EU Proposes Curbs on Three Chinese Firms for Aiding Russia

(Bloomberg) -- The European Union has proposed new trade restrictions on about two dozen firms, including three based in China, accused of supporting Russia’s war efforts in Ukraine.

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If adopted, it would be the first time the EU has imposed restrictions on companies in mainland China since Russia invaded Ukraine. The list includes firms in Hong Kong, Serbia, India and Turkey, some of which are also being targeted for the first time, according to a draft of the proposal seen by Bloomberg. The companies are not named for legal reasons.

The restrictions would ban European firms from trading with the listed firms as part of the bloc’s efforts to crack down on Russia’s ability to get its hands on sanctioned goods through companies in third countries. The EU had previously proposed listing several Chinese firms, but those proposals were dropped following resistance from some member states and after Beijing provided assurances.

The issue is of critical importance to the EU, which counts Beijing as one of its most important trade partners, and in particular for Germany, for whom China is the biggest market for carmakers including Volkswagen AG.

EU sanctions need the backing of all member states to be adopted and could change before then.

A spokesperson from the commission declined to comment on the proposal. A message left with China’s embassy in Brussels wasn’t immediately returned.

The mostly technology and electronics companies are accused of “contributing to Russia’s military and technological enhancement or to the development of Russia’s defense and security sector,” according to the document.

Commission President Ursula von der Leyen traveled to Beijing in April and warned Chinese President Xi Jinping against getting involved in the war.

“We also count on China not to provide any military equipment, directly or indirectly, to Russia,” von der Leyen said in Beijing. “Because we all know, arming the aggressor would be against international law. And it would significantly harm our relationship.”

The proposals include three Chinese firms and one each from India, Sri Lanka, Serbia, Kazakhstan, Thailand, Turkey and Hong Kong. Their inclusion in the proposed list “does not entail any attribution of responsibility for their actions to the jurisdiction in which they are operating,” the document says. The EU has so far listed more than 620 companies, with the near entirety from Russia.

The companies are mostly importing banned technologies and electronics and reexporting the goods to Russia.

As part of a package of sanctions to mark two years since Russia’s invasion of Ukraine, the EU has also proposed sanctions on more than 110 people and entities.

(Updates with details in second paragraph. An earlier version corrected the name of a country.)

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