China has imposed export controls on 14 European companies, including German defense giant Rheinmetall AG, stating that these are retaliatory measures against EU sanctions on enterprises from mainland China and Hong Kong, UNN reports citing Bloomberg.
Details
According to a statement from China's Ministry of Commerce published on Friday, the export of dual-use goods from China to these 14 companies will be immediately banned. The transfer of such goods by foreign companies to these enterprises is also prohibited. In special cases, an export permit is required.
A ministry spokesperson stated that these actions are a response to the EU's 21st package of sanctions against Russia, which affected 14 enterprises from mainland China and Hong Kong. In his statement, the spokesperson called the EU's actions "outrageous."
The European Commission said it is assessing Beijing's export control measures and will engage with member states and affected companies to evaluate the impact before seeking clarification from Chinese counterparts, chief press secretary Paula Pinho told reporters in Brussels.
This exchange of mutual accusations marks another escalation of tensions between China and Europe, the publication writes.
Brussels accuses China of trade practices that it says harm the bloc's economy, creating huge trade imbalances and undermining local industry. In turn, Beijing criticizes the latest EU policies for restricting Chinese investment in some key sectors, condemning its proposed new Industrial Accelerator Act as protectionist and violating World Trade Organization rules.
Europe is also deeply concerned that the world's second-largest economy is providing Russia with a lifeline amid its war against Ukraine.
However, despite the escalation of tensions, both sides have set an October deadline to make progress in resolving trade disputes, as well as to create a joint platform for monitoring trade flows.
The economic consequences, it is noted, may be limited for the European companies targeted by China. Rheinmetall CEO Armin Papperger told Politico last year that the share of Chinese components in the company is about 1%.
In addition to Rheinmetall, Beijing has also targeted European companies that have representative offices in China. Lafert, owned by Japan's Sumitomo Heavy Industries, is a manufacturer of industrial motors and has a subsidiary in Suzhou. Garnet, an automation and robotics company, has a branch in China that supplies custom-made magnets.
The 14 companies affected by Beijing's actions:
- Lafert
- Garnet
- Sindlhauser Materials
- Rheinmetall
- Antraco Chemie-Handelsgesellschaft
- InPACT
- III-V Lab
- Cavok UAS
- Vigo Photonics
- Politechnika Wroclawska
- IHC Merwede Holding
- TATRA TRUCKS
- Opticoelectron Group
- Ekspla UAB
Addendum
Earlier, the EU adopted a 21st package of restrictive measures against Russia in response to its aggression against Ukraine. It includes tough economic sanctions affecting sectors with the greatest impact on Russia's economy and its ability to fuel aggression against Ukraine, as well as the largest sanctions list of entities in the last four years, totaling 218, of which 48 are individuals and 170 are organizations:
- Tightening the screws on financial services and cryptocurrencies. The EU has frozen assets and prohibited the provision of funds to 94 banks and major financial institutions, as well as a key figure in Russia's banking establishment. The EU has extended the transaction ban to another 33 Russian credit and financial institutions. It also imposed a transaction ban against a Kyrgyz bank linked to the banned SPFS (System for Transfer of Financial Messages), and three other non-Russian banks for circumventing sanctions. The EU imposed sanctions on 4 entities linked to the A7 cross-border network, including its new connections with Africa. It also extends its transaction ban to 14 cryptocurrency-related platforms based in Georgia, Panama, the UAE, the Marshall Islands, Kyrgyzstan, and Belarus. For the first time, the EU introduced the possibility of a full ban on crypto-asset-related services for third countries as a powerful deterrent for countries hosting platforms that help Russia evade EU sanctions. This new tool will allow the EU to prohibit any transactions between an EU operator and any crypto provider used by Russia;
