(Yicai) Jan. 13 -- China and the European Union have agreed to implement a price-undertaking mechanism for imported Chinese battery electric vehicles as an alternative to high tariffs, a major breakthrough after more than a year of talks to resolve the bloc's anti-subsidy case.

After multiple rounds of consultations to implement the consensus reached at the China-EU summit, the two sides agreed it is necessary to provide general guidance on minimum pricing for Chinese exporters of BEVs to the EU, China’s commerce ministry said yesterday. The aim is to address concerns in a way that is more practical, targeted, and consistent with World Trade Organization rules.

In October 2024, the European Commission imposed additional import duties of as much as 35.3 percent on Chinese EVs for five years on top of the existing 10 percent standard car import tariff. In comparison, the rate for Tesla is 7.8 percent.

The EU has issued guidelines, committing to assess each pricing proposal made by Chinese exporters against the same legal criteria in an objective and fair manner, following the principle of non-discrimination and in accordance with WTO rules, the ministry said.

This development fully reflects that both China and the EU have the ability and willingness to properly resolve differences through dialogue and consultation under the WTO framework, which is not only conducive to the healthy development of China-EU trade relations, but also helps to safeguard the rules-based international trading order, the ministry said.

Properly resolving the EU's anti-subsidy case against Chinese BEVs meets the broad expectations of upstream and downstream businesses, helping steady and secure supply chains between China and the EU, and safeguarding their economic and trade ties and the rules-based international trade order, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products noted.

The chamber said the outcome represents a “soft landing” for the case and will encourage and support affected companies to make full use of the results of the consultations.

It will also boost market confidence, creating a more stable and predictable environment for Chinese EVs and supply chain companies investing and operating in Europe, said the China Chamber of Commerce to the EU. Furthermore, it will help promote deeper China-EU cooperation on market expansion and technological innovation in the EV sector, it added.

The competitiveness of China's EV sector comes from continuous technological innovation and cost and scale advantages formed through market competition, rather than reliance on subsidies, the CCCEU noted.

China exported about 580,000 pure EVs, 250,000 plug-in hybrid models, and 170,000 conventional hybrid models to the EU in the first 11 months of last year, making it its biggest market in each category, according to data from the China Passenger Car Association. 

China's EV exports to the EU will maintain an average annual growth rate of around 20 percent from this year through 2028, said Cui Dongshu, secretary general of the CPCA. Replacing high tariffs with price undertakings preserves China’s key access route to the EU’s EV market, avoiding the impact of high tariffs while stabilising market access expectations, Cui said.

In the long term, the two sides will shift from trade competition to deep industrial collaboration, strengthening ties in battery recycling and carbon footprint management to jointly promote the electrification of the bloc's auto market, he pointed out.

Editor: Martin Kadiev