China Hits Back at EU Sanctions Within 24 Hours, Blacklisting 14 European Firms Including Rheinmetall

Beijing responded to the European Union’s latest Russia sanctions package in less than a day, placing an equal number of European companies on its dual-use export control list and cutting them off from key Chinese inputs, including certain rare earth materials. On 23 July 2026, the EU adopted its 21st package of restrictive measures against Russia. Among the new listings were 14 companies from mainland China and Hong Kong accused of supporting Russia’s military-industrial complex or helping circumvent earlier export controls on dual-use goods.

China’s Ministry of Commerce answered on 24 July. It added 14 EU entities to its export control list, effective immediately. The companies include Germany’s major defence manufacturer Rheinmetall AG, Italian electric motor maker Lafert S.p.A., French drone producer Cavok UAS, Czech firm Tatra Trucks, and several others active in materials, optics, photonics and related fields.

Chinese companies are now prohibited from exporting dual-use items — goods with both civilian and military applications — to the listed European firms. The ban also applies extraterritorially: no organisation or individual anywhere may transfer Chinese-origin dual-use goods to these entities. Chinese officials framed the move as necessary “to safeguard national security and interests, and to fulfil international obligations such as non-proliferation,” describing the EU’s actions as “egregious.” The symmetry was deliberate: fourteen for fourteen, delivered inside a day.

Analysts note a clear difference in the practical impact. Europe restricted access to its markets — a cost the affected Chinese firms can more readily absorb or work around. China restricted access to processed inputs that are difficult to source at scale elsewhere.

China accounts for roughly two-thirds of global rare earth mining and close to 90 percent of processing capacity. Processing is the critical step; ore in the ground has little value until it is separated and refined. These materials are essential for drones, precision munitions, electric motors, sensors and many components used in modern vehicles and defence systems.

Rheinmetall, one of Europe’s largest defence contractors, faces the restrictions at a time when European governments are accelerating rearmament programmes. Market prices already reflect earlier Chinese controls. Some rare earths, including dysprosium in E…