Maros Sefcovic, European Trade Commissioner, announced the information on 9/10. The agreement was reached after three months of negotiations with Chinese officials, including Minister of Commerce Wang Wentao. This comes as the European Union faces a daily trade deficit of 1 billion euro (1.12 billion USD) with China.

According to Sefcovic, this agreement will help regulate the export of hybrid cars and plug-in hybrid electric vehicles (PHEVs), reducing several million units from China to the EU over four years. While not specifying the exact implementation methods, the European Trade Commissioner stated that the agreement marks a crucial first step in rebalancing trade between the two sides.

Both parties also agreed to reduce China's import tariffs on automotive components, olive oil, and footwear from the EU, valued at approximately 4 billion euro. Additionally, the agreement facilitates the export licensing process for rare earths and permanent magnets from China.

From China's perspective, Minister Wang Wentao told Sefcovic that China is not the root cause of the EU's problems. Instead, China sees itself as a partner in addressing these issues.

EU and Chinese leaders will continue discussions on these outcomes at the opening session of the Brussels summit on 15/10.

The agreement comes amidst a rapid surge of Chinese vehicles, particularly hybrids, entering the European Union. This influx has raised concerns within the bloc, putting pressure on domestic automakers to reduce their workforce. Volkswagen alone is cutting up to 100,000 jobs. Beyond hybrids, plug-in hybrid electric vehicle (PHEV) sales are also accelerating, with sales in the first nine months increasing by 86% compared to the same period last year.

Chinese cars awaiting to be loaded for export at a port in Anhui province, China, 18/9/2025. Photo: China Daily

Last month, the EU requested China to voluntarily limit hybrid car exports to avoid a trade war. The bloc hoped the East Asian nation would reduce its hybrid market share in Europe to 15% from the current one-third. In contrast, Chinese media commented that the problems of the EU automotive industry are not due to China's strong competitiveness, but rather "Europe's weak capabilities".

Disputes over the export of low-cost electric vehicles have cast a shadow over EU-China relations for years. In late 2024, the EU imposed 45% tariffs on battery electric vehicles (BEVs). China retaliated with tariffs on EU spirits, pork, and dairy products, as well as export restrictions on rare earths and essential minerals to the bloc.

France and Germany have been most heavily impacted by Beijing's measures. France accounts for 90% of the EU's spirits exports by value to China, while Germany has been significantly affected in the dairy products sector.

By Bao Bao (via Reuters)