China says can avoid 'escalation' after EU trade talks

China said on Saturday it can avoid “escalation” in disputes with the European Union after two days of trade talks in Beijing.

Commerce Minister Wang Wentao met EU trade chief Maros Sefcovic this week, as worries of a damaging trade war simmer.

What did China say after the EU trade talks?

China’s commerce ministry called the talks “successful” and said they marked “a new starting point”. It said both sides have the willingness and the wisdom to manage differences through dialogue and consultation. Beijing said the talks included in-depth discussions on trade in electric vehicles and hybrid vehicles.

“The outcomes and consensus reached by both sides fully demonstrate that China and the EU have both the willingness and the wisdom to manage and properly handle differences through dialogue and consultation, and to effectively avoid escalation of frictions,” it said. The ministry made the comments in an online statement.

What did China and the EU agree on hybrid car exports?

Sefcovic said Friday after the conclusion of the two-day talks that Beijing had agreed to “moderate” exports of hybrid vehicles to the 27-nation bloc. Local automakers there are increasingly feeling pressure from Chinese competitors.

The EU trade chief told reporters that the deal “opens the prospect of cutting China’s export (of hybrids) by more than a half”. He based this on projections over a four-year period.

A joint statement published on Friday said the two sides had “reached an understanding on trade in hybrid vehicles in a (World Trade Organisation) compliant manner”. It described the discussions as “intensive”.

Beijing’s commerce ministry said on Saturday that the talks included “in-depth discussions on trade in electric vehicles and hybrid vehicles, avoiding escalation of the situation and effectively safeguarding the practical export interests of Chinese enterprises”.

The talks also saw China commit to continue the supply of vital items including rare earth minerals to the EU. The topic has been closely followed since Beijing introduced export licence requirements last year.

“Both sides will continue to step up work on important economic and trade issues of common concern,” Beijing’s commerce ministry said, adding that the next such meeting will be held in March.

Why are China-EU trade tensions rising?

Shipments of vehicles to the EU are among the most controversial in China’s mounting trade surplus with the bloc, which now reaches around one billion euros ($1.1 billion) every day. Many in Europe accuse China of unfair trade practices, including supporting firms with huge subsidies, price dumping and currency manipulation.

Exacerbating the issue is a persistent demand slump in China’s domestic economy, prompting manufacturers to seek alternative markets abroad.