China and the European Union reached a preliminary understanding on October 9, 2026, that could cut Chinese hybrid and plug-in hybrid vehicle exports to Europe by more than half while expanding EU market access in China and easing rare-earth export licensing.
The arrangement emerged from two days of talks in Beijing between EU Trade Commissioner Maroš Šefčovič and Chinese Commerce Minister Wang Wentao. Šefčovič said the measure could prevent several million vehicles from entering the European market over the next four years, although the estimate is based on projected export growth rather than an immediate fixed quota. China’s Commerce Ministry included the hybrid-vehicle understanding in a 16-point list of agreed outcomes but did not explain how the export limits would be enforced.
The sides also discussed lower duties on European products worth about €4 billion, including car parts, olive oil and footwear. China additionally agreed to facilitate licensing for rare earths and permanent magnets, materials critical to Europe’s automotive and technology industries. The understanding is intended to ease the EU’s trade imbalance with China and shield European automakers from rapidly expanding, lower-priced Chinese competition.
However, the proposal still requires approval from EU leaders, and both sides have left important implementation details unresolved.