China Sanctions Lithuanian Banks in Retaliation to EU Measures

On August 13, 2025, China's Ministry of Commerce announced sanctions against two Lithuanian banks—UAB Urbo Bankas and AB Mano Bankas—prohibiting them from conducting transactions and cooperation with Chinese entities. This move was a direct response to the European Union's recent sanctions, effective August 9, 2025, which targeted two Chinese banks—Heihe Rural Commercial Bank and Heilongjiang Suifenhe Rural Commercial Bank—for allegedly providing crypto-asset services that helped Russia evade international restrictions.

The EU's sanctions were part of a broader effort to curtail financial support for Russia amid the ongoing war in Ukraine. In response, China's Ministry of Commerce criticized the EU's actions as "groundless" and urged the bloc to avoid damaging longstanding economic and financial cooperation between China and the EU.

The European Union has urged China to lift these "unjustified" sanctions, emphasizing that the Lithuanian banks do not operate in China, rendering the measures largely symbolic. European Commission spokesperson Olof Gill stated, "Our sanctions are the centerpiece of our efforts to minimize the effectiveness of the Russian war machine." He further called on China to remove its countermeasures, asserting that they lack justification or evidence.

Both UAB Urbo Bankas and AB Mano Bankas have indicated that the Chinese sanctions are largely symbolic, as their business models are focused on the local market and they do not have partnerships with Chinese entities. Marius Arlauskas, head of administration at Urbo Bank, stated that the sanctions would have no impact on the bank's activities.

Diplomatic relations between China and Lithuania have been strained in recent years. In 2021, Lithuania allowed Taiwan to open a liaison office in Vilnius, leading to China downgrading its diplomatic representation in Lithuania. In 2024, Lithuania expelled Chinese diplomats following suspicions involving a Chinese ship and the severing of undersea data cables.

The EU has been critical of China's support for Russia amid the ongoing war in Ukraine. The recent sanctions are part of the EU's broader efforts to pressure China to curtail its ties with Russia. European Commission President Ursula von der Leyen noted that trade relations between the EU and China have reached a "clear inflection point."

The recent sanctions imposed by China on Lithuanian banks, in response to EU measures against Chinese financial institutions, highlight the escalating tensions between China and the European Union. While the immediate economic impact on the targeted Lithuanian banks appears minimal, the incident underscores broader geopolitical rifts concerning China's support for Russia and the EU's efforts to enforce international sanctions.