Beijing. In the trade dispute with the EU, China accepts a reduction in Chinese exports of hybrid cars to Europe. Deliveries to the European Union could fall by more than half as a result, said EU Trade Commissioner Maros Sefcovic after negotiations with China's Trade Minister Wang Wentao in Beijing. China had previously released a statement in which it only spoke of an agreement on the issue without providing further details.
According to Sefcovic, this is the first time that China has accepted to moderate its exports without first going through a period of trade tensions. Specifically, the Slovakian explained that in the case of hybrid and plug-in hybrid cars, the number of vehicles exported from China to Europe will be reduced by “several million vehicles” over the next four years. According to both sides, the agreement is compatible with the rules of the World Trade Organization (WTO).
The agreement could alleviate some of the pressure from Chinese competition for German car manufacturers. Hybrids are now the largest market segment in the EU. In August, more than 44 percent of newly registered cars were hybrids or plug-in hybrids - i.e. cars that combine an internal combustion engine with an electric motor and a battery, some with a charging port (plug-in).
As with purely battery-powered electric cars, Chinese manufacturers were also able to make gains in this segment in Europe. VW boss Oliver Blume warned a few weeks ago: “Chinese manufacturers are aggressively pushing into Europe and are quickly gaining market share.” In the second quarter, every third plug-in hybrid sold in Europe came from Chinese manufacturers. German manufacturers cannot keep up with their prices - experts speak of a “price war” in view of heavy discounts from manufacturers like BYD.
The Association of the Automotive Industry (VDA) welcomed the agreement between the EU and China. The agreement is an initial positive signal, said VDA President Hildegard Müller, according to the statement. At the same time, she adds that a final assessment of the agreements will only be possible once the specific content, framework conditions and effects on the automotive industry become known in detail.
The MEP Bernd Lange (SPD), chairman of the parliament's trade committee, said: "First progress is visible, but it was not yet a major breakthrough." Lange praised the agreed reduction in imports of Chinese hybrid cars. This alleviates the pressure on European car manufacturers without sealing off the European market.
However, the agreement on hybrid cars was only one of 16 points in the joint declaration by the Chinese and Europeans. Among other things, both sides agreed to look for a way to reduce tariffs on certain goods within WTO rules. What was striking was that only the EU communication also spoke of a possible “elimination” of tariffs.
Export controls were also discussed, although there were signs of less movement on this contentious issue. Both sides agreed on greater transparency when being included in or removed from an export control list.
China agreed to continue to facilitate the issuance of export licenses for the supply of rare earths and permanent magnets to the EU under the fast track procedure. The EU wants to accommodate Beijing by making it easier to grant specific priority approvals for dual-use goods, i.e. for both civilian and military use.
Sefcovic emphasized that we are currently examining how the process can be made even smoother and more user-friendly for European companies. China is a major global producer of rare earths. The export controls had caused supply fears in industry in Europe.
The results will now be presented to EU Commission President Ursula von der Leyen and to the EU member states, said Sefcovic. This is where the final decision lies. Wang and Sefcovic also promised another meeting via video link in January. The third round of the Trade and Investment Consultations (Tic), which was launched in June, is scheduled to meet in March.
In the event that China as a whole does not give in to the trade conflict, Germany and France in particular are pushing for more decisive action against Chinese imports in view of the growing damage to European industry. Among other things, they are calling for a new instrument that could quickly restrict access to the EU market for certain products.
Last year, the EU imported goods worth around 360 billion euros more from China than it exported there. Brussels accuses Beijing of using state subsidies to ensure unfair competition. China, on the other hand, warns against protectionist measures by the EU.
