(Deutsche Welle Chinese website) According to a report by Bloomberg on Sunday (October 11), the European Union plans to set an import quota for China's gasoline-electric hybrid vehicles in the next four years, with an upper limit of 350,000 vehicles in 2027 and an annual increase of 6% in the next three years. After last week's trade and investment consultation between the EU and China, the two sides said they had "reached an understanding" on hybrid vehicles.
The Financial Times reported that this quota measure can be implemented without "improper market manipulation", which means that if China's export of vehicles exceeds the quota, it may face significantly higher additional tariffs.
An insider revealed that China will accept the EU's quota and will not take retaliatory actions against the EU.
According to the documents obtained by the above-mentioned media, in order to comply with the WTO non-discrimination principle, the import quotas reached by the EU and China are not limited to vehicles made in China, but will apply to all gasoline-electric hybrid vehicles and plug-in hybrid vehicles imported into the EU, including countries that have signed free trade agreements with the EU; China's quota must not be lower than any other source of hybrid vehicle imports.
European Economic Area member states, Ukraine, Kenya, and developing WTO member states with low import proportions will be exempted.
At the same time, China will eliminate tariffs on some auto parts and halve tariffs on shoes, ice cream and olive oil. The document points out that these measures are also temporary and cover exports of goods with a total value of approximately 4 billion euros.
The two sides will also discuss how to relax export controls and licensing procedures, especially the supply of rare earths and permanent magnets. The EU and China also agreed to exchange more information on each other's export restrictions.
Before the above news came out, EU Trade Commissioner Maroš Šefčovič met with Chinese Commerce Minister Wang Wentao in Beijing from the 8th to the 9th to hold the second regular meeting of the China-EU Trade and Investment Consultation Mechanism (referred to as the Mechanism). They reached consensus on 16 outcomes and agreed to "as a key trading partner, within the framework of WTO rules, properly handle the differences between the two sides and commit to continuing to stabilize bilateral economic and trade relations and make them more balanced."
The next regular meeting of the China-EU Trade and Investment Consultation Mechanism is scheduled to be held in March next year, followed by a ministerial-level online video conference in January.
China: China-EU consensus “strongly safeguards the actual interests of Chinese enterprises”
On Monday (12th), the official website of China's Ministry of Commerce responded to the aforementioned media reports in the form of "answering reporters' questions". It did not confirm the figure of the import quota, but said that China and the EU "emphasized and confirmed three basic principles" for hybrid vehicles. The first is to "respect the facts" and make upward arrangements based on the number of Chinese hybrid vehicles imported by the EU in 2025 (302,000 units). "Ensure the export space and stable growth of Chinese enterprises, and take into account the reasonable concerns of both industries based on reality."
The other two principles are "non-discrimination" and "compliance" under WTO rules.
Regarding electric vehicles, China's Ministry of Commerce said that the two sides achieved a "soft landing" in the anti-subsidy case in January this year, and the European side will continue to advance relevant procedures in the future. This refers to a general guidance published by the European Commission at the time, according to which Chinese electric car manufacturers can make minimum price commitments - that is, setting a minimum price for electric cars exported to the EU to offset government subsidies. In other words, a minimum import price mechanism would replace tariffs.
China's Ministry of Commerce also stated that the above consensus "effectively safeguarded the actual interests of Chinese enterprises and avoided the escalation of China-EU trade frictions."
Earlier on the 12th, the "Zhongsheng" commentary column of the "People's Daily" stated that the Beijing negotiations showed that the EU and China "completely have the wisdom" to manage their differences.
Sevcovic said that the agreement reached on the 9th will become the "blueprint" for the next stage of negotiations and prove that negotiations with China can achieve results.
Bloomberg quoted people familiar with the matter as saying that after Sefcovic briefed the ambassadors of various countries to the EU on the 11th, the ambassadors generally welcomed the results of the negotiations, but emphasized that this was only the starting point for rebalancing bilateral trade relations. The people spoke on condition of anonymity because the discussions were internal matters.
Sigrid de Vries, Director General of the European Automobile Manufacturers Association (ACEA), also said that the agreement will help "promote China into a new stage in the European market in an orderly manner, which is in the long-term interests of all parties."
Although the negotiations have achieved concrete results so far, some European officials worry that progress in reducing the trade deficit may be too slow given the size of the trade deficit, and that the EU does not have much time left. The European Commission is expected to propose a number of tools before the end of the year to diversify supply sources and deal with the EU-China trade imbalance.
Before this negotiation, France and Germany called on the EU to significantly expand its economic countermeasures powers, and even suggested that it consider cutting off trade relations with the target of the trade war. Europe's two largest economies also want the EU to investigate whether subsidized imports harm Europe's chemicals, plastics and other industries; related investigations may lead to more tariff measures.
The proposal is seen as a tactic to put pressure on Beijing and represents the beginning of support for tougher measures that Germany has opposed in the past.
EU-China trade imbalance
Hybrid car sales in China have increased partly because these models are not included in the EU's 2024 tariffs on electric vehicles.
The EU's trade deficit with China reached 360 billion euros last year and continues to expand. In the second quarter of 2026, the deficit was 103 billion euros, up from 93 billion euros in the same period last year. Among them, vehicles and machinery and equipment are the main factors causing the deficit. In August, Chinese-made cars accounted for about a quarter of hybrid car sales in Europe.
At the same time, China is increasingly relying on exports to support its economic growth. Facing the sluggish domestic consumer market in China, Chinese automakers such as Chery have significantly increased shipments to the EU, further exacerbating the market slowdown faced by European automakers.
European car manufacturers have ranked at the bottom of the global performance list in recent years. Mercedes-Benz Group's third-quarter car sales fell by 8%; Volkswagen lowered its profit forecast last month, after BMW issued a similar warning in June.
