EU seeks China curbs on hybrid car exports to avert trade row, FT reports

The European Union has approached China to impose voluntary limits on hybrid car exports to the EU in an attempt to avert escalating trade tensions, according to a report by the Financial Times. Brussels desires China to cap its hybrid vehicle sales within the EU market at roughly 15%, according to people briefed on the issue. An EU official quoted by the FT declared that if China fails to limit its exports to the EU market, Brussels will take action.

This matter pertains to preventing deindustrialization and promoting managed trade. The EU has previously sought to restrict exports of other goods, such as chemicals, while simultaneously encouraging increased purchases of European exports by China. European Commission President Ursula von der Leyen announced on Wednesday that the EU will utilize all available means to reduce what she termed an unsustainable trade deficit with China.

In a speech to the European Parliament, she noted that the EU's goods trade deficit with China, which reached €360.6 billion ($413.4 billion) last year and increased by 9% in the first half of this year, had reached a critical point, resulting in a second "China shock" through deindustrialization. European Trade Commissioner Maros Sefcovic, who is spearheading talks with China to address the trade gap, aims to achieve tangible results by October and is expected to visit China early next month.

The EU claims that a surge in Chinese exports, including chemicals, batteries, and vehicles, has been fueled by overcapacity. Beijing disputes this claim, asserting that concerns over economic imbalances and excess capacity are deemed protectionist and intended to curtail China's growth.