Berlin defends EU curbs on Chinese hybrid cars

The German-French initiative to strengthen the European car industry serves only as protection against "a certain country," a senior official at the German Economy Ministry said at a conference in South Korea on Friday.

Parliamentary State Secretary Stefan Rouenhoff did not name China explicitly, but the direction of his remarks was nonetheless clear. "In a market that is increasingly being flooded with cars from a certain country, we need to find answers," he said at the Asia-Pacific Conference of German Business.

At the same time, the state secretary said that the German-French understanding was not directed against South Korea.

There is concern in South Korea that EU trade protection measures could also hit the country, which, like Germany, relies heavily on exports.

"Europe must effectively protect itself against distortions of competition from China. At the same time, long-standing and reliable trading partners such as South Korea must not be placed at a disadvantage as a result," said Tanja Gönner, managing director of the Federation of German Industries (BDI).

Gönner said that German industry stood for open markets and rules-based trade. She said that trade protection was not an end in itself, but had to level the playing field in a targeted way.

"Free trade only works if everyone has similar rules and abides by them," Gönner said.

Germany and France insist on protecting the car industry

The EU and China agreed at the start of the month to curb Chinese exports of hybrid cars. 

Deliveries to the EU could fall by more than half as a result, EU Trade Commissioner Maroš Šefčovič said after talks in Beijing. The measure is largely the result of an initiative by France and Germany.

The EU and Germany also face a historic trade deficit with China in goods. In the first six months alone, the EU-China trade deficit reached nearly €197 billion ($220.4 billion), according to Šefčovič.

According to analyses by economic experts, the unequal trade is also due to excessive and widespread subsidies, currency manipulation and competitive disadvantages for domestic companies in China.