Investing.com -- Shares in European carmakers rose Monday after the EU and China reached an understanding that could cut Chinese exports of hybrid cars to the bloc by more than half, European Trade Commissioner Maros Sefcovic said after two days of talks in Beijing.

The "shared understanding" would "moderate" Chinese exports of hybrids and plug-in hybrids, and would cut imports of several million cars over four years, Sefcovic said, without saying how it will be put into effect.

European automakers, which have slid for two years under U.S. tariffs and surging Chinese exports, broadly gained. Stellantis and Renault rose more than 2% each, while Volkswagen and Porsche climbed over 1%.

"This is far from the end. It is a crucial first step – but only a first step – in the process of rebalancing," Sefcovic said. The EU’s trade deficit with China has swelled to more than €1 billion ($1.12 billion) a day. EU leaders will discuss the outcome at a summit in Brussels next Thursday.

The two sides also agreed on China cutting import duties on about €4 billion of EU exports, including car parts, olive oil and footwear, and on smoothing China’s export licenses for rare earths and permanent magnets.

Bernd Lange, who chairs the European Parliament’s trade committee, said the hybrid deal should extend to other sectors and the EU should use trade defense tools more effectively. China’s Commerce Minister Wang Wentao said China is "not the root cause" of the EU’s problems but a partner in solving them, according to Beijing’s ministry.

EU governments are alarmed as Chinese car imports climb while their own carmakers cut jobs, including about 100,000 at Volkswagen. Plug-in hybrid imports rose 86% in the year to September, with prices down 20%, and over half now come from China.

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