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, obtained by the Financial Times.
Some of the companies have already been placed under sanctions by the US, and the EU’s move is likely to rank 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 — which also includes two companies from the United Arab Emirates and one from Armenia — needs unanimous approval from the 27 member states.
Two mainland Chinese companies, 3HC Semiconductors and King-Pai Technology, are on the list and have also been sanctioned by the US. Five companies based in Hong Kong are also listed, two of which are on the US Treasury list: Sinno Electronics and Sigma Technology.
“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,” the sanctions proposal from the European Commission reads.
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 defense industrial base”.
King-Pai provides microelectronics to Russia that “have defense applications that include cruise missile guidance systems”, the US Treasury said.
Sinno from Hong Kong and Armenia-based Taco supplied Radioavtomatika, a Russian defense procurement company that specializes in evading sanctions, the US said.
In a potentially embarrassing move, Brussels is proposing to impose sanctions on I Jet Global DMCC in Dubai and Syria.
I Jet has co-ordinated delivery of Iranian drones to Russia, “ultimately contributing to Russia’s military and defense industrial base”, the US Treasury said.
Brussels is also proposing sanctions on more 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 behavior. 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.