Wrocław University of Science and Technology and VIGO Photonics are among 14 EU entities operating in strategic sectors that have been targeted by Chinese export restrictions. The measures are Beijing’s response to the European Union’s latest sanctions package against Russia. Analysts from the Centre for Eastern Studies, or OSW, argue that the decision signals not only China’s willingness to continue supporting Russian policy, but also Beijing’s increasingly assertive approach towards the EU.
“Beijing’s response to the European Union’s 21st sanctions package against Russia was to place 14 EU entities on what is effectively a sanctions list maintained by the Ministry of Commerce of the People’s Republic of China,” Paulina Uznańska, an analyst with the China Department at OSW, told the Newseria news agency.
“This means that, with immediate effect from the introduction of the Chinese countermeasures, both Chinese entities and foreign companies using Chinese semi-finished products, components or technologies are prohibited from exporting dual-use products to the organisations included on the list,” she explained.
The EU’s 21st sanctions package against Russia, adopted on 23 July, imposed restrictions on 14 Chinese and Hong Kong entities accused of supporting Russia’s war machine. For the first time, China responded directly to an EU decision on a tit-for-tat basis, introducing its measures the following day.
According to the OSW analyst, Beijing’s earlier responses had been limited to the banking sector or to penalising selected EU companies that China alleged had participated in supplying weapons to Taiwan.
“China is targeting EU entities from strategic sectors that are highly important to the modernisation of NATO member states’ armed forces. These include the defence, photonics, semiconductor and maritime technology industries,” Uznańska said.
“The Chinese authorities are selecting these organisations very precisely and targeting them in order to limit the ability to strengthen NATO’s eastern flank,” she added.
The list published by China’s Ministry of Commerce includes companies and institutions from Germany, the Czech Republic, Italy, France, Lithuania, the Netherlands and Bulgaria. It also contains two Polish entities: VIGO Photonics and Wrocław University of Science and Technology.
“Although the Chinese side has not provided an official explanation of why these two particular entities were selected, we can see that they are institutions of importance to the defence sector,” Uznańska said.
“Wrocław University of Science and Technology is the only higher education institution on the list. Among other activities, it conducts EU-funded research into drone technologies and the use of artificial intelligence on the battlefield. At the same time, it also cooperates with Chinese universities under other research grants,” she explained.
“VIGO Photonics, meanwhile, is a strategically important company in the field of infrared detectors and plays a significant role in the European defence market.”
According to the analyst, if the EU continues to put pressure on Beijing over its support for Russia, China may further expand its blacklist.
“At present, we are dealing with a licensing system. Whenever a Chinese exporter wants to sell dual-use products or rare earth metals, it must apply for a licence from the Ministry of Commerce of the People’s Republic of China,” Uznańska said.
“However, China has a very broad range of export-control instruments at its disposal, and it is possible that it may impose a complete ban on the sale of such products in the future.”
“The question will always be how effectively China can enforce such a ban, because these supply chains are extremely complex and difficult to trace. Nevertheless, we can clearly see that the Chinese authorities are moving in this direction,” she added.
Rare Earth Restrictions Show Beijing’s Direction of Travel
China’s export restrictions on rare earth metals and products made from them, introduced last year, may already provide evidence of this strategy.
In response to tariff increases imposed by Donald Trump’s administration, China introduced export licences in April 2025 for seven heavy rare earth elements, including terbium, dysprosium and samarium. These materials are essential for the production of magnets and military electronics, among other applications.
In October 2025, Beijing extended the controls to additional rare earth elements and processing technologies. Some of these measures were subsequently suspended until November 2026.
“This is particularly important because the entire world depends on rare earth metals mined and refined in China,” the OSW analyst said.
“Approximately 70% of global rare earth extraction takes place in China, while the country accounts for more than 90% of refining.”
“China demonstrated last year that it would not accept its rare earth materials being used abroad to develop defence industries. We are now seeing the next step in the same direction: first rare earth metals, and now dual-use companies,” Uznańska added.
“Step by step, China is trying to cut the West off from its semi-finished products, raw materials and components in order to slow the development of defence capabilities and the modernisation of NATO member states.”
In 2024, China mined six times more rare earth metals than the United States, the world’s second-largest producer. The European Union’s strong dependence on imports of these resources from China has become a source of political leverage for Beijing.
The European Commission has already announced measures aimed at reducing this dependence. One of them is the Critical Raw Materials Act, which places strong emphasis on diversifying sources of supply.
By 2030, the EU should no longer import more than 65% of its annual demand for any strategic raw material from a single non-EU country. In addition, 25% of annual consumption should come from recycling rather than extraction.
“Europe is preparing for the possibility of a defensive war with Russia while simultaneously remaining dependent on China, which is the Russian Federation’s closest partner,” Uznańska said.
“The problem is that, in the event of a conflict, China could easily cut European companies off from access to strategically important components and products.”
“This is why it is essential for companies to undertake the painstaking work of tracing their supply chains, identifying precisely who they cooperate with and avoiding reliance on a single source of supply,” she added.
China Signals Continued Support for Russia
In her analysis, Uznańska argues that China’s decision signals Beijing’s willingness to continue supporting Russia in its war against Ukraine.
It may also be interpreted as evidence of China’s growing assertiveness, particularly in the context of the EU’s plans to adopt new instruments to protect the single market in the autumn.
“China will attempt to exert pressure on the European Union so that it does not introduce additional mechanisms to protect its own market,” Uznańska said.
“What we are currently witnessing in bilateral relations is enormous pressure from Chinese industry on European industry. In practice, European industry is increasingly being consumed by Chinese competition.”
“The EU is preparing to present new instruments designed to protect the single market. These may include tariffs and other wide-ranging measures,” she added.
“China’s latest move shows that Beijing will be prepared to respond aggressively to such actions by the European Union.”
Analysts Warn of a ‘China Shock 2.0’
In a July report prepared by the Centre for Eastern Studies and the Union of Entrepreneurs and Employers, analysts warned about the consequences of a new wave of Chinese economic expansion, described as “China Shock 2.0”.
The trend is directly affecting sectors including the automotive, machinery, chemical and green technology industries.
The report estimated that the EU economy lost EUR 87 billion in added value as a result in 2025, while Poland lost EUR 11.4 billion.
Pressure from China is visible both in the EU market and in international markets, where European products compete with goods made in China.
Experts identified several areas requiring urgent action. Alongside dependence on imported rare earth metals, Europe is also heavily reliant on Asian production of active pharmaceutical ingredients and antibiotic components, as well as on supplies of photovoltaic cells.
The authors of the report and the business representatives quoted in it called for selective protectionism, a more active industrial policy, protection of strategic supply chains, the development of European brands and stronger preference for European added value in public procurement.
