China, EU reach agreement to reduce Chinese hybrid vehicle imports

The EU and China reached a deal Friday to reduce China’s shipments of hybrid vehicles to Europe by half, forestalling a damaging trade war but doing little to address Brussels’ broader complaints.

The agreement slashes Chinese imports by millions of cars over four years, the EU’s trade commissioner said, calling it “only a first step.” The deal leaves untouched the vast majority of Brussels’ $1 billion-a-day trade deficit with Beijing.

Chinese brands accounted for one in four European hybrid sales in August, swamping Europe’s legacy automakers. Volkswagen recently announced 100,000 job cuts.

Beijing is playing for time, a Trivium China analyst suggested: “In exchange for reviews, dialogue, and ‘understandings,’ it has conceded little on the structural drivers of the EU’s massive trade deficit.”