The European Union on Thursday (August 14) urged the Chinese Communist Party to lift sanctions on two Lithuanian banks, calling the move “completely unjustified.”
Beijing had announced retaliatory measures against Urbo Bank and Mano Bank a day earlier in response to the EU’s sanctions on two Chinese banks.
According to reports from the Associated Press, these two Lithuanian banks do not operate in China, so China’s actions are largely symbolic. However, the sharp retaliation highlights the increasing tension in EU-China relations at a time when Beijing’s support for Russia’s invasion of Ukraine is apparent. The banks targeted for sanctions come from an EU member state with longstanding strained relations with the CCP, mainly due to close ties with Taiwan.
Olof Gill, spokesperson for the European Commission, stated at the EU headquarters in Brussels on Thursday that the EU believes China’s retaliatory measures are “completely unjustified and have no basis in evidence, so we urge China to immediately withdraw them.” He pointed out that the CCP “must address the problems we have identified” and called sanctions “a core means of weakening Russia’s war machine.”
The EU’s latest round of sanctions against Russia was passed in July and went into effect on August 9, including sanctions on Heihe Rural Commercial Bank and Heilongjiang Suifenhe Rural Commercial Bank, accusing them of providing encrypted asset services to help Moscow evade restrictions.
The Chinese Ministry of Foreign Affairs stated that the EU’s sanctions on Chinese companies have had a “negative impact” on China-EU economic and trade relations, leading to countermeasures against Lithuanian banks.
Lithuanian banks and government officials stated that while the sanctions were unexpected, they are not expected to have a substantial impact. The Bank of Lithuania issued a statement on Wednesday saying that their initial assessment indicates that this move “will not have a significant impact on the national financial system or the operation of the banks themselves, as the business models of the relevant banks are primarily focused on the local market.”
Marius Arlauskas, CEO of Urbo Bank, said, “Since we have no business dealings with individuals or entities in China, the sanctions will not affect Urbo Bank’s operations or compliance with prudential supervision requirements.”
The relationship between Lithuania and the CCP remains tense. In 2021, Lithuania allowed Taiwan to establish a representative office in the capital, Vilnius, leading to Beijing expelling the Lithuanian ambassador. China regards Taiwan as an “inseparable” part and prohibits other countries from establishing formal diplomatic relations with Taiwan. Taiwan has long sought to strengthen relations with Baltic countries, citing shared democratic and freedom values.
In 2024, Lithuania suspected a Chinese vessel’s involvement in the cutting of two underwater data cables during an investigation, leading to the expulsion of Chinese diplomatic personnel. One of the cables connects Lithuania to Sweden, passing through the Baltic Sea.
Ursula von der Leyen, President of the European Commission, held a summit with senior CCP officials in Beijing last month, discussing concerns in the trade sector, while also urging China to dissuade Russia in the Russia-Ukraine conflict.