On August 14, 2025, the European Union made a pointed call to China, urging Beijing to revoke sanctions imposed on two Lithuanian banks—Urbo Bank and Mano Bank. According to reporting from the Associated Press and other outlets, the EU’s request comes after China announced these measures in retaliation for recent EU penalties placed on two Chinese lenders, Heihe Rural Commercial Bank and Heilongjiang Suifenhe Rural Commercial Bank. The escalating tit-for-tat underscores just how tense relations have become between Brussels and Beijing, especially in the context of Russia’s ongoing war in Ukraine.
Let’s rewind a bit. In July 2025, the European Union adopted its latest sanctions package against Russia. This package, which became effective on August 9, specifically targeted the two Chinese banks, accusing them of providing crypto-asset services that allegedly helped Moscow evade international restrictions. The EU’s aim, as explained by European Commission spokesperson Olof Gill at a press conference in Brussels, was clear: “Our sanctions are the centerpiece of our efforts to minimize the effectiveness of the Russian war machine.”
China, however, was quick to push back. In a move that many observers see as largely symbolic, Beijing slapped its own sanctions on Urbo Bank and Mano Bank. The catch? Neither Lithuanian bank actually operates in China, so the practical impact of the sanctions is minimal. Still, the gesture carries weight in the world of international diplomacy, where symbolism often matters as much as substance.
The Chinese Ministry, in justifying its actions, stated that the EU’s sanctions on Chinese firms had “a serious negative impact on China-EU economic and trade relations and financial cooperation.” This, Beijing argued, left them with little choice but to respond. Yet, the EU remains unconvinced. Olof Gill didn’t mince words: “The Commission does not believe that the Chinese countermeasures have any justification or are evidence based, and therefore we call on China to remove them even now.”
For Lithuania, the episode is yet another chapter in a fraught relationship with China. The Baltic nation has been on Beijing’s radar for years, especially since 2021 when Lithuania allowed Taiwan to open a liaison office in Vilnius. That move infuriated China, which considers Taiwan a breakaway province and strictly forbids other countries from having formal ties with Taipei. In response, Beijing expelled Lithuania’s ambassador. Tensions ratcheted up again in 2024 after Lithuania expelled several Chinese diplomats. The catalyst? A Chinese ship came under suspicion during an investigation into the severing of two undersea data cables between Lithuania and Sweden—an incident that further deepened mistrust.
Despite the dramatic headlines, Lithuanian officials and banking leaders have downplayed the practical consequences of China’s latest move. The Bank of Lithuania, in a statement dated August 13, 2025, assessed that the sanctions would likely have little impact on the country’s financial system or on the banks themselves. “According to the preliminary assessment, this decision will not have a significant impact on either the country’s financial system or the activities of the banks themselves, since the business models of the mentioned banks are focused on the local market,” the central bank said.
Marius Arlauskas, head of administration at Urbo Bank, echoed this sentiment. “Since we do not have any business partnerships with Chinese individuals or legal entities, the sanctions will have no impact on the activities of Urbo Bank and the implementation of prudential regulations,” he stated, as reported by the Associated Press. Mano Bank issued similar reassurances, emphasizing their local focus and lack of exposure to Chinese markets.
But if the direct financial fallout is limited, the broader diplomatic implications are harder to ignore. The EU’s decision to sanction Chinese banks was rooted in its ongoing efforts to curb Russia’s ability to finance its military campaign in Ukraine. Brussels has been steadily tightening the screws on Moscow since the invasion began, and the July 2025 measures were just the latest step. By targeting banks accused of helping Russia sidestep restrictions via digital assets, the EU hoped to close loopholes and send a clear message—no one helping the Russian war effort would be spared.
China’s counter-response, though largely symbolic in this case, signals Beijing’s growing willingness to push back against what it views as Western overreach. The Chinese government has repeatedly criticized sanctions as a tool of coercion, arguing that they destabilize global markets and undermine international cooperation. In this case, the Chinese Ministry’s statement about the negative impact on economic and trade relations highlights Beijing’s broader concerns about the direction of EU-China ties.
The diplomatic friction is further complicated by Lithuania’s stance on Taiwan. The Baltic state, which endured decades of Soviet occupation before regaining its independence, has long been sympathetic to Taiwan’s quest for international recognition. Taiwan, for its part, has sought closer ties with Lithuania and other Baltic nations, citing shared experiences with authoritarian rule and a mutual embrace of democracy and liberal values. This budding relationship has not gone unnoticed in Beijing, which has responded with a series of escalating measures over the past few years.
For the EU, Lithuania’s situation is emblematic of a larger struggle. On the one hand, Brussels is committed to defending the sovereignty and policy choices of its member states. On the other, it must navigate the economic realities of its relationship with China, a key trading partner and global power. The current spat over bank sanctions is just one flashpoint in a much larger and more complex geopolitical contest—one that involves not just Europe and China, but Russia, Taiwan, and the broader international community.
As of now, it appears unlikely that the Chinese sanctions on Urbo Bank and Mano Bank will have any meaningful effect on Lithuania’s financial sector. But the episode is a vivid reminder of how quickly diplomatic disputes can escalate and how even symbolic gestures can ripple through the global system. For Lithuania, the EU, and China, the challenge will be finding a way to manage their differences without letting them spiral into something more damaging.
In a world where economic ties and political principles often collide, the latest round of sanctions and counter-sanctions serves as both a warning and a lesson—one that policymakers on all sides would do well to heed.
