Brussels has proposed sanctions on Chinese companies for supporting Russia’s war machine for the first time since the conflict in Ukraine began, in a development likely to increase tensions with Beijing.
Seven Chinese businesses accused of selling equipment that could be used in weapons have been listed in a new package of sanctions to be discussed by EU member states this week, which has been seen by the Financial Times.
Some of the companies have already been placed under sanctions by the US. The EU’s move is likely to rankle with Beijing, which is anxious to keep Brussels from siding with Washington in their battle for global influence.
Brussels has until now avoided targeting China, arguing that no evidence showed it was directly providing weapons to Moscow.
The sanctions list needs unanimous approval from the 27 member states before it can be enforced.
Two mainland Chinese companies on the list, 3HC Semiconductors and King-Pai Technology, have already been placed under sanctions by the US. Two companies based in Hong Kong that are on the EU list are already on the US Treasury list: Sinno Electronics and Sigma Technology.
The sanctions proposal from the European Commission said: “In view of the key enabling role of electronic components for use by Russia’s military and industrial complex for supporting the war of aggression against Ukraine, it is also appropriate to include certain other entities in third countries involved in the circumvention of trade restrictions as well as certain Russian entities involved in the development, production and supply of electronic components for Russia’s military and industrial complex.”
It accused 3HC, which makes computer chips, of “attempting to evade export controls and acquiring or attempting to acquire US-origin items in support of Russia’s military and/or defence industrial base”.
King-Pai provides microelectronics to Russia that “have defence applications that include cruise missile guidance systems”, the US Treasury has previously said.
Brussels is also proposing sanctions on some Iranian companies involved in the manufacture and supply of drones to Russia.
The EU is seeking to tackle the circumvention of sanctions more generally. The draft includes measures that would allow the EU to restrict sales of certain products to third countries if diplomatic pressure did not change their behaviour. Member states would have to approve individual measures against companies or countries.
There are also powers to ban oil tankers that conceal their location without good cause from EU ports. The FT has reported that ships have been circumventing an embargo on Russian seaborne oil imports by pretending their loads are from elsewhere.
The commission has also proposed widening the range of banned exports to Russia.
Finally, it is loosening restrictions on asset transfers to sanctions-hit entities to allow western companies in joint ventures with them to sell up.
The commission declined to comment.