China Strikes Back

In late July, China’s Ministry of Commerce (MOFCOM) added 14 EU entities to its export control list, effectively imposing sanctions by prohibiting the supply of dual-use goods. This step was nearly simultaneous with the European Union’s new, 21st, package of sanctions imposed on Russia.

Paulina Uznańska from the Polish Centre for Eastern Studies (OSW) writes that two of the listed entities are from Poland: Wrocław University of Science and Technology and Vigo Photonics. The list also includes companies from Germany (including Rheinmetall AG), the Czech Republic (Tatra Trucks), Italy, France, Lithuania, the Netherlands and Bulgaria. All operate in sectors considered critical to national security, including the defense and drone industries, as well as photonics, semiconductors, lasers and maritime technologies.

Under the measure, Chinese companies, as well as foreign firms using Chinese components, must immediately suspend deliveries of dual-use goods to the listed entities and cease all transactions involving such products.

China’s move is a direct response to the EU’s 21st sanctions package against Russia. The EU had imposed restrictions particularly on 14 companies from China and Hong Kong accused of supporting Russia. In explaining its decision, Beijing explicitly cited the EU’s sanctions. As in previous cases, it also invoked national security, China’s interests and international non-proliferation obligations.

Beijing is seeking to demonstrate resolve ahead of the European Commission’s planned adoption, this autumn, of new measures targeting China to protect the European Union’s single market.

China’s response to the EU’s 21st sanctions package is unprecedented in speed and intensity. It followed just the day after the European Union imposed its new package of anti-Russian sanctions.

Experts note that in the past China’s responses to EU sanctions packages were far more limited. Beijing restricted its measures to the banking sector or targeted selected companies, citing their involvement in arms sales to Taiwan rather than the EU’s actions.

Beijing’s harsh response is part of a broader set of Chinese measures that could hamper the modernization of NATO members’ armed forces. The selection of the 14 entities targeted by the restrictions suggests they were deliberately chosen because of their strategic importance to Europe’s defense industry and supply chains.

Ahead of the European Commission’s initiatives planned for this autumn, including the Commission President’s State of the Union address in September and the presentation of new protective instruments, Beijing is intensifying its informal pressure on EU member states, warning them of the consequences of adopting measures that would harm Chinese interests.

Experience shows that China has many more cards in store. The standoff between the Celestial Empire and the Old World is just beginning. China’s margin of strength seems much wider than Europe’s. It will be a thrilling affair.

Original publication: https://www.osw.waw.pl/en/publikacje/analyses/2026-07-27/china-hits-europes-defence-industry-response-to-eus-21st-sanctions