COMMENTARY: Brussels Bares Its Teeth — The EU Wants to Sanction Putin’s Chinese Banks

Introduction: Moscow’s Financial Lock Finally in Brussels’ Crosshairs

Bloomberg reveals what Beijing would rather keep quiet

The information circulated discreetly, almost drowned out by the deluge of geopolitical news in mid-June 2026: according to a report by Bloomberg, the European Union is considering sanctioning two Chinese banks accused of helping Russia bypass the trade restrictions imposed since the invasion of Ukraine. This isn't just a hallway rumor. It’s a political signal of the highest magnitude. The U.S. China Economic and Security Review Commission, the USCC, recorded it in its tracking of Beijing’s position on the invasion of Ukraine — a source whose analytical rigor is recognized in Washington and Brussels alike.

The scope of this information goes far beyond the mere designation of two financial institutions. It is the entire architecture of sanctions evasion that Brussels is beginning to attack head-on. Since 2022, China has functioned as a pressure relief valve for Vladimir Putin's war economy: by buying his oil, selling him electronic components, and providing discreet financial services. Today, that valve is at risk of being shut off.

A 21st sanctions package that redefines the rules of the game

This initiative regarding Chinese banks is part of a methodical escalation. On June 9, 2026, the President of the European Commission, Ursula von der Leyen, presented a 21st sanctions package against Russia of unprecedented scale: asset freezes on nearly 90 Russian banks, transaction bans on 31 Russian banks and 20 third-party entities — banks, crypto platforms, oil traders outside the EU — suspected of serving as conduits for Moscow. For the first time, the EU is arming itself with a mechanism allowing for a total ban on crypto-asset services at the scale of an entire third country.

On June 15, 2026, in parallel, the EU Council adopted a mini-package targeting 47 entities and 34 individuals, including the Chinese companies Shenzhen Minghuaxin and Xinxiang Richful Lubricant Additive Company, identified as suppliers of drones and military components to the Russian army. The move by Brussels is coordinated, deliberate — and it is now taking aim at the financial heart of Chinese support for Putin.

The Circumvention Strategy: How Beijing Played Innocent for Four Years

The diplomatic facade of benevolent neutrality

Since February 24, 2022, China has maintained an official posture of neutrality in the Russo-Ukrainian conflict. Foreign Ministry spokespeople — from Lin Jian to Guo Jiakun — invariably recite the same catechism: Beijing respects international law, opposes unilateral sanctions not authorized by the UN Security Council, and believes that trade between China and Russia is "legitimate and legal". This last phrase — used by spokesperson Guo Jiakun in August 2025 in response to American threats — is revealing of a perfectly honed strategy: claiming formal legality while organizing the practical circumvention of Western restrictions.

Faced with this official posture, the facts are damning. The EU Special Envoy for Sanctions, David O'Sullivan, put it bluntly to Euronews on June 3, 2026: "China remains a very big problem" for the effectiveness of Western restrictions. There is no sign of mitigation. Dozens of Chinese companies have been designated in successive packages. And yet, the flow of dual-use components, financial services, and hydrocarbons bought at a discount continues to feed the Russian war machine.

Banks: The final link in the war-financing chain

Sanctioning banks constitutes a decisive qualitative leap. Sanctioning a company that manufactures drones means cutting off a specific supply. Sanctioning a bank means attacking the very circulatory system of the economic relationship between two countries. It forces Chinese financial actors to choose between their relationships with the European market — and the global one, as long as the dollar remains king — and their services to Russian entities hit by restrictions.

The precedent already exists. In August 2025, the EU sanctioned two small regional Chinese banks for providing "crypto-asset services" to Russia — a historic first. Beijing's response was mechanical and predictable: the Ministry of Commerce announced retaliatory sanctions against two Lithuanian banks, UAB Urbo Bankas and AB Mano Bankas. This game of reprisals reveals less about Beijing's strength than about its profound discomfort in the face of pressure that is starting to bite.

Methodical Escalation: Twenty-One Packages in Four Years

From rapid reaction to a strategy of strangulation

This movement against Chinese banks must be placed within its historical trajectory. In February 2022, the first European sanctions targeted major Russian banks, oligarchs, and technology sectors directly linked to defense. It was targeted surgery. Twenty-one packages later, the logic has fundamentally evolved: it is now about methodically suffocating Putin's war economy by plugging every breach that Moscow has tried to exploit.

