China says it reached an 'understanding' with the EU on hybrid car exports
China's Ministry of Commerce announced the understanding on Friday, after Maroš Šefčovič ended two days of talks in Beijing. No terms were disclosed.
The announcement
China's Ministry of Commerce said on Friday that Beijing and the European Union had reached an 'understanding' on trade in hybrid vehicles, a key source of friction between the two sides. The statement followed two days of talks in Beijing that EU Trade Commissioner Maroš Šefčovič wrapped up, and the car trade became the main subject of those discussions ahead of his visit. The Chinese side released the statement without offering any details on the terms.
Following intensive consultations, both sides have reached an understanding on the trade of hybrid vehicles in a manner consistent with World Trade Organization rules.
Trade deficit and car sales
The talks were the culmination of months of efforts to narrow the EU's trade deficit with China, which Politico put at about €1 billion a day. Chinese car exports have grown steadily, and in August one in eight cars sold in the European Union came from China, mainly because of strong sales growth in hybrid vehicles. European carmakers are under strain, with Volkswagen and Mercedes-Benz announcing layoffs and factory closures, and the European car industry is concentrated in Germany. Brussels had hoped Beijing would commit to voluntarily reducing its hybrid vehicle exports, according to Il Sole 24 Ore. The Chinese statement, as reported, provided no further details on that point.
- Chinese Ministry of Commerce announces understanding on hybrid vehicle trade
- EU leaders review the outcome of the trade talks at a meeting in Brussels
- A new meeting between China and the EU is expected
Rare earths and dual-use licences
According to the Chinese side, the meeting also opened a channel to ease EU approval of export licences for rare earths and magnets. In exchange, the EU would ease licences for Chinese exports of dual-use products, which have both civilian and military uses. Il Sole 24 Ore reported that Beijing said it was 'willing' to keep facilitating the review and approval of rare earth and permanent magnet export licences to Europe. The two sides also agreed to strengthen the 'stability' of supply chains and to strengthen dialogue on export controls. La Repubblica reported that the European Commission had not yet taken a position on the Chinese account.
What comes next
EU leaders are due to review the outcome of the trade talks at a meeting in Brussels next Thursday. A new meeting between the two sides is expected next March. Beijing and Brussels will also continue procedures on price undertakings made by companies, as the Chinese statement indicated.
