China, EU reach deal to 'moderate' China's car exports to EU

European Trade Commissioner Maros Sefcovic announced on Friday that China and the European Union had reached a deal that could cut Chinese exports of hybrid cars to the EU by more than half.

This announcement followed two-day talks in Beijing aimed at reducing the EU's growing trade deficit with China.

Earlier, Sefcovic said this week's talks were the culmination of three months of intensive work.

What do we know about the EV deal?

According to Sefcovic, the deal would "moderate China's export of hybrids and plug-in hybrids to the EU."

He added that this opens the prospect of cutting China's exports by more than half, based on projections over a four-year period.

"By this step, we're actually preventing several millions of cars exports from China to the European Union," Sefcovic said.

Although he did not offer details on how the agreement will be implemented, Sefcovic said he believed the two sides had achieved a very good result.

What else was decided?

Sevcovic added the two sides also reached an agreement to reduce Chinese import duties on €4 billion ($4.5 billion) worth of EU exports, including car parts, olive oil and footwear.

They also agreed to simplify China's process for granting export licenses for rare earths and permanent magnets.

The agreement will require approval from the leaders of all 27 EU nations, who will discuss the outcome at the start of their summit in Brussels on Thursday.

Rebalancing EU-China trade

According to UN Comtrade data, Chinese exports to the EU totaled $560 billion (€500 billion) last year, up from $517 billion in 2023. Exports to major economies, including Germany, Italy, Spain, and Poland, each rose approximately 10% from a year earlier. Shipments to Hungary increased by 43%.

Meanwhile, China imported $268.3 billion (€240 billion) worth of European goods last year, down from $269.4 billion the previous year. Purchases from Denmark, Ireland, and France led the way.

Last month, European Commission President Ursula von der Leyen warned lawmakers at the European Parliament that the trade gap had reached a tipping point. She said the EU would use all available tools to rebalance the relationship.