The ghost fleet — those hundreds of vessels that Russia uses to export its oil while bypassing the price cap — already had 632 sanctioned units before the 21st package. Thirty additional ships were added. Restrictions on LNG, crypto-assets, aerospace metals and alloys, drone components, and fishing: package after package, the EU has closed the valves one by one. What remained open — financial services in third countries — is now in the crosshairs.

The June 15 turning point: When Chinese names appeared in European texts

The mini-package of June 15, 2026, marks a symbolic boundary of considerable importance. For the first time in such an explicit manner, Chinese companies were nominally designated in a European anti-Russian regulatory text: Shenzhen Minghuaxin and Xinxiang Richful Lubricant Additive Company. They are not industrial giants. But their inclusion in European law creates a precedent: from now on, being a Chinese company no longer confers automatic immunity against sanctions from Brussels.

Beijing's reaction was predictable. The Chinese diplomatic mission to the EU declared its "strong dissatisfaction" and "firm opposition" in response to the June 15 sanctions targeting additional Chinese companies. The rhetorical register doesn't change. What changes is that Brussels is no longer stopping for it.

The Guo Jiakun Declaration: Anatomy of a Diplomatic Lie

"All China-Russia trade is legal" — Dissecting the argument

The formula deserves a closer look. When spokesperson Guo Jiakun declares that trade between China and Russia is "legitimate and legal", he is stating a partial truth that functions as a diplomatic shield. Indeed, bilateral trade exchanges between China and Russia do not in themselves violate international law — no more than exchanges between two sovereign nations that have not signed a sanctions treaty. China is bound neither by American sanctions nor by European sanctions.

But this formal defense deliberately ignores the essential: Chinese companies and banks that provide services to sanctioned Russian entities, that process transactions for the benefit of designated individuals or organizations, or that facilitate the acquisition of dual-use goods ending up in the production of missiles or drones, are operating in a gray zone that Brussels and Washington are shutting down. The formal legality of bilateral trade does not protect against unilateral sanctions from third countries — and that is precisely what Beijing refuses to recognize publicly, even as it organizes it behind the scenes.

Reprisal diplomacy: The signal Beijing sends to the West

China's systematic reaction to every sanctions package — trade counter-measures, export bans to European defense companies, declarations of "firm" opposition — follows a predictable manual. After the 20th package, seven European defense companies were included on the Chinese export control list: the Belgian FN Herstal and FN Browning, the German Hensoldt AG, and four Czech industrialists. These are symbolic blows intended to show that Beijing can impose costs — not to shatter the European economy.

Even more revealing: Chinese Vice Premier He Lifeng announced on June 17, 2026, during a forum in Shanghai, that Beijing would integrate anti-sanctions provisions into its financial legislation, strengthening what he called China’s "financial legal toolbox". It is an admission. You don't build a legal architecture for resisting sanctions if you don't intend to be subject to them. Beijing is preparing — and in doing so, confirms the accuracy of the European diagnosis.

O'Sullivan, Kallas, von der Leyen: Brussels’ United Front

Three voices, one coherent message

What is striking in the European posture of June 2026 is its remarkable coherence. David O'Sullivan, the Special Envoy on Sanctions, laid out the public diagnosis: China is "a very big problem" and "there is no indication that the practice is mitigating." He also revealed — without naming them — that previously designated Chinese banks had agreed to stop financing Russian activities after being blacklisted. Proof that designation works, at least partially.

Kaja Kallas, EU High Representative for Foreign Affairs, presented the 21st package on June 9 in terms of unusually direct clarity: institutions "used by Moscow to generate revenue and circumvent sanctions", banks, arms manufacturers, oil traders, refiners, and crypto operators in third countries. The list of targeted countries — China, Turkey, Kyrgyzstan, Kazakhstan, the United Arab Emirates, India — draws a complete map of the circumvention network. Brussels knows exactly where to look.

