EU and China agree to curb hybrid car exports and ease rare-earth licences
Victoria Shinder2 min readEU Trade Commissioner Maroš Šefčovič announced on 9 October, after two days of talks in Beijing with Commerce Minister Wang Wentao, a deal with China that he called the end of the "first phase" of negotiations, Euronews reported.
What was agreed, in Šefčovič's words:
- Hybrid cars. "We have reached a shared understanding to moderate China's export of hybrids and plug-in hybrids to the European Union. This opens up the prospect of cutting China's exports by more than half."
- Rare earths. "A shared understanding to further facilitate China's export licensing for rare earths and permanent magnets" — the inputs the EU says Beijing "weaponised" when it restricted exports in 2025.
- Market access. Better access to China for EU products from car parts to olive oil and footwear, worth almost €4 billion in current exports, with at least €225 million in duty savings.
The pressure behind it. The EU runs a trade deficit with China of about €1 billion a day, and every EU member state now runs a deficit with China. On Monday, Germany and France asked the Commission for strong action against unfair practices, including "an immediate cut-off from the internal market if needed"; on Wednesday the European Parliament adopted a resolution calling for resolute measures; and on Friday 44 EU industries — from chemicals and machinery to solar, glass and cement — warned they cannot maintain their industrial base without the ability to respond to distortions. EU leaders will review the details at a summit in Brussels next week.
Why it matters for euro markets. A negotiated volume restraint on hybrids and an easing of rare-earth licensing reduce two tail risks at once: an abrupt trade escalation and a supply shock to European car, defence and green-tech production. The deal's value depends on enforcement detail — how "moderation" of exports is measured and policed — which neither side has yet published. The phrase "first phase" signals that the bigger asks, on overcapacity and market access, remain open.
Source: Euronews, "EU and China clinch deal over cars after heated trade talks as Brussels pushes to rebalance trade", 9 October 2026 — https://www.euronews.com/2026/10/09/eu-and-china-clinch-deal-over-cars-after-heated-trade-talks-as-brussels-pushes-to-rebalanc