It was already late on Friday evening in Beijing when the EU Trade Commissioner said a sentence that seemed particularly important to him: "For the first time, China is now accepting to reduce its exports without there being a major open conflict beforehand - I appreciate that," said Maros Sefcovic. This first time he is referring to looks roughly like this: China has promised to sell significantly fewer hybrid cars to the European Union in the future than previously forecast.
The export figures for Chinese hybrid vehicles to Europe have increased sharply in recent months because they are not subject to the customs regulations that the EU issued at the end of 2024 for purely electric cars “Made in China”. "We're talking about a period of four years - and according to our calculations, that means several million fewer Chinese cars entering the European Union," said the EU Trade Commissioner.
The European auto industry is initially satisfied with the outcome of the negotiations. There are very fundamental reasons why China is willing to compromise, says Tim Rühling from the EU Institute for Security Studies: "They were afraid that there would be really massive restrictions on exports to Europe, across a wide range of sectors," said Rühling. "And they recognized that something was actually moving in Europe, especially in Berlin."
The agreement now is an attempt to ward off Europe's major counterattack with a small concession. Recently, Chancellor Friedrich Merz and French President Emmanuel Macron called for protective instruments from the EU Commission for the European economy that should have a faster and sharper effect.
The European Union is the third most important foreign market for the People's Republic. “Exports are actually a key growth driver for China, and although Europe only accounts for 15 percent, it is to some extent a premium market because companies in Europe can charge much higher prices for their products,” says Rühling. "That means whether a company makes a profit or writes a loss very often depends on the European market."
Even if Chinese manufacturers can demand more in Europe than elsewhere, the EU Commission complains that prices are still artificially low - partly because of massive government subsidies.
The result: China sells three times more to Europe than it buys from there. The EU trade deficit has reached record levels. Entire industries in Europe are in dire straits. "The trade deficit is a gigantic challenge for the EU that is felt in every member country. This deficit is not sustainable and requires a reliable path towards a balance," said EU Commissioner Sefcovic in Beijing. The agreement on hybrid car exports is a first step towards this.
Another important issue for the EU is access to rare earths, which are needed as raw materials for the development of new technologies. China has a virtual monopoly on mining and processing - and makes exports difficult through strict controls. In the talks in Beijing, China has now signaled its willingness to allow EU companies to obtain export licenses for important raw materials more easily.
This is more of a symbolic than a substantive step, says analyst Rühling: "If you look at China's export control law, then China could give real general licenses for three years, for a larger number of European companies in larger quantities." Here, China could show significantly more willingness to compromise than it actually does, according to the expert.
After all: Beijing has recognized the political concerns that Europe has with China's export-driven growth, says the EU Trade Commissioner. According to Anyalyst Rühling, this does not mean that China wants to be part of the solution to the problem: "China usually reacts to power and pressure, and Europe must insist that the next negotiations with China relate to larger product groups - i.e. to entire economic sectors and not just to a single product like the hybrid cars now."
The EU heads of state and government want to discuss the results next week. The next round of negotiations between Brussels and Beijing is scheduled for January.
