China imposes sanctions on Two European Union Banks

From 9th August 2025, European Union (EU) sanctioned two Chinese regional banks — Heihe Rural Commercial Bank and Suifenhe Rural Commercial Bank — as part of its July sanctions package. The EU alleged these banks were involved in facilitating Russia-related financial activity, but China dismissed the accusations as “groundless” and warned that such actions harm long-standing trade and economic cooperation.

Now, China has responded strongly to recent European Union sanctions by targeting two Lithuanian banks — UAB Urbo Bankas and AB Mano Bankas. China has banned them from conducting any transactions or cooperating with individuals and organisations in China. The sanctions, announced by China’s Ministry of Commerce on August 13, 2025, took effect immediately.

China’s sanctions are widely seen as a retaliatory measure, signalling that it is ready to respond in kind to any financial restrictions imposed by Europe. While the Lithuanian banks are relatively small players in global finance, targeting them carries symbolic weight, particularly given Lithuania’s strained relations with China in recent years over issues like Taiwan.

EU officials have said they are reviewing China’s decision and remain open to talks that could lead to reversing the sanctions if both sides can reach a compromise. However, this latest episode reflects broader tensions in EU-China relations, fuelled by disputes over trade imbalances, China’s alleged support for Russia, and competing strategic interests.

The tit-for-tat banking sanctions highlight the growing use of financial measures as geopolitical tools — and the increasing difficulty both sides face in finding common ground.

“China urges the EU to cherish the long-standing and sound economic, trade, and financial cooperation between China and the EU and its member states, rectify its wrongdoings, and immediately cease actions that harm China’s interests and undermine China-EU collaboration,” it added.