Europe criticizes subsidies: China announces hybrid car deal with the EU

Because Chinese policy subsidizes electric cars, the EU is imposing punitive tariffs. There is a lot of talk about import restrictions for hybrid cars. But they seem off the table. China announces a deal. What exactly that entails is unclear.

According to information from Beijing, the European Union and China have reached an agreement on the controversial trade issue of hybrid cars. The agreement is “in line with the rules of the World Trade Organization” and concerns, among other things, “companies’ price commitments,” said the Chinese Ministry of Commerce. The agreement will cover hybrid vehicles and electric cars. EU Trade Commissioner Maros Sefcovic is currently in Beijing for talks and should appear before the press there later.

Trade relations between Beijing and Brussels are currently tense. The EU accuses China of intentionally using state aid to fuel its enormous export surplus compared to the confederation of states.

The EU has imposed punitive tariffs on electric cars from China in 2024 and justified them with unfair state aid from Beijing. Since then, Chinese manufacturers have sold more hybrid cars to Europe. The Chinese Ministry of Commerce had previously rejected a voluntary waiver of part of its exports.

Now the ministry in Beijing announced that both sides had agreed to “further strengthen” the dialogue on export controls. China is ready to continue to "facilitate the approval of export licenses for rare earths and permanent magnets for the EU," it said in a statement. European industry relies on supplies of raw materials from China, such as lithium for batteries.