EU Looks At Chinese Company Sanctions For Their Trade With Russia

EU-China trade is rapidly decreasing as Euro politicians appear intent on damaging their supply chains and export capabilities

The European Union is considering a proposal to impose sanctions on Chinese companies trading with Russia in equipment that could have ‘secondary use’ in the conflict with Ukraine. This step is being taken without confirmation that such products have actually been re-positioned by the Russian military, and includes items such as Chinese-made semiconductors, microchips and other electronics. The Chinese government has denied it supports military equipment usage sales to Russia.

The EU countries have been discussing an 11th package of anti-Russian sanctions, which includes seven Chinese companies that produce semiconductors, microchips and other electronic products.
According to the EU Commission, a draft sanctions list includes the following mainland Chinese and Hong Kong companies.

3HC Semiconductors
Hong Kong, specialises in the sourcing and supply of obsolete and in stock components;

King-Pai Technology
Hong Kong, specializes in the sourcing and supply of obsolote and currently available electronic components.

Sinno Electronics
Hong Kong, an international trading company acts as a representative and distributor of electronic components.

Sigma Technology
Hong Kong, a leading intelligent distributor for electronic components.

Asia Pacific Links
Hong Kong, electronics distributor with Russian sales

Tordan Industry
Shenzhen, electronics distributor with markets in the Baltic regions.

Alpha Trading Investments
Hong Kong, electronics distributor with markets in Eastern Europe.

This is the first time Brussels has proposed imposing sanctions on Chinese and Hong Kong companies for selling such equipment to Russia. The European Commission is also considering the possibility of expanding the list of goods prohibited for import into Russia and imposing this upon China.

The Chinese Foreign Ministry has said that if such sanctions are imposed, they will violate the trust and cooperation between China and the EU : “The trade and economic relations between Russia and China are honest and transparent, they are not directed against third countries, they are not subject to third-party interference and coercion,” said Chinese Foreign Ministry spokesman Wang Wenbin.

China has also recently proposed a 12-point peace plan between Russia and Ukraine. Among the proposals are respect for the sovereignty and territorial integrity of all countries, abandonment of the Cold War mentality, cessation of hostilities, resumption of negotiations and lifting of sanctions.

The Chinese Foreign Ministry has also called for compliance with international law, essentially suggesting that the correct mechanisms to deal with trade sanctions is the WTO and not individual blocs.

Meanwhile, the European Union is also losing trade share with China. According to the OEC, in terms of Chinese imports, in March this year China imported most from Taiwan (US$16.9 billion), the United States (US$16.1 billion), Japan (US$15.2 billion), South Korea (US$13.9 billion and Australia (US$13.7 billion.

In terms of exports in March 2023, China exported mostly to the United States (US$43.7 billion), Hong Kong (US$26.2 billion), Vietnam (US$14.9 billion), South Korea (US$14.8 billion), and Japan (US$14.1 billion). This means that no EU nation is currently within the top five of either exporting too or importing from China at this moment.

The proposed sanctions will not assist in arresting this EU decline in its China trade. China’s trade with Russia meanwhile has been booming with Chinese exports to Russia growing 64% in 4M 2023, suggesting that the shrinking of EU markets for China is being absorbed by increasing exports elsewhere. China’s exports to Central Asia have also increased by 9.2% in Q1 2023.

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