"If they don't limit their exports to our market, we will. This is about stopping de-industrialization. We have to act," an EU source told the newspaper.
The EU proposal is for China to limit sales of Chinese hybrid cars to around 15 percent of the EU market, compared with the current share of around 30 percent.
The comments come after European Commission President Ursula von der Leyen said in a speech on Wednesday that the EU's trade deficit with China has crossed a painful threshold.
EU Trade Commissioner Maros Sefcovic will hold talks with Chinese Commerce Minister Wang Wentao on Thursday, ahead of a trip to Beijing in October.
