The European Union and China have “reached an understanding” that will cut Chinese hybrid car shipments to the bloc by “more than a half”, in a temporary salve to trade tensions that have threatened to boil over into a full-blown trade war. Speaking after marathon trade talks in Beijing, EU trade chief Maros Sefcovic said the deal would see China slash its hybrid car exports “by several million cars” over a four-year period. “This is the first time that China has accepted to moderate its exports without going through the phase of prior trade tensions, and I very much appreciate that,” Sefcovic told reporters in the Chinese capital. The sides also agreed to expedite EU applications for rare earth mineral export licences and improve market access for goods including car parts, olive oil and textiles, which Sefcovic said could be worth “almost €4 billion” (US$4.5 billion) in current export value. While the Slovenian official said EU national leaders would decide next week whether China’s concessions were enough, he downplayed the likelihood of an all-out tariff war. “It’s very easy to declare a trade war or any war, but it’s very difficult to stop it,” he said. “So therefore, I put so much emphasis on negotiations, and I’m glad that today I can present to you the outcome.” Sefcovic declined to share further detail on the arrangement on hybrid cars – shipments of which have ballooned in recent months – but hinted that it could follow a recent import curb the bloc placed on Chinese steel. “There are different techniques,” he said. “If you look in recent couple of months, I think you would find the answer.” A source briefed on the talks suggested that it would be a safeguard measure, by which the EU is able to place quotas and tariffs to urgently curb import surges. This is far from the end. It is a crucial first step, but only a first step in the process of rebalancing Maros Sefcovic, European commissioner for trade Earlier in the week, EU sources had explained that the bloc was seeking a “proof of concept” deal in a single sector – hybrid cars – which would be seen as a test of whether Beijing was negotiating in good faith. A joint statement by the two sides, published following two days of negotiations, said that talks would continue over reducing tariffs and creating minimum price deals that would allow Chinese electric vehicles to enter the EU market at a lower duty rate. The 16-point agreement listed a series of deliverables from the latest round of talks, with the two sides set to meet for further discussions in March next year. Most of these centred on further talks over long-standing trade disputes, including over medical equipment and power inverters. Sefcovic – who met with Chinese Commerce Minister Wang Wentao and Vice-Premier He Lifeng – had been pressing Beijing to cap exports of hybrid vehicles, as a recent surge in shipments to Europe had led to fears within the bloc that its car industry could be hollowed out. “We never had the level of intensity of our exchanges and contacts as we have [had] over the last three to four months with our Chinese counterparts,” Sefcovic said. “I want to say that this was done in good faith, and this is the result of very intense work.” But he cautioned that the outcomes laid out in the joint statement would not be enough by themselves to reduce tensions between the two sides. “I often say that genuine negotiations deserve a real try. Therefore, I appreciate my counterparts’ engagement. Having said that, this is far from the end. It is a crucial first step, but only a first step in the process of rebalancing,” Sefcovic said. “As President von der Leyen has said, dialogue needs results, and where the dialogue cannot deliver, the EU will use its tools to ensure rebalancing.” The latest talks came amid rising tensions between China and the EU over a range of trade issues, with calls growing in Europe for Brussels to take firmer action to curtail a surge in Chinese exports to the bloc. Next week, European Commission President Ursula von der Leyen will brief EU national leaders on the results of the talks with Beijing, as the European Commission seeks instruction on how to respond to what is now widely described in Europe as a “China shock 2.0”. Member states have been coalescing around a tougher approach, shown by a joint paper from the governments of France and Germany – leaked on Monday – which called for a weapon to cut countries or firms perceived to be cheating on trade out of the EU market almost instantly. The commission is then likely to present a series of new trade tools before the end of the year. It was also expected to launch a flurry of investigations aimed at quickly curbing Chinese imports in sectors including chemicals, plastics and automotive, though it remained unclear on Friday whether the progress in Beijing would alter those plans. Businesses responded positively to the Beijing talks. The China Chamber of Commerce to the EU (CCCEU) welcomed the “pragmatic outcomes”, saying they showed both sides’ “willingness to handle trade frictions and stabilise bilateral trade relations through dialogue”. The European Automobile Manufacturers’ Association said “this announcement is a positive step in easing trade tensions between the two” sides. Pascal Canfin, a lawmaker who manages the China file in the European Parliament’s trade committee, told the South China Morning Post that the hybrid deal was “a very first step towards rebalancing our trade relationship”. “But while dialogue has delivered a first result today, we are under no illusion: the imbalance is systemic,” Canfin said. “We will therefore have to go further, and we must of course not give up on using our trade defence instruments to safeguard our economic security.”