EU and China agree to limit Chinese hybrid car exports, several million fewer vehicles over four years
Several million fewer Chinese hybrids are expected to reach Europe over four years than projected without the deal, EU trade commissioner Maroš Šefčovič said after talks in Beijing.
The agreement
The European Commission has reached an understanding with China on limiting exports of Chinese hybrid and plug-in hybrid cars to the European Union. Over four years, several million fewer vehicles are expected to reach Europe than would have arrived without the deal, according to EU trade commissioner Maroš Šefčovič, who negotiated it with the Chinese minister Wang Wentao. Šefčovič did not explain how the mechanism limiting imports would work, saying details would be presented once EU leaders approve the approach. Asked how Brussels plans to restrict sales of Chinese cars when European consumers want to buy them, he said the details would follow.
We are talking about limiting Chinese exports to the European Union by several million cars over four years. In my view, this is a very significant change.
Why Brussels moved
Imports of Chinese plug-in hybrids rose 86 percent over the past 12 months, while their prices fell 20 percent over the same period. More than half of the plug-in hybrids currently imported into the EU come from China. The EU goods trade deficit with China exceeds one billion euros a day, and the Polish Economic Institute (PIE) puts the deficit for the first half of 2026 at 207 billion euros. EU leaders had instructed the Commission to present concrete results from its dialogue with Beijing at the October summit. Šefčovič argued that the sharp rise in Chinese exports could threaten entire industrial sectors and thousands of jobs. The European Automobile Manufacturers' Association (ACEA) responded positively to the agreement.
- Franco-German letter and non-paper sent to the European Commission
- China publishes a 16-point list of agreements with the EU after talks in Beijing
- Preliminary ministerial videoconference between China and the EU
- Next meeting of the bilateral mechanism
Paris and Berlin push for tougher tools
On 5 October, the German chancellor and the French president sent a joint letter to the president of the European Commission, together with an accompanying non-paper. It was published ten days before a European Council summit on trade relations with China and three days before Šefčovič's visit to Beijing. PIE called this a breakthrough shift for Berlin, which had previously backed an open EU market, and noted that Germany voted against EU tariffs on Chinese electric cars two years ago. The proposed new trade defence tool is modelled on the US Section 301 provisions of the 1974 Trade Act. Under the proposal, measures proposed by the Commission would take effect unless a qualified majority of member states rejected them. The tool would range from sector-specific measures to a full block on access to the EU market.
The EU trade deficit is at a record high. In the first half of 2026 it exceeded the result of the second half of 2022, when an extraordinary deficit linked to the pandemic was recorded.
What China agreed to
The Chinese Ministry of Commerce published a list of 16 points of agreement on Friday, following talks in Beijing between Wang Wentao and Šefčovič. The list includes an agreement on hybrid vehicle trade that is consistent with the rules of the World Trade Organization, but the Chinese document gives no detailed parameters. Western agencies cited in the article report that Brussels had sought a declaration from Beijing on voluntary restraint of exports. The sides also confirmed that price undertaking procedures in the EU anti-subsidy investigation into Chinese electric cars will continue. China will streamline licensing for rare earth metals and permanent magnets through a green channel, while the EU will ease permits for dual-use goods exports. Chinese exporters, and EU exporters of car parts, olive oil and footwear, are set to benefit from facilitation measures, with EU exports of these products reaching almost 4 billion euros and potential duty savings of at least 225 million euros, according to Šefčovič.
What comes next
The next meeting of the bilateral mechanism is scheduled for March 2027, with a preliminary ministerial videoconference planned for January. Officials have not yet specified the concrete measures that would limit hybrid exports. Europe's leaders remain concerned about a trade deficit above one billion euros a day and about subsidised, low-priced Chinese goods that weaken local industry. If negotiators do not soon show progress, the EU will consider new powers that would allow it to block Chinese access to its market.
