China-EU trade consultations take a more problem-oriented approach

Editor's note: He Yinghao is an assistant researcher at the Institute for National Strategy and Regional Development, Zhejiang University. The article reflects the author's opinions and not necessarily the views of CGTN. 

The second meeting of the China-EU trade and investment consultation mechanism, held in Beijing on October 8-9, concluded with a list of deliverables and understandings, covering automotive trade, market access, export controls and other issues. At a time of growing trade tensions, the meeting was more than an opportunity for dialogue. It suggested a shift toward a more problem-oriented approach to managing China-EU economic relations: Identifying specific disputes, working through possible solutions and setting out a framework for further negotiations.

This shift matters because competition has become an increasingly prominent feature of China-EU economic relations. The EU has imposed additional countervailing duties on Chinese electric vehicles, stepped up scrutiny of foreign subsidies and placed critical raw materials and supply chain security at the center of its economic security agenda. 

Against a backdrop of sluggish European growth and shifting US trade policies, concerns over trade imbalances and industrial competitiveness have gained greater prominence in the EU's approach toward China. China, meanwhile, has raised concerns about the EU's trade restrictions and emphasized the need to protect its legitimate trade interests. These differences are substantial, but they need not prevent progress on individual trade issues.

The meeting yielded progress on several specific trade issues, with automotive trade among the most significant. China and the EU reached an understanding on trade in hybrid vehicles consistent with WTO rules and agreed to continue relevant procedures concerning companies' price undertakings and reviews in the EU's anti-subsidy case involving Chinese electric vehicles. 

On October 12, China's Ministry of Commerce provided further details on the hybrid vehicle understanding. Citing Eurostat figures, the ministry noted that EU imports of hybrid vehicles from China rose from 107,000 in 2024 to 302,000 units in 2025. The two sides reached an arrangement based on the 2025 trade level that allows room for further growth in Chinese exports to the EU. The arrangement also follows the principle of non-discrimination, with China's quota no lower than that of any other source of imports into the EU. The progress shows that China and the EU are moving beyond broad understandings to work through the details of trade volumes, quota arrangements and applicable rules, seeking workable solutions to specific disputes, the ministry said. 

Progress was also made on tariffs, market access and export controls. The two sides agreed to continue exploring possible tariff reductions on certain products within the WTO framework and to maintain discussions on market access for medical devices. On export controls, China agreed to continue facilitating export licenses for rare earths and permanent magnets destined for the EU through its existing fast-track mechanism. The EU, for its part, is committed to working with member states to help address priority cases involving licenses for exports of dual-use goods to China. While existing export controls remain in place, these efforts could help ease licensing bottlenecks, improve regulatory communication and make cross-border trade more predictable.

What distinguishes this meeting is its focus on the practical details of resolving trade disputes. Rather than seeking agreement on broader differences over industrial policy and economic security, China and the EU concentrated on issues where negotiations could produce tangible results. This included working through existing trade procedures, addressing licensing concerns and identifying areas for further negotiation. Neither side was required to change its broader policy position. Instead, the talks demonstrated how progress can be made on individual issues even when fundamental disagreements persist.

The two sides also agreed on a timetable for follow-up discussions, with a ministerial-level video conference scheduled for January 2027 and the third meeting planned for March 2027. These meetings will provide opportunities to assess progress, address outstanding issues and build on the understandings reached in Beijing. For complex trade disputes, sustained engagement is often as important as the initial agreement. Regular consultations can help prevent unresolved issues from escalating into wider tensions.

Nevertheless, this meeting should not be seen as a resolution of the structural differences between China and the EU. Disagreements over subsidies, market access and economic security remain, and their impact on bilateral trade is unlikely to diminish quickly. The more immediate test will be whether the understandings reached in Beijing translate into meaningful progress, particularly on automotive trade and export licensing.

The consultations therefore offer a constructive signal for China-EU economic relations. While the list of deliverables and understandings matters, so does the willingness of both sides to engage with the details of their disagreements and pursue solutions through established mechanisms. If this approach can be sustained and produce tangible results, it could help contain trade frictions, improve predictability and provide a more stable basis for China-EU economic relations.