The June 18-19 Summit: Political validation at the highest level

The European Council of June 18 and 19, 2026, confirmed the direction. The leaders of the 27, joined by Volodymyr Zelensky, adopted conclusions on Ukraine and decided to extend sanctions for an additional 12 months. The political signal is unambiguous: Europe is not weakening. It is in for the long haul. And pressure on Putin's financial facilitators — including Chinese banks — is now a part of the acknowledged strategy.

This European consensus was not easy to reach. The unanimity rule on sanctions gave Hungary — whose Orbán government maintains ambiguous relations with Moscow — a potential veto over every package. That twenty-one packages could be adopted despite this institutional constraint is a political achievement that we tend to underestimate.

The Question of Leverage: Why Targeting Banks is More Effective than Targeting Factories

Money: The sinews of the circumvention war

Sanctions on companies producing drones or military components have a direct logic: cut off the supply. But they hit a fundamental limit: for every factory sanctioned, another one — not yet designated, operating via legal front companies or intermediate countries — can potentially take over. The circumvention network adapts, reorganizes, and moves to less exposed jurisdictions.

Banks are different. A bank is not interchangeable. It has correspondent banks, access to international payment systems, and relationships with counterparties that evaluate their own exposure to sanctions risk. When a bank is designated by the EU, its correspondents in third countries — including Asian institutions that value their access to European markets — start to cut ties. It is a multiplier effect that the designation of a factory does not have.

Crypto-assets: The new vector for circumvention

The 21st package introduces a major innovation: for the first time, 11 crypto-asset platforms in third countries are subject to transaction bans, and a mechanism for a total country-wide ban is proposed for jurisdictions systematically hosting platforms that help Russia dodge restrictions. This is a direct response to the rise of circumvention via digital assets.

Russia — and its financial conduits in Central Asia, the United Arab Emirates, and elsewhere — has heavily invested in crypto-assets as an alternative to the traditional banking channels cut off by sanctions. Dollar-backed stablecoins, platforms domiciled in Kyrgyzstan or Hong Kong, digital ruble transactions: the financial circumvention ecosystem has become sophisticated. The EU has decided to attack it directly — including, potentially, by targeting Chinese platforms that may have provided these types of services to sanctioned Russian entities.

Beijing’s Reaction: Between Legalistic Defense and Real Counter-Measures

The vocabulary of indignation

The official Chinese response to every new wave of European sanctions follows a well-established protocol. China’s diplomatic mission to the EU expressed its "strong dissatisfaction" and "firm opposition" after the June 15, 2026 designations. Spokesperson Lin Jian stated that his country "opposes all illegal unilateral sanctions" and that trade between Chinese and Russian companies "complies with World Trade Organization rules." This victimhood rhetoric is not without effect — it feeds the narrative of a portion of global opinion that sees Western sanctions as an instrument of hegemony rather than a tool of international law.

But behind the diplomatic noise, more revealing signals are emerging. The South China Morning Post documented in early June that Chinese banks are hardening their compliance procedures, complicating transfers to Russian entities, and that "a Russian banking official" in Saint Petersburg confirmed that payment routes were becoming "several times more complex", requiring intermediate banks that often refuse transactions. This is a sign that the pressure is working, even if Beijing will never admit it publicly.

The anti-sanctions legal arsenal strategy

Vice Premier He Lifeng's decision to integrate anti-sanctions clauses into Chinese financial law is the clearest sign of Beijing's discomfort. In March 2026, the State Council had already adopted a regulation on the security of industrial supply chains, authorizing "corresponding measures" against foreign actors who disrupt Chinese transactions. In May 2026, Beijing had used its "blocking measures" regulation to allow five Chinese refineries hit by U.S. sanctions to disobey them.

It is elaborate legal contortionism. China is building a domestic legal architecture to allow its companies to continue doing business with sanctioned entities without being exposed to prosecution — while maintaining the facade of international compliance. This sophistication reveals the magnitude of the interests at stake: Sino-Russian trade represents hundreds of billions of dollars. Nobody in Beijing wants to sacrifice this strategic partnership on the altar of Western pressure.

