After trade negotiations between the European Union and China, the EU is planning to establish import quotas for Chinese hybrid cars as early as December, with the China-EU Chamber of Commerce and some economists taking a cautious stance on how to implement it, believing that the actual effects need to be evaluated.
The EU and Chinese authorities reached a “understanding” on hybrid car trade last week, issuing a joint statement stating that they reached a consensus list of 16 items, which will continue to explore the possibility of lowering tariffs on certain goods, as well as reaching an understanding on hybrid car trade (plug-in hybrid vehicles) in a manner consistent with World Trade Organization (WTO) rules.
The EU plans to limit the import of Chinese hybrid cars to 350,000 vehicles annually in 2027, with vehicles exceeding the quota potentially facing additional tariffs. This arrangement aims to alleviate trade tensions between China and the EU, creating room for both sides to rebalance their trade relationship.
According to a report from Reuters on October 12, the European Commission is set to announce trade protection measures in December to curb its trade deficit with China and reduce its dependence on China in key material supplies. These protective measures will also apply to other EU trading partners and last for four years, reducing China’s exports of hybrid cars to the EU and decreasing China’s market share in manufacturing cars from the current 12% to around 6%.
EU leaders will convene on October 15 for a summit where the China issue will be a primary topic of discussion. European Commission officials, while outlining the details of the agreement reached with China, mentioned that the leaders may assess the agreement and decide on further actions necessary.
A senior European Commission official stated, “Dialogue must yield results, and it has indeed yielded results. However, it seems unlikely that our unsustainable structural imbalance issue with China can be resolved solely through dialogue.”
The official added, “So, the question is, what else can we do besides dialogue?”
Meanwhile, China is set to reduce tariffs on certain car parts and halve tariffs on shoes, ice cream, and olive oil. These measures are temporary and cover commodities worth about €4 billion in total exports.
Regarding the various consensus reached in the EU-China negotiations, the China-EU Chamber of Commerce declared on its official website that it signifies both sides’ recognition of the urgent need to translate verbal commitments into concrete actions. However, the realization, implementation, and timing of these agreements still depend on specific execution details.
The China-EU Chamber of Commerce is a non-profit non-governmental organization that supports and represents the interests of EU businesses operating in China.
A research report released on October 12 by Luo Zhiheng, Chief Economist at Yuekai Securities, suggests that the progress in the EU-China phase consultation does not mean that structural competitive pressures have dissipated. Understanding the changes in the scale of trade, country distribution, and commodity structure between China and the EU is crucial for assessing the causes of friction, the scope for cooperation, and the direction of economic and trade relations between the two sides.
The report indicates that in terms of total goods trade volume, China and the EU are each other’s second-largest trading partners. In recent years, China’s exports to the EU have shown rapid growth, leading to a significant increase in China’s trade surplus with the EU. The trade between China and the EU is shifting towards a new pattern of “intensified competition, increased friction, and continuation of mutual complementarity.”
Radio France Internationale (RFI) believes that the Chinese domestic market is weak, with weak consumer purchasing power, leading to a large amount of excess production capacity flooding into Europe. These products not only compete with European industries such as automobiles, household appliances, tires, chemicals, pharmaceuticals, and even the future aircraft industry but also threaten European industries and businesses, jeopardizing jobs in Europe and potentially undermining European social models.