There is a rift between the EU and China. © IMAGO
The EU's next package of sanctions on the Ukraine war could hit China. Several Chinese companies are said to be supplying Russia with weapons components — Brussels could therefore impose punitive measures.
This analysis is IPPEN. MEDIA as part of a cooperation with the Europe.Table Professional Briefing – first published by Europe.Table on 9 May 2023.
Brussels/Munich – The EU apparently wants to target companies from China for military supplies to Russia. In a new round of sanctions, the focus will be on the implementation of and compliance with EU sanctions against Russia, a spokesman for the EU Commission said in Brussels on Monday.
The planned eleventh package of sanctions in the context of the Ukraine war focuses on the effectiveness of the punitive measures, the spokesperson emphasized - and on how to prevent them from being circumvented. Here, for the first time, Chinese companies could also be subject to sanctions. However, the Commission spokesman did not provide further details, such as who is on the sanctions list.
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Companies from China: Deals with Russia
According to a report by the Reuters news agency, the assets of seven Chinese companies in the EU could be frozen. Reuters cites several Brussels diplomats.
On Wednesday, the EU ambassadors will first discuss the package. The aim is to adopt the eleventh package of sanctions before the end of this month. According to a report in the British newspaper Financial Times, the companies are accused of selling equipment with potential military benefits to Russia.
Several companies already on U.S. sanctions list
According to this, two companies from mainland China are on the list:
- 3HC Semiconductors, an electronics component and chip manufacturer based in Shenzhen, China
- King-Pai Technology, which also manufactures electronic components
In addition, there are five other companies from Hong Kong:
- Sinno Electronics
- Sigma Technology
- Asia Pacific Links
- Tordan Industry
- Alpha Trading Investments
3HC Semiconductors, King-Pai Technology, Sinno Electronics and Sigma Technology are already on the Treasury Department's sanctions list in the United States.
Given the "key role of electronic components" in Russia's war against Ukraine, it is "appropriate" to include third countries that circumvent trade restrictions and supply electronic components for Russia's military and industrial complex, according to the EU Commission's proposal, according to the report.
According to the report, 3HC Semiconductors is said to have tried to circumvent export controls by buying parts from the USA and then shipping them to Russia. King-Pai Technology is said to have supplied microelectronics with defense applications to Russia.
Dual-use goods to Russia via Turkey
Brussels has so far avoided targeting Chinese firms. So far, there is no solid evidence that China is supplying weapons to Russia. However, reports and the analysis of customs data had shown that China exports dual-use goods to Russia. These include, for example, drones such as the Mugin-5 drone.
Dual-use products can have civilian and military applications. CQ-A rifles had also recently appeared in customs data. These were marked as civilian hunting rifles. The goods are mostly delivered to Russia via Turkey and the United Arab Emirates. For months now, many products from the EU states themselves have not been allowed to be exported to Russia. In addition to dual-use goods, these also include certain types of machinery and vehicles or certain semiconductors.
Beijing threatens
With the Chinese companies, an extraterritorial component to the EU sanctions would now be added for the first time. Specifically, according to EU circles, it is planned to first create the legal possibility of restricting exports to third countries due to an alleged circumvention of sanctions as a deterrent. If this is not enough, a second step could actually be taken to prevent certain exports. However, such a step must be decided unanimously by the 27 member states.
As a precautionary measure, the government in Beijing warned the EU against imposing sanctions in connection with the war against Ukraine: If such a step were to take place, bilateral relations would deteriorate, the Chinese Foreign Ministry said on Monday. China will then take decisive measures to protect its interests.
Principle of extraterritoriality
The principle of extraterritoriality has been applied in the past, for example, in the case of US sanctions against Iran. In 2018, the Trump administration decided to withdraw from the Iran nuclear deal and impose a strategy of "maximum pressure" to reimpose sanctions on the Tehran regime that had previously been lifted under the international agreement.
Extraterritoriality, also known as secondary sanctions, was then used by the US authorities to punish non-American companies that still did business with Iran. Fearing retaliation, many European companies withdrew from the Iranian market. Brussels sharply criticized Washington for the move at the time.