The EU has reached a preliminary agreement with China to significantly reduce hybrid car shipments into the bloc.

The agreement follows an abrupt surge in hybrid car sales by Chinese brands across Europe, led by BYD.

This surge escalated trade tensions and piled pressure on European carmakers.

Following talks between EU Trade Commissioner Maros Šefčovič and his Chinese counterpart, an agreement was reached on Friday to significantly reduce hybrid car shipments to the EU.

European carmakers, under pressure from companies such as Chery, have been losing market share in China, where competitors develop new models more efficiently.

In Europe, appealing line-ups, including BYD’s Dolphin hatchback, offer robust electric vehicle technology at affordable prices.

This shift has forced carmakers such as Volkswagen to downsize workforces under broad cost-cutting drives.

Šefčovič stated that the agreement was the first of its kind and the result of “intense” negotiations conducted with China since June to reduce a daily trade deficit of 1.18 billion euros, which has caused mounting strain between the two economic powers.

Speaking at a press conference in Beijing on Friday, Šefčovič said the agreement “creates the possibility to reduce Chinese [hybrid vehicle] exports by more than half,” adding that this would lead to a reduction of “several million” rechargeable and battery-powered hybrid vehicles over the next four years.

“China agreed to reduce its exports without first entering a trade tension phase; this is happening for the first time,” the Commissioner said, referring to the standard investigations that must precede the introduction of protective measures under WTO trade rules.

Šefčovič said the Chinese recognised the rising political pressure across every member state in Europe, where “literally thousands of job losses” were risked due to an influx of cheap imports from China across multiple sectors, including chemicals and textiles.

Noting that EU leaders “clearly expected very rapid action” from the European Commission, and that the Chinese were aware of this, he stated:

“I am pleased to say that our Chinese partners appreciated this very strong political argument; therefore, we can reach a negotiated solution. This is not the end of the process. This is a very important first step, but only a first step.”

Earlier this week, senior EU officials announced that they would travel to Beijing to develop a pilot programme, which they termed a “proof of concept” with a single sector, hoping it could later be expanded to other areas under pressure from Chinese competition.

Šefčovič noted that he attached “great importance” to the negotiations because once a trade war begins, it is “very hard to stop.”

As part of the 16-point agreement, Beijing and Brussels will continue negotiations on automobiles, export restrictions on rare earth elements, and greater market access for EU food and beverages entering China.

China stated that both sides would adhere to “procedures on company price undertakings” for hybrid cars, implying that one way to cap sales could involve setting higher minimum prices for Chinese-origin cars sold in Europe.

A statement from the Chinese Ministry of Commerce noted that China was “willing to continue facilitating the approval of export licences for rare earth elements and permanent magnets destined for the EU.”

The statement also added that both sides “reaffirmed their commitments to handle differences appropriately within the framework of WTO rules, and to stabilise and balance bilateral trade and economic relations.”

In a statement issued today (12 October), the Chinese Ministry of Commerce stated that following “intensive consultations” between the two sides, the European Union’s new hybrid vehicle arrangement would allow export growth to continue, with an allocation for China that is no smaller than that of any other country.

The ministry added that this consensus “strongly protects the practical interests of Chinese enterprises, prevents an escalation of China-EU trade tensions, and provides a stable, predictable, and sustainable trade and investment environment for both sides.”

According to Chinese customs data, Chinese hybrid vehicle exports to the 27 EU member states tripled in the first half of this year to $7.5 billion, up from $2.5 billion in the same period a year earlier.

This figure is nearly nine times the $845 million in exports recorded across the whole of 2021.

Since the EU began applying additional tariffs on Chinese-origin electric vehicles in 2024, Chinese carmakers have increasingly turned to plug-in hybrid vehicles, which remain exempt from these additional duties.

Inadequate charging infrastructure in parts of Europe has also supported demand for plug-in hybrid vehicles, which are marketed on long range and high fuel efficiency.

According to Jefferies, SAIC, BYD, and Chery account for more than 90% of Chinese-origin hybrid vehicle sales volumes in the EU, with hybrid cars representing over half of these manufacturers’ European sales.

Support for the agreement also came from Renault. CEO Francois Provost argued that the European Union had reached an initial “important milestone” with the deal to slow the influx of hybrid vehicles from China, contributing to shaping the future of the European automotive industry.

