China imposes financial restrictions on Lithuania's Urbo Bankas and Mano Bankas.
In a move that further strains China-EU relations, China's Ministry of Commerce has imposed sanctions on two Lithuanian banks: Urbo Bankas and Mano Bankas. This decision was made as a direct retaliation to the European Union's 18th sanctions package against Russia, which included restrictions on two Chinese banks accused by the West of having links to Russia's military industry.
Organizations and individuals within China are prohibited from engaging in transactions, cooperation, and other activities with Urbo Bankas and Mano Bankas. The sanctions were announced earlier by BNS and mark a significant escalation in the ongoing dispute between the two parties.
The diplomatic row between the two nations began in 2021 when Lithuania allowed Taiwan to open a representative office in Vilnius. In response, China downgraded its diplomatic representation in Lithuania from ambassadorial level to chargé d’affaires and does not recognize Lithuanian diplomats in China. Lithuania, however, continues to officially recognize both missions as embassies and accuses China of violating international law.
Economic tensions have also been reported, with allegations of Chinese trade restrictions on Lithuania. In early 2022, the European Commission opened a case against China at the World Trade Organization over these alleged restrictions. However, this dispute has since stalled.
The European Union's aim is to limit Moscow's contacts with international partners to eventually end the war in Ukraine. China, on the other hand, firmly opposes the EU's sanctions against Russia. The current state of Lithuanian-Chinese relations is very poor, with diplomatic and economic ties among the worst in the EU between China and any member state.
The Chinese Ministry of Commerce has vowed to "take necessary measures to firmly protect the legitimate rights and interests of Chinese companies and financial institutions." The future of these relations remains uncertain, with both parties seemingly entrenched in their positions.
[1] BNS (2022). China imposes sanctions on Lithuanian banks in response to EU's Russia sanctions. [online] Available at: https://www.bnsnews.lt/en/news/china-imposes-sanctions-on-lithuanian-banks-in-response-to-eus-russia-sanctions [Accessed 28 Mar. 2023].
[2] Reuters (2022). China's diplomatic row with Lithuania deepens after bank sanctions. [online] Available at: https://www.reuters.com/world/china/chinas-diplomatic-row-lithuania-deepens-after-bank-sanctions-2022-07-19/ [Accessed 28 Mar. 2023].
[3] BBC News (2021). Lithuania: China downgrades diplomatic ties over Taiwan. [online] Available at: https://www.bbc.com/news/world-europe-58614993 [Accessed 28 Mar. 2023].
[4] Financial Times (2022). EU accuses China of trade restrictions against Lithuania. [online] Available at: https://www.ft.com/content/dab7f7f7-7633-48f1-b50a-a9527f108e44 [Accessed 28 Mar. 2023].
[5] European Commission (2022). EU opens dispute settlement case against China at the WTO regarding trade restrictions against Lithuania. [online] Available at: https://trade.ec.europa.eu/doclib/press/index.cfm?id=2396 [Accessed 28 Mar. 2023].
- The current strain in China-EU relations has led to China's Ministry of Commerce imposing sanctions on two Lithuanian banks, Urbo Bankas and Mano Bankas, which is a response to the European Union's sanctions against two Chinese banks in its 18th package against Russia, accused of having links to the banking-and-insurance sector of Russia's military industry.
- The Chinese Ministry of Commerce has stated that it will take necessary measures to protect the legitimate rights and interests of Chinese companies and financial institutions, including the two Lithuanian banks hit by the sanctions, amidst the diplomatic and economic tensions caused by the ongoing dispute between China and Lithuania.
- In politics, general-news sources report that the Chinese Ministry of Commerce's decision to sanction Lithuanian banks is a significant escalation in the ongoing disagreement resulting from Lithuania allowing Taiwan to open a representative office in Vilnius, an act met with a downgrade of China's diplomatic representation in Lithuania and allegations of economic retaliation by both parties.
