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To navigate the latest EU sanctions on China, this article maps out key compliance flashpoints for Chinese businesses expanding overseas by examining the EU¡¯s consolidated sanctions list. The central government maintains its firm opposition to any unilateral sanctions imposed by countries under domestic legislation on Chinese entities and individuals. Such sanctions not only contravene international law and the founding tenets of the UN Charter, but also disrupt global supply chain stability.

Chinese companies must defend their legitimate interests through legal channels, carefully assess compliance risks, and refrain from carrying out or aiding discriminatory foreign restrictions aimed at Chinese citizens or organisations.

Restrictive measures

EU restrictive measures targeting specific persons and entities fall into three main categories:

1. 1. Freezing of assets held within EU territory;
   2. Prohibition on EU nationals and companies making funds available to them, which in effect bans any transactions between sanctioned persons/entities and EU persons/entities; and
   3. Individual travel bans denying entry or transit across EU territory.

Trends

The EU¡¯s sanctions journey against Chinese individuals and entities, as reflected in the consolidated sanctions list through to late 2025, has progressed through three stages.

Years 2017-2018. This initial stage centred on implementing UN sanctions.

Years 2020-2021. Driven by the EU¡¯s values-based diplomacy, this wave of designations included:

1. 1. Tianjin Huaying Haitai Science and Technology Development and its employees, over the alleged ¡°Cloud Hopper¡± cyber intrusions; and
   2. Certain officials and entities linked to Xinjiang-related matters.

Years 2024-2025. This stage marked a turn towards geostrategic considerations, with sanctions overwhelmingly focused on Russia-related issues as geopolitical frictions increased. Designations included:

1. 1. Chinese entities and individuals channelling prohibited or restricted EU exports to Russia via third countries, such as Li Xiaocui and her companies, ARCLM International Trading and Shijiazhuang Hanqiang Technology, as well as Lin Zhongheng, who controls Shenzhen Biguang Trading;
   2. Companies offering direct or indirect material backing to Russia¡¯s battlefield capabilities, such as China Head Aerospace Technology and its chairman, Zhou Dachuang, as well as Xiamen Limbach Aviation Engine; and
   3. Entities providing critical fiscal income to the Russian government, largely within the energy industry, such as Liaoyang Petrochemical and Shandong Yulong Petrochemical.

The EU¡¯s approach extends beyond sanctioning the transacting companies themselves. It may also designate the individuals behind them, blocking attempts to slip away through newly incorporated shell entities. EU sanctions in these cases do not hinge on any connecting jurisdictional factor to the bloc, but are imposed purely on the strength of geopolitical priorities.

Evolving strategies

Developments of the consolidated financial sanctions list reveal three fundamental shifts in the EU¡¯s sanctions policy towards China.

Proactive weaponisation. The EU historically acted chiefly as an enforcer of UN sanctions, rarely initiating its own. However, escalating geopolitical frictions have led it to regularly designate entities and individuals with no jurisdictional link but conflicting political objectives or values with the EU.

Sweeping coverage. Beyond pursuing exporters of banned or restricted EU products and entities that directly or indirectly bolster Russia¡¯s military industrial complex, the EU now also targets importers of Russian energy. This marks a deliberate extension from military attrition to sanctions of non-EU entities lawfully participating in global commerce, with the explicit goal of draining Russia¡¯s economic lifeblood.

Blurring compliance red lines. Many of the entities sanctioned were not arms dealers but suppliers of ordinary industrial goods such as all-terrain vehicles, machine tools and electronic components. The EU applies deliberately broad and ambiguous yardsticks for designation, covering anyone deemed to provide ¡°material or financial support¡± to, or to have ¡°otherwise benefitted¡± from, Russia¡¯s military industrial complex or its decision makers. This imposes an extraordinary due diligence burden on businesses.

Countermeasures

Confronted by EU sanctions, their attendant financial and operational perils, and the requirements of China¡¯s Anti-Foreign Sanctions Law, Chinese businesses going global must act decisively to reconcile growth ambitions with compliance realities.

Erecting robust firewalls. All dealings linked to Europe, along with sensitive business lines, require strict legal, financial and personnel isolation, so that sanctions risk does not cascade across the group.

Exercising prudence in contract drafting. Steer clear of clauses that directly reference foreign sanctions, for instance, by citing compliance with EU sanctions as grounds for termination.

If a withdrawal clause is necessary, it should be founded on genuine commercial risks separate from foreign sanctions pressure ¨C such as payment system disruption and substantial logistical blockages ¨C and framed through neutral legal terms like ¡°change of circumstances¡± or ¡°frustration of performance¡± as an emergency legal safeguard.

Full adherence to Chinese legislation, including the Anti-Foreign Sanctions Law and the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures, is essential.

Implementing comprehensive due diligence and compliance protocols. Businesses should adopt a risk-based customer screening system, perform enhanced due diligence on transactions linked to high-risk jurisdictions, execute robust compliance clauses, and maintain meticulous documentation of compliance processes.

Cheng Wenli is a partner, and Liu Yaqi is a trainee lawyerparalegal at Shanghai Ronly & Tenwen Partners