- Pressure on Russia's revenue generation. In the energy sector, the package suspends the automatic adjustment of the oil price cap mechanism until July 15, 2027. This is intended to curb Russia's profits from oil sales. The agreement provides for an interim review of the suspension. The EU also continues to fight the shadow fleet by expanding the scope of existing rules to also cover vessels supporting the shadow fleet by providing bunkering and other services, and adding another 41 vessels to the list in addition to the 632 already under sanctions. The EU imposes sanctions on 8 entities and 1 individual actively working in the shadow fleet ecosystem, including companies operating on behalf of Russian oil giants, and, for the first time, a crewing agency providing support to the shadow fleet. In addition, the EU targets the oil sector, specifically refineries. It imposes sanctions on 18 entities and 1 individual in the oil sector, including 3 refineries in Russia, a large Belarusian refinery, and a company established to sell Belarusian oil products in Russia. Furthermore, the package creates the possibility to ban operations with listed refineries in Russia and third countries that process or refine Russian oil and oil products. Within this framework, the EU imposes a transaction ban, effective in six months, on a Georgian refinery that trades and processes Russian oil in Kulevi. Additionally, the EU added five oil traders to the list of entities subject to the transaction ban for violating the prohibition on purchasing Russian oil and oil products. The EU is also putting pressure on Russia's critical infrastructure by sanctioning a key cross-border energy supplier and a prominent figure of "Russian Railways," and extending the ban on transactions to two Russian ports and four Russian airports. Package introduces reporting obligations for the sale of LNG tankers and the possibility to impose new restrictions on the sale of LNG tankers to Russian citizens and companies, as well as other contractual obligations to reduce the risk of resale to or for use in Russia. The EU also targets other means of revenue generation for Russia by designating 7 major players in the gold mining sector, one of the most important diamond companies, as well as several entities operating in the mining and metallurgical sectors;
- Russian military-industrial complex. To limit Russia's ability to wage war and carry out strikes, including through the use of long-range drones, the sanctions package includes a separate list of 56 individuals and companies involved in the Russian military-industrial complex. Among them, 37 are directly linked to long-range drones, targeting their production and supply chain. The EU also added 51 new entities to the list of those subject to stricter export restrictions on dual-use goods and technologies, due to their support for the Russian military-industrial complex in its aggressive war against Ukraine. Some of these entities are located in third countries (China, including Hong Kong, India, Kazakhstan, Kyrgyzstan, Turkey, and the United Arab Emirates) and facilitate Russia's circumvention of export restrictions, particularly on microelectronics, computer numerical control (CNC) machines, and semiconductor processing equipment;
- ban on entry of Russian combatants into the EU. The package introduces a framework for a comprehensive visa ban for combatants and former combatants of the Russian armed forces and other proxy groups involved in Russia's aggressive war in Ukraine. The EU Council will decide when the ban takes effect;
- trade. The EU agreed to expand the existing export ban to include goods and technologies used by the Russian military industry, such as nickel powders, metals, and alloys used in corrosion-resistant coatings for jet engines; beryllium powders used in fuels and high-performance alloys; self-adhesive films, tapes, and strips used in the aerospace and defense sectors; aviation goods specific to unmanned aerial vehicles (UAVs), such as ground support equipment, jamming/interception systems, launch systems and servo motors, as well as flight termination systems for drones and missiles. In addition, the EU imposed additional restrictions on imports of goods that generate significant revenue for Russia (worth over €60 million), such as copper ores, nickel ores, lead ores, precious metal ores, unwrought zinc, alkaline earth metals, zinc oxides, chromium oxides, glassware, artificial pearls, and automotive parts. The package also includes measures regarding Belarus, aimed at mirroring those imposed on Russia, including trade measures (a ban on imports of goods that generate significant revenue for Belarus, as well as export restrictions related to the military industry) and legal protection;
- Russian war propaganda machine. The EU sanctions 8 individuals for spreading Russian war propaganda and contributing to its manipulative war narrative regarding Ukraine;
- war crimes. As stated, "The EU lists a major general and war criminal who participated in torture, executions, and desecration of the bodies of Ukrainian servicemen, including prisoners of war";
- other measures. The EU strengthens legal protection for EU operators in legal proceedings arising from EU restrictive measures, allowing EU and member state courts to refuse to recognize and enforce any court decision obtained in lawsuits filed in Russian courts.
The relevant legal acts have been published in the Official Journal of the EU.