sides will work to moderate Chinese exports of these cars to the EU. Šefčovič called the result "a first step" and said Europe's demands had appeared "reasonable" to the Chinese side.
The second is market access. China will explore cutting its most-favoured-nation tariffs on EU goods, including car parts, olive oil and footwear. Those products add up to almost €4 billion of EU exports, and the expected duty savings are at least €225 million.
The third is rare earths. China will keep easing export licensing for rare earths and permanent magnets through a so-called green channel.
The EU imposed duties on Chinese battery electric cars in October 2024. Hybrids were not covered, and exports surged. Reported figures put imports of Chinese hybrids at about 3,800 units in October 2024 and around 50,000 in July 2026. Chinese brands took almost 12% of new car registrations in Europe in August.
In September Brussels asked China to limit hybrid exports voluntarily, and warned that quotas could follow. Beijing replied that voluntary export restraints break WTO rules. Days before the talks, the Commission was reported to be preparing safeguard measures, including tariff-rate quotas, as a fallback.
China's commerce ministry now says the new understanding is WTO-compatible. That wording suggests Beijing has found a way to agree without admitting it is accepting a cap.
A lot. Nobody has published a baseline for the 50% cut, so the size of the reduction is unclear. There is no timetable and no enforcement mechanism. Both sides will keep working on price undertakings and the review of the EU's anti-subsidy case on Chinese electric cars.
The stakes are large. The EU's trade deficit with China reached €359.9 billion last year, and Šefčovič called it "unsustainable". Before the trip, analysts such as Emilie Kerstens of the consultancy Flint Global argued that a Commission returning empty-handed would have to open safeguard investigations to protect its credibility. France and Germany had also just pressed for a new trade defence instrument that could shut out countries causing serious market distortions.
Šefčovič got a headline, not a treaty. The next test is whether the understanding turns into measurable cuts. EU leaders will review it in Brussels on 15 and 16 October, and implementation work starts right after. Šefčovič plans a political-level meeting with Wang by January and a third round of consultations in March. He has said the EU will use its own instruments if dialogue fails. With no baseline and no enforcement, that fallback may get used sooner than either side admits.
