On the 15th, the European Union (EU) and the People’s Republic of China officially announced a new trade agreement that will take effect from next year. Both countries agreed to limit imports of Chinese-made hybrid vehicles to less than half of current levels; this is a joint strategy by both nations to avoid high-level trade conflicts.
According to the agreement, EU will reduce imports of hybrid vehicles from Chinese manufacturers by half compared to current levels starting 2025. China will coordinate similarly, maintaining mutually supportive relationship with domestically produced electric and battery-powered vehicles while applying same restriction.
Such restrictions could potentially ease the trade imbalance between the two countries but also carry downside that may intensify pressure on other industries. For example, Chinese electric vehicle battery production and EU's eco-friendly vehicle technology compete in a competitive position. Additionally, there is possibility of supply chain collision due to hybrid vehicle import restriction.
The agreement is expected to benefit both parties while stabilizing trade relations. However at present moment, how the implementation will proceed and what response measures domestic industry and policy makers will take remain pressing issues.