China and EU reach ‘understanding’ on hybrid vehicles after crunch trade talks

The European Union and China concluded a trade agreement on hybrid electric vehicles following intense negotiations in Beijing on Friday, according to a statement from China's commerce ministry. Beijing expressed willingness to expedite licenses for the export of rare earth minerals to Europe. The sides agreed to continue discussions on reducing tariffs and establishing minimum price deals, which could allow Chinese electric vehicles to enter the EU market with a lower duty rate.

The 16-point joint agreement, not yet endorsed by the EU, outlined various deliverables from the latest talks, which are set to resume in March next year. Key areas of discussion included further negotiations on other longstanding trade issues such as medical equipment and power inverters. Specific details regarding the hybrid car deal were scarce.

EU Trade Commissioner Maros Sefcovic, who met with Chinese Commerce Minister Wang Wentao and Vice-Premier He Lifeng, had been urging Beijing to limit exports of these vehicles as shipments to Europe had significantly increased. Tensions between China and the EU have been high due to numerous trade disputes, with calls in Europe for stronger EU action to curb the influx of Chinese exports.

EU Trade Commissioner Sefcovic will present the outcome of the talks to EU national leaders next week as the European Commission seeks guidance on its response to what is described as the "China shock 2.0". Member states are moving towards a more stringent approach, as evidenced by a leaked joint paper from France and Germany advocating for immediate action against countries or firms suspected of cheating on trade.

The European Commission is anticipated to unveil new trade mechanisms and initiate investigations to curb Chinese imports in sectors such as chemicals, plastics, and automotive by the end of the year.