China has imposed sanctions on two Lithuanian banks, UAB Urbo Bankas and Mano Bankas AB, in direct response to the European Union’s recent sanctions targeting Chinese financial institutions. The move, announced by China’s Ministry of Commerce on Wednesday, bars the Lithuanian banks from any cooperation with Chinese individuals or entities, signaling a deepening rift in China-EU relations.

The EU’s latest sanctions, enacted on August 9, were part of a broader effort to penalize entities supporting Russia’s ongoing war in Ukraine. The measures included several Chinese companies, which China claims were unfairly targeted. According to the Ministry of Commerce, the EU’s actions “disregard China’s solemn position” and “severely damage the legitimate rights and interests of Chinese companies.” The statement further criticized the EU for undermining economic and trade cooperation, warning of broader implications for bilateral financial ties.

China’s retaliation follows accusations from NATO, which has previously labeled China a “decisive enabler” of Russia’s war efforts, citing the export of tools, equipment, and microelectronics. The sanctions on Lithuanian banks mark a calculated response, as Lithuania has been a vocal supporter of EU measures against Russia. Analysts suggest this tit-for-tat approach could further strain diplomatic and economic relations, with potential ripple effects across global markets.

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As both sides dig in, the clash underscores the growing complexity of geopolitical alignments, with China signaling it will not passively accept Western sanctions. Observers are now watching closely for the EU’s next move and whether this dispute will escalate further.

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