Ukraine at the Heart of the Debate: Why These Banks Matter to Kyiv

Financing the war: The simple equation

Behind the regulatory acronyms and complex legal mechanisms, there is a human reality of absolute brutality. Every dollar, every euro, every yuan that reaches Russian coffers despite sanctions is potentially one more missile on Kyiv, one more drone on Kharkiv, one more bomb on Ukrainian hospitals. This is not a metaphor. It is a budgetary calculation that the Kremlin makes itself: energy revenues — of which oil sales to China represent a major part — directly finance the war machine.

The European Commission itself admitted this in von der Leyen's June 9 statement: Russian energy revenues have dropped by about 40% since early 2026, more than two-thirds of the Russian sovereign wealth fund's liquidity has been exhausted, and economic growth is "at best sluggish". The sanctions are biting — not yet enough, but they are biting. Tightening the vice on Chinese financial conduits means accelerating this erosion of Putin's war resources.

Zelensky and pressure on allies: Demanding more, always

The Ukrainian Sanctions Commissioner, Vladyslav Vlasiuk, put it without euphemism after the June 15 mini-package: it is "an intermediate step". Ukraine expects more. It expects the full 21st package, with its strikes on Russian banks, its crypto restrictions, its designations of third-party facilitators. It expects measures that truly hurt Putin's war economy — not cosmetic adjustments that leave essential financial flows intact.

This Ukrainian pressure on its allies is both legitimate and necessary. Zelensky is at the table of the European Council. His people have been fighting for more than four years. The slightest crack in the support coalition, the slightest hesitation to strike Putin's financial networks — including when they pass through Chinese institutions — is felt in Kyiv as a potential betrayal. European leaders know this. It is part of what explains the escalation of sanctions packages.

The Role of Trump: A Necessary Evil in a Game that Goes Beyond Washington

American sanctions and secondary pressure on Chinese banks

Europe is not acting alone. The United States, under the Trump administration — despite its profound ambiguities on Ukraine — maintains a regime of secondary sanctions that weighs heavily on the calculations of Chinese banks. A Chinese financial institution that processes transactions for a sanctioned Russian entity risks being cut off from the dollar-based banking system. This is the fundamental reason why major Chinese banks — ICBC, Bank of China — have drastically reduced their exposure to Russia-affiliated transactions since late 2023.

Trump may be erratic, Trump may negotiate with Putin while ignoring Zelensky, Trump may threaten to withdraw American support for Ukraine — but on technical financial secondary sanctions against the facilitators of the Russian war economy, the American arsenal remains operational. This is the paradox of the current administration: on certain essential technical files, the pressure on China continues, even when the rhetoric from the head of the White House sends contradictory signals.

G7 coordination: When the West speaks with one voice — sometimes

The June 2026 G7 illustrates the tensions within this coalition. On the Russian oil price cap — a central tool for depriving Russia of revenue — coordination stumbled. The EU proposed to freeze the cap at $44.10 per barrel until January 2027, precisely because an automatic upward revision could have benefited Moscow in the context of Middle East tensions. This unilateral decision reveals the limits of G7 coordination when national interests diverge.

On Chinese banks, however, the convergence is clearer. London adopted, on June 16, 2026, its own package targeting Chinese entities providing military equipment to Russia — and immediately drew "serious representations" from the Chinese embassy in the UK. The Euro-British synchronization on designating Chinese financial facilitators is a strong political signal: the West is ready to go where it hurts, even if it causes friction with Beijing.

The July 2025 Precedent: When Two Small Chinese Banks Changed Everything

The first banking designation: A broken taboo

To understand what is at stake in the new Bloomberg revelation, we must go back to July 2025. That month, the EU took a historic step: for the first time, it sanctioned two small regional Chinese banks for facilitating payments linked to the circumvention of Russian sanctions. They were not financial juggernauts. But their designation served as a point of principle: from now on, the Chinese flag no longer constitutes automatic immunity.

Beijing’s reaction was immediate — sanctions against Lithuanian banks — and the reaction of the targeted institutions, according to O'Sullivan himself, was to cease funding Russian activities. Proof that the mechanics work. If two regional banks yielded to pressure, larger institutions — potentially more exposed to the international financial system — have even more reason to recalibrate their behavior in the face of a European designation.

