China and the European Union are trying to work through some major trade disputes. And this time, two key issues are on the table: Chinese hybrid cars and rare earths.

At trade talks in Beijing on October 8 and 9, the two sides reached 16 areas of agreement. For China, a key goal is to secure more stable access to the European market, while making sure Chinese companies are not singled out for tougher treatment.

Take cars, for example. After the EU imposed extra tariffs on Chinese-made electric vehicles in 2024, Chinese automakers expanded their hybrid exports to Europe. EU imports of Chinese hybrids jumped from 107,000 vehicles in 2024 to more than 302,000 in 2025.

Now, China and the EU are working on a new arrangement for hybrid and plug-in hybrid cars. Beijing says any quota must follow WTO rules, leave room for exports to grow from 2025 levels, and give Chinese vehicles treatment no less favorable than imports from other countries. China has also kept open the option of challenging unfair measures through the WTO.

Rare earths are another part of the discussion. China will keep a fast-track licensing channel for European companies importing rare earths and permanent magnets. In return, the EU will help Chinese companies secure licenses for sensitive dual-use products.

Both sides want more certainty for businesses that depend on these materials and markets. But other disputes are still on the table, including EU tariffs on Chinese electric vehicles, foreign subsidy rules, and access to each other’s markets.

China and the EU have agreed to keep talking about these issues, along with tariffs and market access for products such as medical devices, cosmetics and agricultural goods.

The EU continues to point to its trade deficit with China, which approached 360 billion euros in 2025. Beijing argues that trade imbalances should not be used to justify restrictions targeting Chinese products. Any solution, China says, must follow international trade rules.

The latest understandings are not a final deal, and many details still need to be worked out. The two sides plan to meet again in March 2027.