EU seeks curbs on China hybrid car exports amid trade deficit push

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EU curbs on China hybrid cars

Highlights

EU has asked China to voluntarily restrict hybrid vehicle exports to around 15% of the EU market, according to the Financial Times.
European Commission President Ursula von der Leyen highlighted a €360.6 billion goods trade deficit with China in 2023, widening 9% in the first half of 2024.
European Trade Commissioner Maros Sefcovic seeks tangible progress on narrowing the trade gap with China by October and plans to visit Beijing by early next month.

Trade talks focus on hybrid vehicle limits

As first reported by Reuters, the EU has asked China to voluntarily restrict exports of hybrid cars in an attempt to avert a broader trade conflict. The newspaper says Brussels wants Beijing to keep Chinese hybrid vehicle sales to around 15% of the EU market, citing people familiar with the matter.

The report says the EU is also asking China to limit exports of other products, including chemicals, while seeking increased Chinese purchases of European goods. An EU official quoted by the FT says that if China does not limit its exports to the European market, the bloc will do so itself, describing the approach as managed trade aimed at stopping deindustrialisation.

The EU does not immediately respond to a Reuters request for comment, and Reuters says it cannot immediately verify the report.

Deficit pressure shapes wider EU stance

European Commission President Ursula von der Leyen says the bloc will use every available tool to reduce what she calls its unsustainable trade deficit with China. In a speech to the European Parliament on Wednesday, she says the EU's goods trade deficit with China reached 360.6 billion euros last year and widened by 9% in the first six months of this year.

Von der Leyen says the deficit has reached a tipping point and that Europe is already experiencing a second China shock through deindustrialisation. European Trade Commissioner Maros Sefcovic, who is leading talks with China on the trade gap, says he wants tangible results by October and is expected to visit China by early next month.

The EU argues that a surge in Chinese exports, including chemicals, batteries and vehicles, is being driven by overcapacity. Beijing rejects that claim, saying accusations of economic imbalances and excess capacity are protectionist and intended to constrain China.

Our earlier coverage of the EU’s proposed Industrial Accelerator Act examined concerns that tying public support to strict local-content rules could disrupt cross-border automotive supply chains and clash with WTO principles. It highlighted warnings from Japan’s ambassador that such requirements may penalise modern production models, even as Japanese carmakers maintain significant manufacturing and R&D footprints in Europe. The piece also pointed to EU–Japan cooperation on critical minerals, arguing that industrial resilience can be strengthened through trusted-partner collaboration rather than exclusion.

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