China in Europe: August 2025

China’s Tit-for-Tat Sanctions: China announced sanctions on two small Lithuanian banks (Urbo Bank and Mano Bank) and banned either from transactions, cooperation, or “other activities” with any partners in China. The sanctions come in retaliation for the EU’s decision to sanction two Chinese banks accused of helping Russia evade Ukraine-related sanctions that came into force in early August. The Chinese banks targeted by the EU anti-Russia sanctions package supposedly used cryptocurrencies to help Russia evade European punitive actions and were “significantly frustrating” the European sanctions policy, according to EU officials. The EU demanded that China withdraw those “unjustified” sanctions. China’s Ministry of Commerce urged the EU to “correct its wrongdoings, and stop undermining the interests of China as well as China-EU cooperation.” Also in August, Beijing extended by six months its anti-subsidy investigation into European dairy imports, to further amp up pressure on Brussels. The Chinese investigations will continue until at least February 2026, citing the complexity of the case. China had previously extended its antidumping investigation into EU pork and announced duties on European brandy as part of the ongoing trade disputes with the European bloc.

Czech President Meets Dalai Lama: China announced that it had suspended all engagement with the Czech President Petr Pavel after he met with the Dalai Lama on a private trip to celebrate the Tibetan leader’s ninetieth birthday. The Dalai Lama, a symbol of Tibetan Buddhism and independence, has remained in India since fleeing China in 1959. China’s Ministry of Foreign Affairs issued a statement, saying Pavel’s meeting, “seriously contravenes the political commitment made by the Czech government to the Chinese government, and harms China’s sovereignty and territorial integrity.” The Czech presidency is largely ceremonial, and China continues to engage with the government in Prague. Former Czech President and national hero Václav Havel was a close friend of the Dalai Lama.

Britain in Japan: A UK Carrier Strike Group as part of Operation HIGHMAST arrived in Tokyo to stress European engagement in the Indo-Pacific, joined by the British Defense Secretary John Healey. It was the second trip by such a strike group to Japan after a 2021 visit led by Queen Elizabeth II. British Ambassador to Japan Julia Longbottom said, “We are deeply grateful for your hospitality and shared commitment to a free and open Indo-Pacific.” At a joint press conference with his British counterpart, Japanese Defense Secretary Gen Nakatani described how “Japan and the UK have been steadily enhancing cooperation as each other’s closest security partners in Asia and Europe.” Healey concurred: “The security of the Indo-Pacific is interlinked and indivisible with security in the Euro-Atlantic” and “our policy is NATO-first but not NATO-only.” The two also outlined their “serious concerns” about events in the East and South China Sea, and that they both “strongly oppose any unilateral attempts to change the status quo by force or coercion.” British media suggested that Healey used jingoistic language against China, claiming he said, “If we have to fight, as we have done in the past, Australia and the UK are nations that will fight together. We exercise together and by exercising together and being more ready to fight, we deter better together.” The British defense secretary denied that claim and added, “There is no place for threats or the use of coercion.”

Iran Sanctions Snapback: China (along with Russia) condemned Britain, France, and Germany for reimposing UN sanctions on Iran. The sanctions were part of the snapback mechanism in case Iran violated the 2015 deal to limit Iran’s nuclear program in exchange for sanction relief. Chinese Foreign Ministry spokesperson Guo Jiakun said of the situation: “The Iranian nuclear issue is at a critical juncture. Launching the Security Council’s snapback mechanism of sanctions is not constructive and will undermine the process of a political and diplomatic settlement of the Iranian nuclear issue.”

Italy Attacks EU Weakness: Italian Prime Minister Giorgia Meloni accused the European Union of being sidelined from the global stage compared with the world’s great powers. She described how the EU “seems increasingly condemned to geopolitical irrelevance, incapable of effectively responding to the competitiveness challenges posed by China and the United States.” The former European Central Bank chief Mario Draghi underscored a similar sentiment the week prior, saying, “For years, the European Union believed that its economic size, with 450 million consumers, brought with it geopolitical power and influence in international trade relations. This year will be remembered as the year in which this illusion evaporated” and how “China has made it clear that it does not consider Europe an equal partner.” 

New Information on Chinese Hack: British security services (alongside security bodies from thirteen other countries) have discovered a Chinese state-sponsored hack on critical national security infrastructure. Reports suggest the hackers have attacked government, telecoms, transport, and military facilities since 2021. The attacks were related to Salt Typhoon, the Chinese hack of American telecommunications that targeted President Donald Trump, Vice President JD Vance, and former Vice President Kamala Harris.

Germany Avoids Dependence on China: The German economy ministry outlined its program to de-risk from China in wind-power components. Wind farms rely on permanent magnets, which “nearly all come from China. . . .We want to systematically reduce critical dependencies, for example on rare earths, from individual third countries,” said the ministry. Currently, China holds a 90 percent share over the permanent magnet supply, and the proposal aims to increase the supply from other sources (such as Australia and Japan) to 30 percent of Germany’s magnet procurement by 2030, and 50 percent by 2035. There has already been some follow-through, as when the Waterkant North Sea offshore wind farm scrapped a deal for China to provide the turbines. Germany’s tough line on China was also visible in the Canada-Germany agreement to step up cooperation in the extraction of critical raw materials. On the deal, Canadian Prime Minister Mark Carney said, “Canada can play a role in accelerating that diversification for Germany and for Europe.” Germany has taken other steps to divorce itself from Chinese minerals, such as the plant in the small town of Bitterfeld, which hosts “the largest rare earth magnet recycling plant in Europe” and which will reuse the rare earths in old technology rather than import more from China. The factory is part of a larger process triggered by the 2024 EU Critical Raw Materials Act, which aims to source 25 percent of all the raw materials it requires through recycling by 2030.

London Super Embassy: China’s proposed “super embassy” in London has been delayed by Westminster after China failed to explain the redacted areas in the embassy’s construction plans. The embassy already raised concerns of espionage, given its proximity to sensitive telecommunications and financial infrastructure in the City of London. Deputy Prime Minister and Secretary for Housing Angela Rayner demanded an explanation for the blacked-out sections of the planning application. When China failed to provide it, the deadline to approve the country’s embassy plans was pushed back to October. In response, the Chinese embassy objected, “Anti-China forces are using security risks as an excuse to interfere with the British government’s consideration over this planning application. This is a despicable move that is unpopular and will not succeed.” Meanwhile, China has blocked the UK’s reconstruction of the British Embassy in Beijing.