For the First Time in Human History, China Imposes Financial Sanctions on the EU
The underlying message to the EU is: if you launch financial war on us, we will launch it on you.
Two Lithuanian banks UAB Urbo Bankas and AB Mano Bankas are now banned from transactions and cooperation with any Chinese entity. This is strategic signalling. Beijing chose Lithuania deliberately. In 2022, Vilnius defied China by allowing Taiwan to open a representative office under its own name - crossing one of Beijing’s red lines. This is punishment and a warning rolled into one.
The trigger was EU sanctions on two Chinese rural banks accused of facilitating Russia-linked transactions. The EU acted under its Russia sanctions package. Beijing responded in kind, escalating from rhetoric to financial measures. Until now, China’s retaliation against the EU had focused on individuals, companies, and symbolic trade curbs. Targeting EU banks is a new threshold. It shows Beijing is ready to weaponise financial access. By hitting small Lithuanian banks, China sends a calibrated message - serious enough to be noticed in Brussels, but avoiding immediate confrontation with the EU’s largest economies. Strategic precision, not random retaliation.
The underlying message to the EU is: if you launch financial war on us, we will launch it on you. This is deterrence by demonstration. The next targets could be much larger, with real systemic consequences for European markets. This also fits into Beijing’s broader playbook: show that sanctions are a two-way street, eroding the West’s monopoly on financial coercion for the first time in modern history.
For MENA countries, this matters. They are deeply tied into both EU and Chinese trade, banking, and capital flows. A sanctions war between Brussels and Beijing will force them into hard choices on compliance and alignment.