The deterrence effect: What non-designated banks do out of precaution

The effect of banking sanctions is not measured only by the actions of designated entities. It is also measured by the behavior of entities who do not want to be designated. Since 2022, dozens of medium-sized Chinese banks have progressively restricted their transactions with Russian entities — not because they were legally forced to, but because they evaluated the risk of future reprisals from Brussels or Washington.

This is the mechanic of financial deterrence. It is imperfect — institutions less exposed to Western markets continue to serve as conduits — but it progressively reduces the volume and fluidity of the Russo-Chinese financial flows that feed Putin's war machine. The Bloomberg revelation about the two new targeted Chinese banks is part of this dynamic of gradual escalation.

The Crypto-Asset Stakes: The 21st Century Financial Frontier

When blockchain becomes the tool of economic warfare

The inclusion of 11 crypto-asset platforms in the 21st package's transaction bans represents a major doctrinal evolution. Until now, the EU had sanctioned individuals and traditional entities — banks, companies, ships. The designation of platforms operating on blockchains introduces unprecedented technical and legal complexity: how do you apply sanctions to a decentralized infrastructure, distributed by design to resist censorship?

The European response is pragmatic: rather than attacking the protocol, it attacks the interface between crypto and the real economy. Designated platforms lose access to the European banking system. European entities are forbidden from using them. EU financial institutions can no longer process transactions involving them. It is a sanitary cordon that, even if it doesn't destroy the platform, exiles it from the Western economic world — including Chinese platforms that may have provided these types of services to sanctioned Russian entities.

The digital ruble and de-dollarization: Moscow's ambitions

At the same time, Russia is pushing for the de-dollarization of its trade with China. The digital ruble, transactions in yuan, circumventions via unregulated crypto-assets: Moscow has invested in these alternatives since 2022, with Beijing’s tacit support. The EU's 20th package had already banned transactions involving the RUBx and the digital ruble. The 21st goes further by creating a mechanism allowing for the banning of all crypto services from a third-party jurisdiction.

This is a direct response to what Beijing and Moscow are building: a parallel financial system developed enough to reduce their dependence on Western financial infrastructure. The EU realizes it must act now, before this parallel system is mature enough to make financial sanctions truly powerless. It is a race against time — and Brussels is running late.

Effectiveness in Question: Do Sanctions Really Work?

The arguments for partial success

Von der Leyen stated on June 9: sanctions have "cut Russia off from global capital markets", energy revenues have dropped by 40%, and more than two-thirds of the Russian sovereign wealth fund's liquidity has been absorbed by the war effort. The budgetary pressure on Moscow is real. Interest rates in Russia have exploded in an attempt to contain inflation and finance a growing deficit. The war machine is still running — but at a growing cost that the Russian economy is finding increasingly difficult to bear.

The Russian economy hasn't collapsed — that's true. But it has militarized at a pace that is not sustainable in the long term. Entire civilian sectors are being sacrificed on the altar of military production. Endemic corruption in the army’s supply circuits is eating up additional resources. Sanctions did not cause the economic catastrophe in 2022 that some hoped for — but they are contributing to making the war increasingly expensive for Moscow, and thus altering the equation of negotiation.

Objective limits and the role of third-party facilitators

The main limit of the sanctions is something everyone in Brussels knows: the circumvention network. China is the central piece of it, but not the only one. Turkey, the United Arab Emirates, India, Kyrgyzstan, Kazakhstan — all conduits that have taken advantage of the economic arbitrage opened by sanctions to sell to Russia what the West no longer sells it, and buy what the West no longer buys from it.

Plugging these gaps one by one is the goal of successive packages. Twenty-one packages in four years — it is a sustained pace that shows the political resilience of the EU, but also the scale of the work that remains to be done. The designation of Chinese banks is one of the last locks to be picked. Not the last. The circumvention network will adapt again. But each adaptation costs it time, energy, and credibility with commercial partners who don't want to be next on the list.

Brussels versus Beijing: The Long Confrontation Ahead

The EU-China relationship under maximum tension

The potential designation of two new Chinese banks is part of a broader and structural degradation of the relationship between Brussels and Beijing. In late May 2026, the European Commission concluded that the trade and investment relationship with China was "unsustainable" in its current state. Tensions over electric vehicle subsidies, accusations of commercial dumping, and restrictions on European companies in the Chinese market — all of this predates the Ukraine issue, but is now intertwined with it.

