China vows retaliation after EU sanctions two banks, five firms over Russia ties

China has condemned the European Union’s latest sanctions package targeting its financial institutions and companies, vowing to take countermeasures to protect its national interests.

In a statement released on July 21, China’s Ministry of Commerce said the sanctions “seriously harmed the trade, economic and financial ties” and that it would take necessary steps to “safeguard the legitimate rights and interests of Chinese firms and financial institutions,” Caliber.Az reports via Bloomberg.

The response came three days after the EU sanctioned two Chinese banks and five China-based companies as part of its newest round of punitive measures against Russia over its war in Ukraine.

The two banks—Heihe Rural Commercial Bank Co. and Heilongjiang Suifenhe Rural Commercial Bank Co.—were added to the EU sanctions list for allegedly providing cryptocurrency services that undermined the bloc’s broader sanctions regime, the European Council said in a statement.

This marks the first time that Chinese banks have been included in EU sanctions since the Russian invasion of Ukraine in 2022. According to Bloomberg News, the EU had previously proposed targeting financial institutions suspected of helping Moscow “by processing transactions or providing export financing for trade operations” that bypass sanctions.

Beijing had criticised the proposal even before the measures were officially adopted. In June, Chinese Foreign Ministry spokesman Lin Jian stated that “the normal exchanges and cooperation between Chinese and Russian companies are consistent with WTO rules and market principles. They do not target any third party and should not be disrupted or affected.”

Earlier in July, Chinese Foreign Minister Wang Yi warned of retaliatory measures if the banks were sanctioned, according to the South China Morning Post, which also reported that China’s ambassador to the EU had been lobbying to block the move.

Chinese banks have faced similar scrutiny from the United States. Some state-owned institutions, including Industrial & Commercial Bank of China Ltd. and Bank of China Ltd., reportedly restricted financing to Russian clients in early 2023 after Washington authorized secondary sanctions on foreign financial firms that aid Russia’s war effort.

In previous cases, Chinese banks have shown willingness to comply with Western sanctions to avoid disruptions in global financial operations, including curbs targeting Iran and North Korea that threatened access to the US dollar clearing system.

By Sabina Mammadli