China's Ministry of Commerce said Friday that "The European side cannot fantasize about gaining benefits by exerting pressure, nor should it underestimate China's determination and capability to protect its own interests," pushing back on claims that EU leverage forced a hybrid vehicle deal as "completely groundless." It said the understanding with Brussels benefits both sides, fits World Trade Organization rules, and helped sidestep a fresh escalation in trade tensions.
Beijing also urged the EU to move in the same direction to promote sound and stable economic and trade relations. The statement followed reports that an EU summit discussed a "two-track" approach that combines continued talks with wider trade curbs and possible use of the bloc's anti coercion instrument in more areas.
Bloomberg said the EU is crafting fresh trade authorities that, in the most severe scenarios, could completely bar entry to the single market, part of an effort to reduce its trade deficit with China. EU leaders asked the European Commission to deliver a proposal by year end, people familiar with the matter said, and the commission is reviewing trade data to consider replicating a hybrid car import cap in sectors where Chinese shipments are rising, including chemicals and machinery.
A week ago, negotiators from Beijing and Brussels reached a 16 point understanding that spans investment and trade, export restrictions, and intellectual property rights. As one element, the EU announced a ceiling of 350,000 on Chinese hybrid vehicles entering the bloc, which Europe's auto industry sees as a win.
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China's trade surplus is already near 1 trillion dollars, and with the fourth quarter typically the strongest for exports, it is likely to widen, according to China's General Administration of Customs. The bottom line: policy is shifting in real time around autos, chemicals, and machinery, with the EU weighing tougher tools and caps that could reshape import flows and competitive dynamics in those categories.
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