“I had urged him to reach an agreement as soon as possible. Without an agreement, we would have faced a trade war with China, which would have been a ‘lose-lose’ situation for everyone,” Provost said.

Provost was among the business leaders who met Šefčovič ahead of this visit, which aimed to address widening EU trade imbalances.

Prior to talks with Chinese Commerce Minister Wang Wentao, France and Germany urged the EU to significantly broaden its retaliatory economic powers and investigate whether subsidised imports were damaging sectors such as chemicals and plastics.

In France, Renault already relies on several Chinese suppliers. Envision AESC assembles electric vehicle batteries for the bestselling R5 city car, as well as the R4 and Alpine A290 models, at a facility near Renault’s car assembly plant in Douai, northern France.

“We need Chinese companies to invest heavily in the European value chain, rather than merely setting up ‘screwdriver factories’,” Provost said.

Provost also called on the EU to move quickly on so-called “Made in Europe” rules, which could establish a local framework for Chinese players:

“If Europe does not take rapid decisions now, the collapse of the European automotive industry risks continuing. At least on the Chinese front, some progress has been made thanks to Commissioner Šefčovič.”

Editor’s note: Speaking at the East-West Forum held in Istanbul on September 26, Prof. Abdullah Baabood addressed the heavy toll that wars and destruction in the Middle East have inflicted on the peoples of the region. Noting that the attack on Iran has also imperiled the Gulf states under the American security umbrella, Baabood stated that the closure of the Strait of Hormuz has adversely affected oil and natural gas trade, imports, and regional economies. Stating that relations with the US and the future of the American military presence in the region are now being questioned more than ever, Baabood stressed that regional states must shape their own security through a shared understanding rather than leaving it to the decisions of foreign capitals.

First of all, good afternoon, everyone. I hope you are still awake.

Thank you, Pascal. I also thank Tunç and Harici for their kind invitation.

Being the last speaker is always a great thing because you can recycle all the good ideas you have heard throughout the different panels. But I will spare you that and offer something quite different.

I had thought I would be talking about something else, but I have changed my mind because some of the topics I wanted to address have already been covered.

Let me offer some reflections from someone who comes from the region. Although it says I come from Waseda University, which is in Japan, and we both worked at the same university, where I still work, I am originally from Oman. That is why it says Muscat there.

When you look at the Middle East today, since the British withdrawal, or even before, what do you see? Conflict, destruction, and wars lasting for decades.

We ask ourselves how much longer this will continue. When we look around us, we see devastated states and people being killed almost every day.

Not only in Palestine, which is a separate issue and has already been discussed. Look at Lebanon, Syria, Libya, Sudan, Somalia, Yemen, and Iraq.

I was once speaking to a diplomat and said: “All of this is happening. Could this be a conspiracy theory? I don’t believe in conspiracies.”

He said: “If it is not a conspiracy, what is it? How can you explain all of this?”

I still cannot figure it out. Perhaps you can.

The few remaining countries in the region that were stable, secure under the American umbrella, as it were, and prosperous because of oil and gas were the Gulf states.

What happened? President Trump decided to attack a neighbouring country unlawfully, knowing full well that Iran would retaliate against the American presence in the region.

What does that mean? It means our countries in the region would be attacked by Iran, as would some of our infrastructure.

Not only that, but the Strait of Hormuz is now closed. It was open; now it is closed. All the Gulf states, with the possible exception of Oman, rely on the Strait of Hormuz for their oil and gas exports and their imports.

Their economies are now suffering. It has been six or seven months, and we do not know how much longer this will continue. The region is paying a very high price for someone else’s decision.

Someone in Tel Aviv and someone in Washington decided that they wanted to do this. We do not even understand the reason.

If it was the nuclear issue, that had already been settled a long time ago through the JCPOA. Iran has also always said that it would never enrich uranium to produce nuclear weapons or a bomb.

Even before the war, the Omani foreign minister was negotiating with the Iranians and the Americans, and the Iranians had agreed to almost everything President Trump wanted.

That prompted the Omani foreign minister to appear on television and say that he was surprised the decision to go to war had already been taken while negotiations were still underway.

From the region’s perspective, we look at this and think: You have devastated everything. The entire region around us is devastated, and now we are too. Yet we are your allies. We are under the United States’ umbrella.

We have given you all the support you needed. We ensured that you received oil and gas. We ensured that the global economy functioned well and received the energy it needed.

