In Tit-For-Tat Move, China Sanctions Two European Union Banks

Last Updated:August 14, 2025, 10:08 IST

The move came as a direct response to the EU’s earlier decision to sanction two Chinese regional banks — Heihe Rural Commercial Bank and Suifenhe Rural Commercial Bank.

As diplomatic tensions simmer, EU officials indicated they are reviewing China’s reaction and remain open to negotiations. (AP Photo)

In a sharp counter to European financial pressure, Beijing has imposed sanctions on two small Lithuanian lenders — UAB Urbo Bankas and AB Mano Bankas — barring them from conducting any transactions or cooperating with individuals and organisations in China. The measures, announced on August 13, 2025, were declared effective immediately by China’s Ministry of Commerce.

The move came as a direct response to the EU’s earlier decision, effective August 9, to sanction two Chinese regional banks — Heihe Rural Commercial Bank and Suifenhe Rural Commercial Bank — under its July sanctions package over concerns that these institutions facilitated Russia-related financial activity.

China, vehemently rejecting the EU’s allegations as “groundless," criticised the sanctions for undermining longstanding economic and trade cooperation with Europe. Beijing urged the European Union to reconsider its actions to protect bilateral ties in trade, economy, and finance.

As diplomatic tensions simmer, EU officials indicated they are reviewing China’s reaction and remain open to negotiations that might lead to reversing the sanctions, if a mutually acceptable solution is reached.

Escalating Financial Retaliation Amid EU-China Tensions

At the heart of this standoff lies a tit-for-tat escalation in the realm of financial sanctions. The EU, aiming to tighten its grip on Russia by targeting enablers of its war efforts, included two Chinese banks in its sanctions list on August 9. Viewing this move as a direct affront, China promptly retaliated by hitting two Lithuanian institutions — symbolic actors but strategically relevant — as a signal that retaliatory measures would follow any aggression.

This move reflects broader strains in EU-China relations, stoked by disagreements over trade imbalances, alleged Chinese support for Russia, and competing economic interests. With high-level meetings such as recent summits having failed to clarify common ground, the tit-for-tat banking sanctions underscore a deeper erosion of trust and growing readiness on both sides to leverage financial tools for geopolitical signaling.

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The News Desk is a team of passionate editors and writers who break and analyse the most important events unfolding in India and abroad. From live updates to exclusive reports to in-depth explainers, the Desk d...

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First Published:

August 14, 2025, 10:08 IST

News world In Tit-For-Tat Move, China Sanctions Two European Union Banks

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