CHINA AND THE European Union reached an understanding to “moderate” hybrid vehicles exports on Friday, which could prevent millions of Chinese cars from being shipped to Europe, the bloc’s commerce chief said following talks that dispelled a much-feared trade war.

The EU’s Maroš Šefčovič said the understanding would “moderate China’s export of hybrids and plug-in hybrids to the EU”.

“This opens the prospect of cutting China’s export by more than a half” based on projections over a four-year period, he told reporters after the talks.

“By this step, we’re actually preventing several millions of cars exports from China to the European Union,” he said.

The critical automotive sector was a focal point in the lead-up to talks, as cheaper products coming from China have strangled European industry and Brussels has sought to manage those exports.

Europe’s main auto group welcomed the deal as “a positive step in easing trade tensions”.

“Today’s announcement can help facilitate the transition to a new era of Chinese presence in the European market in an orderly way and this is in the long-term interests of all parties,” Sigrid de Vries, director-general of the European Automobile Manufacturers’ Association, said in a statement.

The agreement comes as Chinese-manufactured cars have been gaining ground in Ireland. They accounted for 6.35% of new-car registrations in the first seven months of 2026, up from 3.38% in 2025.

Hybrid vehicles are also increasingly popular among Irish motorists, with conventional hybrids and plug-in hybrids accounting for almost four in 10 new-car registrations in the first nine months of this year.

‘Crucial first step’

Šefčovič hailed the talks as a “crucial first step” towards rebalancing trade between the EU and China, which he previously said was marred by an “unsustainable” deficit.

The EU trade deficit with China runs at around one billion euros every day.

“It’s a crucial first step, but only a first step in the process of rebalancing,” Šefčovič told reporters, adding that “dialogue needs results, and where the dialogue cannot deliver, the EU will use its tools to ensure a rebalancing”.

EU-CN trade needs real rebalancing. With Minister Wang Wentao we've reached a shared understanding to:
🔹halve HEV, PHEV exports
🔹improve access to China's market
🔹further ease rare earths export licensing. A first step. I welcome the genuine engagement. We reconvene by Jan. https://t.co/SiKiZYLC8N

— Maroš Šefčovič🇪🇺 (@MarosSefcovic) October 9, 2026

In a move that will bring further relief to Brussels, Beijing also committed to continuing the supply of vital items such as rare earth minerals to the European Union.

China is “willing… to continue facilitating the approval of export licences for rare earths and permanent magnets destined for the EU”, the joint statement said.

While they acknowledged “differences”, the two sides said they were committed to maintaining trade and to hold another meeting in March.

The talks follow months of rising tensions between the 27-nation EU and the Asian powerhouse that threatened to escalate into a trade war.

Many in Europe accuse China of unfair trade practices, including supporting firms with huge subsidies, price dumping and currency manipulation.

Europe can ill afford to anger Beijing, but the stakes are also high for China, which is heavily reliant on exports to compensate for its weak domestic economy.

The EU parliament’s trade committee chief, Bernd Lange, said ahead of Šefčovič’s trip that this “economic crisis in China” gives the bloc “bargaining power”.

Need for predictability

European companies with operations in China “recognise the importance and the real issue of the outstanding trade imbalance”, Adam Dunnett of the EU Chamber of Commerce in Beijing told AFP.

“They fully support that that needs to be addressed, but they want it to be done in a proportionate, specific and negotiated way so that we can manage the overall relationship,” he said.

Beijing’s commitment to continue providing rare earths will bring some comfort to European companies in China, who face complicated access to the critical materials under new rules imposed by Beijing last year in retaliation against tariffs announced by US President Donald Trump.

“Having a bit more transparency and predictability around that” is a key deliverable from this week’s talks, Dunnett said.

Additional reporting from Andrew Walsh