We invested the revenues from oil and gas in your economy, your technology, your know-how, and your weapons. This is how we are repaid.

I think many questions have now been raised about the future of the relationship with the United States, including the future of American bases and the American presence in the region.

I believe America has shot itself in the foot in this case, perhaps even more than that.

At the public level, there is considerable resentment. It is not only because of the unconditional support for Israel in Gaza, the massacres, and the genocide that people have witnessed, but also because of what is happening now.

Many questions will therefore be raised. I think this conflict will further accelerate the changes taking place globally.

Let me conclude with one point. I think the region must begin thinking outside the box and beyond reliance on American or other foreign security umbrellas.

It is time for the region to start thinking about its own security. Its security does not have to be decided in Washington, London, or anywhere else. It must be decided within the region, through collaboration among regional countries.

Many countries in the region can help support its security and stability. This does not mean saying goodbye to the Americans. They will remain allies. But we also need to diversify our relationships with China, Russia, India, and other powers.

Türkiye is, of course, playing a very important role here. So is Pakistan.

I think we need a regional mechanism that ensures security, stability, and economic development, while making us less dependent on foreign powers to secure our region.

Thank you very much.

Editor’s note: French geopolitical analyst Georges Kuzmanovic, in his speech at the East-West Forum held in Istanbul on September 26, emphasized that the West, particularly the European Union, is in a profound political and moral collapse. Stating that Western leaders are completely detached from reality and constantly fuel war out of resentment born from failed globalization, Kuzmanovic pointed out that Europe has lost its sovereignty to neoliberal oligarchies and US tutelage. Expressing that the sabotaging of the 2022 Istanbul Accord by NATO and the relentless sanctions ended in failure, he conveyed that the West cannot come to terms with the independent rise of the Global South.

Well, thank you first for organizing this gathering. This is a great idea, this East West Forum. And I am here also to say to everybody hello from Emmanuel Todd, who was not able to come. He was invited, but he had family issues. And yeah, I would like to see the comeback of the European Enlightenment. But I think that we are first to hit the wall and this is what we are doing. As Thomas expressed, we are in a rapid decline. And in order to have a new Europe, we need to have a change of our leaders. And as Mikael von der Schulenburg said, our leaders, most of them are completely disconnected from reality in a point that is really Orwellian.

And that’s why EU right now is really a pole of instability. It’s always about war talks, war talks, war talks. Firstly against Russia, of course, but not only, of course, Iran. And somewhere somehow with China and in the future with India, it’s already started to build up the mindset again against India because it is rising. And the reason, the profound reason, is because all these leaders, especially the politics and mediatic leaders, a little bit less the industrial businessmen, but they are pissed off. They are pissed off because the globalization went completely wrong. They organized it in order to get all the benefits and all the rest of the planet to work and to be thankful to be working for the Western elite. Well, that doesn’t go well.

And also they’re speaking about European values, democratic values, respect of human beings. But the problem is that you cannot have these values if 10% of the population is consuming 50% of world resources. So that’s the basic problem. And the rest of the world is saying it’s enough and they are not accepting it. So that’s why they’re in complete panic, I think. And that’s why they are more and more vassalized to the United States in the hope that somehow the next strike, the next bomb, the next attack will change something. Because of course all these people who are running Russia, Iran, China, India, Modi is a bad guy, everything. Well, if there is a one strike, the people will rise and change the government because we are the good. And these people of course understand the good. And all their leaders are bad. So there is no space for negotiation. And when you don’t have space for negotiation, well, you cannot find any solution.

And there is a saying from a French humorist, it’s very funny, translate in French is the enemy is stupid because it doesn’t understand that he is the enemy. That’s exactly the mindset. And that’s why all the enemies are somehow Hitler. So Milosevic was Hitler and Saddam Hussein was Hitler and Gaddafi was Hitler and of course Putin, he’s Hitler. And it’s absurd. First Hitler loses hands. If everybody is a Nazi, then nobody’s a Nazi, which is a problem. And of course you cannot discuss with a great evil, so you cannot find solutions.

And I feel the same. I come from the left. I’ve been a long time political leader in the left parties and I have the same feeling with left parties. Until five, six years ago, they were very much about anti globalization protest and gatherings. But if you have noticed, there is no more anti globalization gatherings because it was all about left people from left, European left parties or American explaining to the south, global, global south people how to, how to become something, how to make the revolution, how to grow. But now that these global south countries are organizing by themselves, it’s less interesting.

