China has imposed sanctions on two Lithuanian banks in response to recent European Union measures targeting Chinese lenders, marking a further deterioration in relations between Beijing and Brussels over Russia’s invasion of Ukraine.
The Chinese Ministry of Commerce announced on Wednesday that UAB Urbo Bankas and AB Mano Bankas have been added to its countermeasure list. Under the sanctions, individuals and organisations in China are prohibited from conducting transactions, cooperation, or “other activities” with the two institutions. While the official statement described them as “EU financial institutions,” it did not mention Lithuania by name.
Retaliation Against EU Sanctions
The move follows last month’s EU sanctions against two Chinese regional banks accused of facilitating prohibited trade with Russia. These EU measures were the first instance of the bloc targeting lenders outside its own territory in connection with Moscow’s war in Ukraine.
A European Commission spokesperson confirmed that Beijing notified Brussels of its intentions on August 12. “Once formally received, the EU will study these measures in detail before deciding on any additional next steps,” the spokesperson said, adding that the EU remains open to finding a mutually acceptable solution that could lead to the banks’ removal from the sanctions list.
Geopolitical Context
The EU has been pressing China to use its influence over Moscow to help end the war in Ukraine, repeatedly voicing concerns about potential military-related trade. Germany has also raised these concerns in bilateral discussions. This week, Brussels said it was preparing its 19th sanctions package, which could target Russia’s trading partners in addition to tightening measures directly on Moscow.
Lithuania has long been among the EU’s most outspoken critics of Beijing. Relations hit a low in 2021 when Vilnius allowed Taiwan to open a representative office in the capital under the name “Taiwanese Representative Office,” a move China condemned as a violation of its “One China” policy.
Wider EU-China Trade Disputes
The sanctions episode comes against the backdrop of broader trade frictions between the EU and China. The two sides have been in dispute over EU tariffs on Chinese electric vehicles, introduced in October last year. Although negotiations are ongoing — with the possibility of replacing tariffs with minimum pricing — tensions overshadowed a summit last month marking 50 years of diplomatic relations.
Beijing has responded to EU measures with its own counter-tariffs on goods ranging from dairy products to brandy. Separately, China’s trade truce with the United States over certain tariffs was extended by 90 days this week.
