EU Trade Commissioner Maroš Šefčovič announced a deal with China on Friday to curb imports of Chinese hybrid vehicles into the EU and facilitate access to rare earths.
While the understanding signals a preference for a diplomatic resolution to the growing trade imbalance, European leaders are pushing for stronger measures to level the playing field. They are expected to review the details at a summit in Brussels next week.
The EU has also floated retaliatory measures if the outcome falls short of expectations.
Šefčovič travelled to Beijing on Wednesday for two days of intensive talks with his Chinese counterpart, Wang Wentao, in a bid to rebalance EU-China trade relations.
The EU is facing a record trade deficit with China of €1 billion a day, as a surge in low-cost Chinese imports threatens entire sectors of European industry.
“We have reached a shared understanding to moderate China's export of hybrids and plug-in hybrids to the European Union,” Šefčovič said. “This opens up the prospect of cutting China's exports by more than half.”
The commissioner said the deal would also improve access to the Chinese market for a range of EU products, from “car parts to olive oil and footwear”, representing almost €4 billion in current export value. It should generate at least €225 million in duty savings, he added.
Market access has been at the heart of EU-China discussions since negotiations began last June. Beijing has been reluctant to relinquish access to the EU's 450-million-consumer market, which provides an outlet for its excess production.
Meanwhile, Brussels has proposed several legislative measures aimed at restricting Chinese companies' access to the European market, while pressing Beijing to open up its own market to EU businesses.
Šefčovič also said China had agreed to facilitate exports of rare earths, which are essential to Europe's green technology, defence and automotive industries.
“We have reached a shared understanding to further facilitate China's export licensing for rare earths and permanent magnets,” he said.
The EU has accused China of “weaponising” its dependence on Chinese rare earths after Beijing restricted exports in 2025 amid a trade war with the US.
Šefčovič described the agreement as the conclusion of a “first phase of negotiations”.
The deal comes ahead of a meeting of EU leaders in Brussels next week, with expectations running high for concrete results from negotiations led by the European Commission on their behalf since last June.
A consensus on China has been emerging across the EU this week.
All EU countries now run trade deficits with China. On Monday, Germany and France urged the European Commission to take strong action against unfair Chinese trade practices that cause severe market distortions.
In a joint document, Paris and Berlin called for measures that could include “an immediate cut-off from the internal market if needed”.
On Wednesday, MEPs overwhelmingly adopted a resolution calling for resolute measures against Beijing.
Meanwhile, 44 EU industries, including chemicals, machinery, metals, solar, glass and cement, issued a joint statement on Friday warning that “Europe cannot maintain and grow its industrial base, quality jobs, and attract investment without the ability to respond effectively to unfair trade practices and distortions”.