Yeah, of course we, we need to, if we, if we want Europe to come back on international stage, we need to get back our sovereignty. This has been already told. So of course we lose it. We lost it for united Europe, for sorry, for the European Union, for NATO, but also and eventually for our own oligarchs. And that’s maybe the main problem is that this neoliberalism dogma created an oligarchy in western countries that has taken power. If I take, if I take the example of France, it’s nine billionaire controls like 95% of the medias and six among them are producing weapons. So here we are.

And they are also pissed off because as it was said in 2022 with the memorandum of Istanbul, which was a good solution. A few weeks after the start of this terrible war in Ukraine, which is kind of a third European suicide. Well, as you know, the story will not repeat. NATO countries, especially Boris Johnson went to Kyiv and said, guys, you have to continue the war. And they were convinced the deal was hold the line six months against Russian soldiers. We will defeat them economically and this doesn’t happen. And since they are in complete disarray, so we are on the 21st, 22nd, I don’t know, bunch of sanctions. It didn’t work.

And at the same time, Americans have lost a war in five weeks in Iran. So it’s terrible for people who consider themselves as the leader of the world. And as NATO even said, they have unconscious belief that they are the tops of the world and the rest are the barbarian. Well, if you don’t quit that mindset, then you cannot advance. You can do nothing. It’s so crazy that they are not even interested in what’s going on in Global South. I know because with my friend we created this media fragrance, popular Pedro, who is here. We are traveling around the world to cover the BRICS summits. Well, we are about the only European journalist to be there. It’s crazy. This is not covered even recently in New Delhi.

Well, to summarize with leaders that are, as Colonel Davis said and the others are blocked in 92 and in the Fukuyama concept of the end of history, with people that cannot see the world, that only see the world as war and they have to win the wars, even if it’s absurd, they have not the means to defeat the opponent. I think we have a bigger role. That’s why it’s here. What you’re doing is fantastic. It’s that we have to push for peace. As Professor Zhang Weiwei said, as the first of the six pillars is peace. And what we are all doing as we can is to push for peace. And because it went very wrong.

I think I wouldn’t agree with your interpretation of socialism, because it’s of course based on the Marx work. And if you read Marx, it’s not against violence. It’s not about peacefully achieved upgrade of the human society. On the contrary, it’s a violence blood, even more blood would uprise the majority. It’s like injustice of the humanity that found itself embodied like Haitian way into a working class. And that is why all these injustice allegedly embedded in a working class. Given that working class right to forcefully by war, by killing, overtaken the society and impose violently that imaginary society of communism. So it’s not socialism is like. It’s not democrat socialism of the post second World War Europe. No, it’s something else.

I wanted to add something else, but now I forgot. Yes. In the Second World War, in Croatia, nowadays, Croatia, there was Ustaše state with of course, fascist ideology. Puppet state, they say. But not puppet state, but ally state of Nazi Germany, where Catholic Church was hand in hand with this Ustaše movement. And not a single priest would say no to killing of around 1 million Serbs, Jews, Roma in a system of concentration camps. So even there were priests involved in killing and baptizing these Serbs, like rebaptizing into Catholicism. So we. Well, it’s a very complex phenomenon.

Yeah. It’s about the rapid decline and schizophrenia of our countries. As Colonel Davis is often saying on Deep Dive. It’s bizarre because our leaders are preparing us for war against Russia since already four and a half years. Last year, in the gathering of the mayors of France, which is not the place, the chief of staff took the microphone and it was a speaker and he said that we have to prepare for war in 2030 against Russia. Okay, why not? But there is no conscription, no off conscription, no more tanks built, no more ammunitions. And it’s strange, but there is one thing that is that the boat, a lot of tanks for civil arrest, for the gendarmerie and for the police, and both units are armed to the teeth.

And I think that, okay, they cannot make peace with Russia right now. And all these talks, war are, if I take the example of France, in which we have a presidential election, it is to avoid the main discussions which are why our debt is so crazy, why and is rising very fast, why interest rate is rising very fast, almost eating 5% for the 10 years or 80. Why, why the young people cannot have employment, why the wages are so, so, so, so small, why the diesel price will hit €3 per liter, which is completely insane, and nobody will be able to work on that price. So in order to avoid that and to prepare for the civil unrest will come. They’re speaking about war in Russia, but I’m saying that they’re preparing more to fight their own people.