Europe wants to contain Chinese hybrids and gives Beijing a proposal

Dafter the electrics, it's the chinese hybrid cars which generate concern for European Union. Brussels or contain its entry into the Community market and proposes to China a voluntary restriction on exports – subject to the imposition of tariffs.

The EU wants Beijing to commit itself to limiting the share of hybrid cars manufactured in China to around 15 percent of the European market, against more than a third today, they have told the Financial Times three sources aware of the negotiations.

“ If they don't limit exports to our market, then we'll do it“, said a European official quoted by the FT, adding that the goal is “stop deindustrialization” and move on to a form of “managed trade”.

The proposal comes before meetings considered decisive between European and Chinese leaders, scheduled for October in Beijing, to try to reduce trade imbalances between the two blocs.

Rebalance commercial relationship

In addition to cars, Brussels has proposed voluntary restrictions on Chinese exports of other products, including chemicals, and also wants Beijing to increase purchases of European goods.

The President of the European Commission, Ursula von der Leyen, said on Wednesday that the EU trade deficit with China, equivalent to around EUR 1 billion per day, reached a “turn point”.

“China’s second shock has arrived,” he said in the annual speech on the State of the Union.

“We will use every instrument at our disposal to rebalance our relationship. Words are good. But the acts are better”, he added.

The European Trade Commissioner, Maroš Šefčovič, is expected to travel to Beijing in the second week of October and intends to make concrete progress in rebalancing trade relations before the visit.

In June, the EU established October as a deadline for achieving “tangible results” in reducing the growing trade deficit with China, having both parties set up a forum for consultations on trade and investment to address, among other issues, difficulties in accessing their markets.

Previous with Japan is 40 years old

According to France Télécom, Brussels seeks to reproduce a agreement reached with Japan in 1986 when Tokyo agreed to voluntarily limit car exports to Europe.

The restrictions, maintained until 1999, helped Japanese manufacturers, such as Toyota and Nissan, invest in production units in Europe or establish partnerships with local companies.

The pressure on Brussels to take new measures increased after imports of Chinese hybrids reached a historic peak in the second quarter of this year.

Electrical tariffs for almost two years

The EU imposed, in October 2024, compensatory duties of up to 45 percent on electric cars manufactured in China, after an investigation concluded that manufacturers benefited from state subsidies that harmed european competitors.

Beijing rejected the charges and responded with commercial measures on European products, including brandy, meat and dairy products.

The hybrids were, however, out of the additional tariffs and are subject only to the customs rate of ten percent.

Chinese hybrids “fire”

European imports of Chinese hybrid cars increased more than ten times, from 3,800 units in October 2024 to around 50,000 in July this year, while average prices decreased, according to France Télécom.

European manufacturers, including the Volkswagen group, have advocated the application of similar tariffs to imports of chinese hybrids, at a time when the European car industry faces job cuts and increasing competition from models produced in China.

Beijing argues that the competitiveness of its products results from the efficiency of Chinese companies and rejects European accusations of unfair subsidies.