China Retaliates Against EU with Export Controls on Defence and Aerospace Firms

· Beijing’s Action: On April 24, 2026, China’s Ministry of Commerce added seven EU-based entities to its export control list, barring them from receiving Chinese-origin “dual-use” items (civilian goods with potential military applications).

· Targeted Firms: The listed companies include Belgium’s FN Herstal and its parent FN Browning Group, four Czech defence firms, and Germany’s Hensoldt AG, known for radar systems previously supplied to Taiwan.

· Reason Cited: Beijing accused the entities of involvement in arms sales or military cooperation with Taiwan, framing the move as necessary to “safeguard national security” and adhere to non-proliferation obligations.

· Tit-for-Tat Retaliation: The decision follows the EU’s sanctions a day earlier against 27 Chinese and Hong Kong entities linked to supporting Russia’s war in Ukraine, marking an escalation in trade tensions.

· Expert Analysis: Economists view the controls as retaliatory, tied also to China’s new supply chain security law (April 7), which expands state power over foreign interference in industrial networks.

· Broader Context: Relations between China and the EU remain strained amid disputes over Ukraine, Taiwan, and EU industrial policies such as the Cybersecurity Act 2 and Industrial Accelerator Act, which restrict Chinese market access.

· Official Messaging: China emphasized that the sanctions apply only to a “small number” of military-linked firms and do not affect broader EU trade; however, analysts warn the standoff shows “no signs of subsiding.”

· Diplomatic Overtures: Chinese Commerce Minister Wang Wentao urged European industrial leaders, including Airbus and Mercedes-Benz, to counter “protectionist” EU policies and promote dialogue to stabilize trade ties.

[ABS News Service/24.04.2026]

Beijing has placed seven entities in the European Union on its export control list, banning them from receiving “dual-use” items – products with potential military application – originating in China, according to a statement from the Ministry of Commerce issued on Friday.

The entities, including Belgium-based firearms manufacturer FN Herstal and its parent FN Browning Group, are predominantly major European defence contractors, aerospace research institutes and satellite intelligence firms the ministry said were involved in arms sales to Taiwan.

The move came after the bloc imposed sanctions or export controls on 27 mainland Chinese and Hong Kong entities on Thursday, accusing them of either helping Russia and Belarus circumvent Western sanctions or directly providing items such as drones or components for use on the battlefield in Ukraine.

The ministry said the measure was to “safeguard China’s national security and interests” and “fulfil international obligations such as non-proliferation”, and was in accordance with the country’s laws and regulations on export control.

“It must be emphasised that China’s legal listing of these entities targets only a small number of EU military-related entities that have taken part in arms sales to Taiwan or engaged in collusion with Taiwan,” the ministry said in a statement.

“These measures apply strictly to dual-use items and do not affect normal economic and trade exchanges between China and the EU. Law-abiding EU entities with high integrity have absolutely no cause for concern.”

Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis, said Beijing’s move could be a tit-for-tat retaliation for the EU measures revealed the day before.

“Notably, it also follows China’s supply chain law approved on April 7,” she said. “The rules impose significant penalties on foreign entities that attempt to interfere with, audit, or otherwise disrupt Chinese supply chain arrangements.”

The new 18-point regulation on supply chain security elevates safeguarding China’s industrial and supply chains to a national security issue. It also grants officials the power to punish any entities deemed to threaten the country’s access to vital resources and the free flow of goods.

Xu Tianchen, senior economist at the Economist Intelligence Unit, said China has seemed less tolerant of the EU’s sanctions involving Chinese firms.

“The animosity between the two powers shows no signs of subsiding.”

The entities added to China’s export control list also include four companies from the Czech Republic and German sensor and avionics firm Hensoldt AG. In 2024, then-CEO Thomas Mueller said in a call with analysts that Hensoldt had delivered two units of its TRML air defence radar to Taiwan.

China-EU relations have been under increasing strain this year. On top of long-standing friction over the extent of Beijing’s support for Moscow in the Russia-Ukraine war, Brussels has enacted or proposed new trade and industrial regulations seen as restricting Chinese investment and companies, including the EU Cybersecurity Act 2 and the Industrial Accelerator Act.

Both policies are likely to restrict market access for Chinese firms, either a total freeze on national security grounds or limitations in favour of made-in-Europe products.

On Thursday, Chinese Commerce Minister Wang Wentao called on European industrial heavyweights to play a “proactive role” in tempering Brussels’ increasingly “protectionist” stance during meetings with Airbus CEO Guillaume Faury and Ola Kaellenius, chairman of Mercedes-Benz and president of the European Automobile Manufacturers Association.

Wang urged the executives and the business community to push for dialogue between China and the EU to resolve economic rifts, as a recent spate of “protectionist measures” from Brussels has caused “substantial damage” to trade relations, according to statements from the ministry.

He also urged European businesses to advocate for the adjustment of “improper terms” to ensure a non-discriminatory market environment, the ministry said.