European trade negotiators led by Commissioner Maroš Šefčovič fly to China this week for two days of EU China trade talks intended to curb cheap hybrid electric car exports and shrink Beijing's record £1bn-a-day trade surplus with Europe.

A pilot deal on cars, against a leaders' deadline

The central aim is a "proof of concept" pilot agreement covering one sector, expected to be cars, that could be scaled up to other sectors in the coming months. Sources close to the talks say negotiators want results described as "tangible, meaningful and measurable" before EU leaders meet in Brussels on Thursday of the following week, a summit where China ranks high on the agenda.

• •Šefčovič and his team fly out on Wednesday, with negotiations due to start the next day and run late into Friday
• •Diplomatic attempts to prevent a full-scale trade war began at the end of June

Why hybrids, and the threat of quotas

The gap the talks are meant to close opened when the EU imposed tariffs on Chinese electric vehicles in October 2024: hybrids were not covered by those tariffs, and exports of hybrid cars boomed as a result. Brussels has since asked China to rein in hybrid exports voluntarily, warning that safeguards, which could include quotas, could otherwise be enacted.

• •The request went to Beijing in the month before the report
• •China's response to it is not known
• •Sources say the mood in the talks has changed as EU member states have hardened demands for protection against Chinese imports

Merz's U-turn and the 'kill switch'

The trip comes against a shift in European posture. On Monday, German Chancellor Friedrich Merz made a "historic U-turn" on China policy by siding with French President Emmanuel Macron, in effect clearing the way for EU leaders to approve a new instrument to defend trade by cutting single-market access at short notice. A joint paper by the two leaders described "a massive industrial shock" affecting sectors at the heart of the European industrial model and of systemic relevance, naming pharmaceuticals, aerospace, automotive, machine tools and chemicals.

• •The Franco-German paper calls for all existing trade defence tools to be used, alongside a new diversification instrument and "possible additional" measures where third countries seek to undermine the restoration of a level playing field
• •The planned instrument has been nicknamed a "kill switch"
• •It was born out of frustration, particularly in Paris, that the EU's anti-coercion instrument, a so-called "trade bazooka", has never been used
• •Paris pushed for the anti-coercion tool after Trump's tariff threats last year, but it never gained traction because implementation could take up to a year

What the talks will test

Andrew Small, a former EU adviser on China and Asia director at the European Council on Foreign Relations in Berlin, said Šefčovič's negotiations will test the resolve of both Beijing and Brussels, and put the stakes in Beijing's court in his own words:

Small warned that China's most effective tactic may be to draw Europe into a "process trap", offering just enough to delay action.

Handelsblatt, the German business newspaper, described Monday's policy change as "nothing less than an economic turning point". Martin Greive, its chief political reporter, concluded in a column that Merz was "putting an end to years of naiveté towards Beijing". Greive wrote that Merz now sees Germany as the epicentre of a "China shock 2.0", warning that there might not be much left of German industry if China keeps gaining export advantages through trillions in subsidies, knowhow extraction and questionable monetary policy.

The negotiators fly out on Wednesday, sit down the next day and are scheduled to negotiate late into Friday, with sources seeking results that are tangible, meaningful and measurable before EU leaders meet in Brussels on Thursday of the following week.