China retaliates against EU sanctions, targeting European defense firms and supply chains

Last Thursday, the European Union added 14 Chinese companies to its latest round of sanctions, accusing them of providing support for Russia’s war against Ukraine – but few of the names were recognisable to anyone outside narrow trading and compliance circles.

Officials were taken aback less than 24 hours later, when Beijing – which had been notified of the ragtag group of traders and freight forwarders to be listed by the EU as far back as June – fired back ferociously. Unlike the long notice afforded to their own diplomats, China gave Brussels just a one-hour warning, according to people familiar with the exchange.

Europe’s own listings had been carefully calibrated, intentionally omitting major Chinese actors to ensure its own member states would support the package amid fears of retaliation. Beijing, on the other hand, went for the jugular.

Added to a list that effectively bars them from buying certain goods from China were 14 EU defence organisations, including the continent’s biggest defence company, Rheinmetall, and a prominent Polish university.

The firms named are also effectively cut off from receiving those same Chinese-origin materials via overseas suppliers, an extraterritorial reach that does not exist in the EU’s own measures, and which could send a chilling effect through their supply chains, Brussels officials fear.

“They have threatened for years but until now they barked a lot and didn’t bite. This time they didn’t bark much, but they bit,” one senior official said.