EU proposes sanctions on Chinese firms for helping Russia

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The European Union is for the first time planning to sanction companies in mainland China, and in other countries including Turkey, India and Serbia, for helping Russia circumvent sanctions and buy dual-use goods, several diplomats told POLITICO’s Brussels Playbook.

Since Chinese President Xi Jinping and Russia’s Vladimir Putin declared the “no-limits friendship” between their dictatorships, reports — including this POLITICO investigation — have piled up about how China is helping Russia’s illegal invasion of Ukraine.

Brussels is now preparing to sanction four Chinese entities which it believes are helping the Kremlin buy European dual-use goods, according to a draft of the proposal. Two senior diplomats confirmed the plans to Playbook, which were earlier reported by Bloomberg.

The bloc wants to finalize a 13th package of sanctions against Russia before Feb. 24, which would mark two years since Putin ordered the full-scale invasion of Ukraine. The European Commission has also urged national governments to take “concerted action” to toughen sanctions enforcement.

EU Council President Charles Michel served notice to Xi Jinping at a Beijing summit in December that Europe had compiled a list of companies suspected of supplying dual-use goods — that can have both military and civil uses — to Russia.

If EU countries agree to include the four names in the bloc’s dual-use sanctions list, European firms will be banned from dealing with those companies. Playbook first reported on plans to sanction several Chinese companies that aided Russia’s war machine last year.

Who else is on the list

Also on the list are one company in Kazakhstan, one in Thailand, one in Turkey, one in Sri Lanka, one in India and one in Serbia, as well as 11 more entities in Russia, for a total of 21 new listings. 

In an effort to stop Moscow’s war economy from making drones, tanks and guided missiles, the EU and G7 allies have banned their own companies from exporting dual-use goods, such as microelectronics or even ball bearings. But intermediaries in other countries such as the United Arab Emirates, Serbia, Kazakhstan and China quickly popped up to sell suspiciously large amounts of those European products on to Russia.

Research by the sanctions team at the KSE Institute, a think tank attached to the Kyiv School of Economics, found that companies in China and Hong Kong were now the most important intermediaries for shipments of “battlefield technology” subject to Western sanctions. It was U.S. companies, however, that led the list of original manufacturers.

But the EU has so far shied away from directly singling out China, as EU countries such as Germany urged Brussels to scrap plans to sanction third countries that help Russia.

While under this new proposal, the EU would only sanction particular companies that are actively undermining sanctions, it would still be the first time the EU openly targets companies in mainland China — that is, if the 27 EU governments agree on the new package of sanctions this week.

Diplomats from the EU member countries discussed the plan at the so-called Relex meeting on Monday. Permanent representatives will seek to agree on the list on Wednesday.

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