China Agrees to ‘Moderate’ Car Exports to Europe

China and the European Union (EU) reached a critical deal on Friday to curb Chinese hybrid vehicle exports, averting a full-blown trade war between the two economic powers.

EU Commerce Chief Maroša Šefčovič confirmed that the agreement will moderate shipments of plug-in and standard hybrids, potentially cutting projected Chinese auto exports to Europe by more than half—preventing millions of vehicles from entering the market over the next four years.

The compromise directly addresses mounting European anxiety over cheap, state-subsidised Chinese automobiles that have undercut domestic automakers.

Sigrid de Vries, Director-General of the European Automobile Manufacturers’ Association, praised the outcome as a positive step toward managing China’s market presence in an orderly manner.

Šefčovič described the talks as a vital first step toward rectifying an “unsustainable” trade imbalance, where the EU currently runs a daily deficit of roughly €1 billion ($1.1 billion) with Beijing.

Beyond automotive controls, Beijing agreed to maintain export licences for critical rare earth minerals and permanent magnets destined for European industries.

This supply guarantee offers significant relief to European firms navigating complex trade restrictions imposed following recent global tariff disputes.

While both sides acknowledged ongoing friction regarding currency manipulation and industrial subsidies, they committed to resolving disputes diplomatically and scheduled follow-up negotiations for March.