The Commission is struggling to gather the necessary support to trigger its anti-coercion instrument against China — a tool designed specifically to respond to economic pressure from third countries. The diverging interests of the 27 member states — some very dependent on the Chinese market — complicate the mobilization of a unified response. This is where the strength of the European coalition is being tested in its depth, not just in its declarations.

Xi Jinping facing the impossible equation

For Xi Jinping, the situation is becoming uncomfortable. Continue to support Putin — even indirectly, even via private banks rather than state decisions — at the risk of increasing sanctions from the EU and the United States. Or distance China from Moscow at the risk of weakening the strategic partnership that Xi presented to his public as a geopolitical victory over the West. There is no good answer to this equation.

What the 21st package and the prospect of sanctions on two new Chinese banks impose on Xi is an increasingly explicit choice. The window of calculated ambiguity — neither sanctions nor overt support — is narrowing. Brussels is forcing a clarification. And in a context where Taiwan, the South China Sea, and technological tensions with Washington already complicate Beijing’s international posture, every new front opened represents an additional burden.

Conclusion: The Time for Chinese Banks Has Come

One more step in the long march toward accountability

The Bloomberg revelation about the prospect of sanctioning two additional Chinese banks is not an end in itself. It is a signal in a longer, more complex, and more decisive sequence. The European Union is building, package after package, a doctrine according to which any financial actor — regardless of nationality, regardless of country of domicile — that provides services to Putin's war economy exposes itself to real consequences for its economic interests in Europe.

This isn't wild extraterritoriality. It is economic sovereignty: the EU decides with whom its economic actors can do business. China can be indignant. It can retaliate. But it cannot prevent Brussels from exercising its prerogative over its own economic space. This is what these Chinese banks will have to integrate — and what Beijing will have to accept if it wants to preserve an economic relationship with Europe that is worth, for China too, infinitely more than its facade alliance with a regime whose days may be numbered.

Ukraine deserves for the West to go all the way

Ultimately, this all comes down to a question of moral and strategic coherence. The West decided, in 2022, that the Russian invasion of Ukraine was unacceptable and must be economically sanctioned. This decision implies following the money to its sources — even when those sources fly a red flag marked with a golden star. Zelensky is fighting. His army is resisting. His people are suffering. The least Europe can do — beyond declarations, beyond symbolic packages — is to cut off the financial taps that allow Putin to prolong this conflict.

The two Chinese banks targeted by Bloomberg are just one cog in a much larger machine. But every cog counts. Every designation, every restriction, every financial institution that must choose between Moscow and Brussels brings us closer, even infinitesimally, to the moment when maintaining this war will cost Russia more than it can afford. This is Brussels’ bet. This is the West's bet. And it is a bet that deserves to be held until the end.

Signed Maxime Marquette, columnist

Sources

Primary sources

USCC — China's Position on Russia's Invasion of Ukraine, updated tracking through June 17, 2026 (Bloomberg: EU proposes sanctions on 2 Chinese banks; Chinese retaliation against Lithuanian banks; Guo Jiakun statement)

Euronews — "China is a very big problem for EU sanctions against Russia", exclusive interview with David O'Sullivan, June 3, 2026

Ukrainska Pravda — EU approves parallel mini-package of anti-Russian sanctions (Shenzhen Minghuaxin, Xinxiang Richful, ghost fleet), June 15, 2026

Secondary sources

European Commission — Statement by President von der Leyen on the 21st sanctions package against Russia, June 9, 2026

Bloomberg — China Vows to Improve Anti-Sanctions Measures in Financial Law (He Lifeng, anti-sanctions legal arsenal), June 17, 2026

US News/Reuters — China Protests UK Sanctions on Chinese Entities Over Russia, June 16, 2026

Institut des Sciences Stratégiques — The EU's 18th sanctions package against Russia: Brussels targets Chinese intermediaries, June 16, 2026

Eastern Herald — EU's 21st Sanctions on Russia Target Third-Country Banks, Crypto Operators and Refineries, June 9, 2026