China firms in EU firing line as Hungary yields to anti-Russia sanctions package

The European Union could blacklist Chinese firms accused of circumventing sanctions as soon as Wednesday, after Hungary said it would not veto the latest package of punitive measures targeting Russia.

"There is no reason to veto it," Hungarian Foreign Minister Peter Szijjarto said in Brussels after a meeting with his ministerial counterparts on Monday evening, adding that he thought "the EU is making the wrong decision".

On Sunday, Chinese Public Security Minister Wang Xiaohong - who was in Budapest to sign cooperation agreements on policing and security - told Hungarian Prime Minister Viktor Orban that Hungary was "a good friend and companion who has stood the test of time", according to a statement from China.

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Diplomats said that EU ambassadors could now finalise the 13th package of sanctions at a meeting on Wednesday, since Hungary was the only holdout during initial discussions last week.

Three mainland Chinese firms and one Hong Kong company would be blacklisted and banned from trading with EU companies as part of the package, for allegedly circumventing the bloc's efforts to choke the supply of European-made dual-use goods to Russia.

Media reports have named the companies as mainland China-based Guangzhou Ausay Technology Co Limited, Shenzhen Biguang Trading Co Limited, Yilufa Electronics Limited, and the Hong Kong-based RG Solutions Limited.

According to a post on Soapbox, a weekly newsletter about EU-China trade, the firms are listed on "some Russian e-commerce sites, and ship electronics" and were "just traders, not producers".

The ban would mark the first listing of mainland companies on the EU's "annex IV" roster of censured firms. Last summer, officials removed five Chinese entities from a previous sanctions package after assurances from Beijing that the practice would stop.

EU leaders directly raised the names of 13 other Chinese entities they said were providing Moscow with sanctioned goods with President Xi Jinping during a summit in Beijing in December.

Beijing has strongly condemned the suggestion that its firms could be listed. Addressing a United Nations Security Council session on the conflict last week, Chinese envoy Zhang Jun lashed out at "unilateral sanctions".

During a meeting with US Secretary of State Antony Blinken in Munich last Friday, Foreign Minister Wang Yi asked him to "lift illegal unilateral sanctions on Chinese companies and individuals and not harm China's legitimate development rights".

In an on-stage interview at the Munich Security Conference, Wang rejected any moves "to blame China or to shift the responsibility of resolving the Ukraine crisis to China".

The veteran diplomat subsequently met his Ukrainian counterpart Dmytro Kuleba and told him that "[China] does not sell lethal weapons to conflict areas or parties to conflicts", according to a foreign ministry readout.

The EU's 13th sanctions package targets almost 200 individuals and businesses alleged to be aiding Russia's military effort. Its passage comes as the war ticks towards its second anniversary, and as the tide looks to be turning against Ukraine.

"I hope it will be approved before the 24th of February," the EU's foreign affairs chief Josep Borrell said on Monday evening.

The devastated city of Avdiivka fell to Russia on Saturday after months of fighting, while a mood of pessimism hung over the Munich conference last weekend. Attending the conference, Ukrainian President Volodymyr Zelensky appealed for continued Western military support, amid waning enthusiasm on US right-wing.

Monday's meeting of the EU's 27 foreign ministers in Brussels was attended by Yulia Navalnaya, the widow of Alexei Navalny, a Russian opposition leader who died in a remote prison in the Arctic Circle on Friday.

In a joint statement, the ministers said they would "spare no efforts to hold Russia's political leadership and authorities to account, in close coordination with our partners; and impose further costs for their actions, including through sanctions".

Borrell on Monday proposed renaming its human rights sanctions regime for Navalny.

"Now it will be called - if the ministers agree, they agreed politically, but it has to go through the technical process - the 'Navalny regime on global human rights sanctions'. This will be a way of keeping his memory alive," Borrell said.

There are currently four Chinese officials listed under this sanctions regime for their part in alleged human rights abuses in Xinjiang. One entity, the Xinjiang Production and Construction Corps Public Security Bureau, is also listed.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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