The European Union will limit imports of hybrid vehicles from China to about 350,000 a year for the next four years, the European Commission has confirmed, following a second round of trade and investment talks in Beijing. The quota is expected to take effect in December and to cut Chinese hybrid exports to the bloc by more than half. Officials say Beijing supports the arrangement, though China's commerce ministry has said only that the sides reached an "understanding" consistent with World Trade Organization rules, without publishing terms.

The measure is to be taken under WTO safeguard rules, which allow faster action than anti-dumping investigations. Cars above the quota will not be hit with tariffs but will be held in customs at European ports. Chinese-branded cars assembled inside the EU, such as in Hungary or, in future, Spain, will be exempt, while European firms making cars in China will be covered. China's hybrid exports to the EU tripled to €6.7bn in the first half of the year, and about 800,000 battery and plug-in hybrids are expected to be sold in the bloc this year. Hybrids became a growth area after the EU imposed duties of up to 45.3% on Chinese pure electric cars in 2024, while plug-in hybrids faced only a 10% tariff.

The benchmark is unclear. Trade Commissioner Maroš Šefčovič spoke of cutting exports by "more than half", but analysts note this may refer to projected future growth rather than today's levels. Šefčovič called it the first time China had agreed to moderate its exports without a prior period of trade conflict. As part of 16 outcomes, China is to speed up rare earth export licences and cut duties on some European goods, including footwear, olive oil and ice cream, and drop some tariffs on auto parts. Beijing described the talks as "constructive" and said China is "a partner in solving problems", not their source.

The deal comes as the EU's goods trade deficit with China widens; one French analyst expects it to exceed €400bn this year. Officials describe a "paradigm shift" from boosting exports to China towards curbing imports, driven by fears of deindustrialisation and job losses. Leaders are due to discuss a French-German proposal for a powerful new instrument that could block market access for certain goods, for example if China restricted rare earths. A commentator in Germany's taz newspaper credited a shift in Berlin's stance for China's concession, and said the pause helps European carmakers. But he argued that a deal covering one sector could simply push China's surplus into other products, and that lasting rebalancing would need Chinese currency and consumption reforms or broader EU countervailing duties.

European officials stress the talks continue. "This is by no means the end of the story," one said. Andrew Small of the European Council on Foreign Relations warned that China may draw the EU into drawn-out negotiations, and that political sentiment in Europe has moved a long way. Meanwhile, Chinese carmakers are also looking to produce outside tariff reach, including in Morocco, which has free trade agreements with the EU.