China Blacklists Two Lithuanian Banks After EU Sanctions Chinese Lenders

Beijing’s step, announced on August 13, follows the EU’s latest Russia package finalized in July and taking effect in early August, which for the first time blacklisted Chinese banks, reported as Heihe Rural Commercial Bank and Heilongjiang Suifenhe Rural Commercial Bank - over alleged facilitation of restricted trade with Russia. By naming two small Lithuanian banks for countermeasures, China signaled displeasure at the precedent of targeting Chinese financial institutions while choosing EU entities whose direct China exposure is limited, thus maximizing symbolism and minimizing domestic disruption.

The immediate market impact is likely modest because the Lithuanian banks in question have limited China business, but the broader message hits Europe’s smaller lenders and payment channels that support trade finance. Brussels has acknowledged China’s notification and is assessing the measures, even as the bloc is grappling with parallel disputes with Beijing over EV tariffs and wider trade policy. The sanctions sequencing also lands against a backdrop of already strained ties between China and Lithuania following their diplomatic rift in 2021, raising the risk of renewed pressure on Baltic supply chains and logistics.

For corporates, two implications stand out. First, compliance risk around China-related transactions in Europe is no longer confined to export controls; it now includes potential Chinese countersanctions on EU financial intermediaries. Second, cross-border payments structures that rely on smaller regional banks and workarounds such as Russia’s SPFS carry growing legal and reputational exposure. Unless there is de-escalation, deal-makers and treasury teams will keep re-routing payments via larger, better-screened institutions or retreating to on-shore financing, which may raise costs and slow trade flows.