China has imposed sanctions on two Lithuanian banks, escalating a diplomatic standoff with the European Union in response to the bloc’s restrictions on Chinese financial institutions tied to Russia. The move, announced by Beijing’s Commerce Ministry on Wednesday, prohibits Chinese entities and individuals from conducting transactions or cooperating with Lithuania’s UAB Urbo and AB Mano banks. The decision follows the EU’s 18th round of sanctions against Russia, introduced last month, which targeted energy and banking sectors—including two Chinese rural banks accused of supporting Moscow.
The EU measures, part of ongoing efforts to curb Russia’s revenue streams and military capabilities, drew sharp criticism from China. Beijing condemned the sanctions against the Suifenhe and Heihe Rural Commercial Banks as a breach of international law, arguing they “severely damaged the legitimate rights and interests of Chinese companies.” In retaliation, Lithuania’s Urbo and Mano banks were added to China’s “countermeasure list,” though both institutions swiftly downplayed the impact. Urbo Bank stated it has no operations or clients in China, while Mano Bank clarified it neither targets the Chinese market nor conducts business there. Both confirmed coordination with Lithuanian officials.
The European Commission affirmed it would review Beijing’s sanctions but signaled openness to dialogue. “We are open to identifying a mutually acceptable solution that could lead to the de-listing of the banks,” said EU spokesperson Olof Gill, according to Bloomberg. The exchange highlights growing friction as Western nations expand sanctions to third countries aiding Russia’s economy. China, which has deepened trade with Moscow since the 2022 invasion of Ukraine, has consistently opposed sanctions outside U.N. mandates, advocating instead for negotiated resolutions.
While the latest measures are unlikely to disrupt major financial flows, they underscore the widening ripple effects of the Ukraine conflict. Western nations have increasingly pressured nations and firms circumventing sanctions, prompting pushback from targeted states. Russia, meanwhile, has dismissed the sanctions as ineffective, claiming resilience to economic restrictions. Kremlin officials have labeled such measures a “double-edged sword” that risks destabilizing global markets.
As geopolitical alliances shift, the tit-for-tat actions between Beijing and Brussels reflect broader struggles to balance punitive measures against Russia with the preservation of international trade norms. Analysts suggest the dispute could test the EU’s capacity to enforce compliance among external partners while navigating China’s role as both an economic competitor and a critical player in potential diplomatic settlements.
