Beijing Targets EU Defense Industry in Retaliation for Sanctions on Chinese Firms

Beijing has imposed strict restrictions on a number of European corporations, a move that could delay weapons deliveries and increase the cost of military assistance to Ukraine.

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Beijing

China Responds to EU Sanctions with Mirror Measures Against European Defense Companies

China's Ministry of Commerce has placed 14 European companies on its export control list in response to the European Union's 21st package of anti-Russian sanctions, under which Brussels included 14 companies from mainland China and Hong Kong. According to the EU, these firms allegedly supplied dual-use components to Russia that were used in weapons production.

China's retaliatory measures directly target Europe's defense, semiconductor, aerospace, and high-tech optoelectronics sectors. Among the affected companies are Germany's Rheinmetall AG, Poland's Vigo Photonics SA, the Czech Republic's Tatra Trucks, and Italy's Lafert Group.

Chinese suppliers-as well as any foreign organizations or individuals-are now prohibited from selling Chinese-made dual-use goods to these companies. All ongoing commercial activity must cease immediately unless specifically authorized by China's Ministry of Commerce.

Weapons Deliveries to Ukraine Could Face New Difficulties

Defense giant Rheinmetall relies heavily on China for critical materials. Tungsten is used in armor-piercing projectile cores, antimony is required for ammunition, while magnesium and Chinese cotton form the basis of propellant production. The company's military radar and air defense systems also use semiconductors containing Chinese gallium and germanium.

Rheinmetall supplies a significant share of the 155 mm artillery ammunition provided to Ukraine. Restrictions on Chinese cotton, a key raw material for propellant, along with antimony exports, will force the company to seek alternative suppliers in countries such as India or Brazil. This could slow production and deepen ammunition shortages for the Ukrainian armed forces.

The company may also encounter greater difficulties servicing heavy equipment supplied to Ukraine. Maintenance of Leopard tanks and Marder infantry fighting vehicles could become more complicated due to shortages of Chinese-made components.

French drone manufacturer Cavok UAS and Poland's Vigo Photonics are also heavily dependent on Chinese refined metals and semiconductor substrates, including selenium, tellurium, gallium, and indium, which are required for producing semiconductor heterostructures. These companies supply Ukraine with drones and high-precision optical equipment, including infrared sensors and thermal imaging systems. Restrictions on Chinese gallium, germanium, and optical components could reduce production of reconnaissance drones.

The Czech manufacturer Tatra Trucks, known for producing military trucks and wheeled platforms, purchases stamped metal components, brake system parts, and hydraulic assemblies from China. China is also a major supplier of castings, forged components, and transmission parts, including clutch discs for heavy vehicles. Tatra produces chassis used for Ukraine's Bohdana self-propelled howitzers, Bureviy multiple-launch rocket systems, and Neptune missile launchers. Delays in Chinese hydraulic and casting supplies could slow production of heavy military vehicles destined for the front.

China is unlikely to halt European defense production entirely. However, European manufacturers may be forced to purchase raw materials through intermediaries in countries such as Turkey, the United Arab Emirates, and Kazakhstan. This would increase the cost of European military assistance to Ukraine by an estimated 15 to 25 percent while delaying deliveries.

The European Union Becomes a Hostage to Its Partnership with Washington

Relations between China and the European Union have deteriorated rapidly. Before the start of Russia's military operation in Ukraine, China was widely viewed in Europe as an important partner and a major market for European exports. Today, European officials increasingly focus on the trade imbalance, an issue that previously attracted far less criticism. Last month, the European Commission stated that the imbalance had reached an "unsustainable" level, citing a €31.9 billion deficit in April.

The shift in Europe's approach toward China is linked to efforts to maintain support for Washington within the framework of the transatlantic partnership and prevent the United States under President Donald Trump from stepping away from the Ukraine issue. However, Europe is taking a considerable risk.

China's most powerful leverage remains the possibility of imposing a complete ban on exports of rare earth elements. Without them, Europe's defense industry, green energy sector, and semiconductor manufacturing would struggle to function.

Such a step could be taken if the European Union significantly expands sanctions against Chinese companies accused of cooperating with Russia. At present, the number of sanctioned Chinese firms is relatively small-around three dozen-while tens of thousands of Chinese companies continue trading with Russia.

It remains uncertain whether Brussels would be willing to pursue such an escalation. However, the same policymakers who weakened Europe's competitiveness through energy policy could also undermine its technological independence, leaving the bloc even more dependent on the United States.