China has added two Italian companies to its blacklist in response to EU sanctions against Russia

Yesterday, China announced that it had added fourteen European companies to its export control list. This is a direct – and unprecedented – response to the European Union’s decision to sanction the same number of Chinese and Hong Kong-based companies as part of the twenty-first package of sanctions against Russia, approved the day before yesterday. The political imbalance is quite evident: whilst the EU seeks to halt Moscow’s war machine – aided and funded by Chinese companies – Beijing is reacting not by blocking its exports to Russia, but by blocking those to the EU. Chinese exporters are now prohibited from supplying dual-use goods – that is, goods that could have both civilian and military use – to companies on the blacklist. The largest company affected by the sanctions is the German defence giant Rheinmetall. But the political and economic attack is also directed at Italy, because, surprisingly, the first two companies on the Chinese Ministry of Commerce’s new blacklist are two Italian firms: Lafert SpA and Garnet srl.

Garnet is a company based in Concorezzo, in the province of Monza and Brianza. It was founded in 1997 and specialises in components for automation, robotics and the automotive sector; in particular, it manufactures permanent magnets, which are made from rare-earth elements – materials over which Beijing holds a near-monopoly and which it considers strategic. In 2025, Garnet achieved a turnover of just over nine million euros. Lafert is a Veneto-based group headquartered in San Donà di Piave, near Venice; founded in 1962, it designs and manufactures electric motors and industrial drives: it is larger than Garnet and forms part of the Japanese Sumitomo Group. It produces electric motors for industrial clients, and in 2023 it closed its financial year with a turnover of 225 million euros; it has around a thousand employees worldwide and approximately seven hundred in Italy. Lafert also uses Chinese rare-earth elements to produce the permanent magnets required for its motors. To closely monitor the Chinese rare-earth market and maintain direct contact with local producers, both Garnet and Lafert have offices in China: the former in Ningbo, in Zhejiang province, and Lafert has a production subsidiary in Suzhou, opened in 2012. The news that Lafert had been added to the Chinese blacklist, which reached San Donà di Piave yesterday morning, “took us by surprise”, the group’s CEO, Cesare Savini, told Il Foglio. This is also because, Savini explains, Lafert has “no links whatsoever to the defence or military sectors, and nothing to do with dual-use technologies. We were aware we were facing difficulties and had to comply with certain restrictions, and we were – and still are – working to find solutions, but today’s news only makes the situation worse”. Certainly, the decision to block exports to Lafert is influenced by the company’s links with Japan, on which the Chinese leadership has for months been imposing restrictions and economic pressure due to accusations against Prime Minister Sanae Takaichi’s government of “new militarism”. However, the economic impact of the Chinese measures is likely to be very real for Italy and also severe, affecting at least 40 per cent of Lafert’s output. Garnet did not respond to a request for comment. According to information obtained by Il Foglio, the Italian embassy in Beijing has been in contact with the Chinese Ministry of Commerce and the government in Rome, but so far there has been no official reaction from the Italian government. European Commission spokesperson Paula Pinho said yesterday, in response to a question from journalists, that the EU is “analysing the announced measures and will be contacting the member states and, through them, the companies concerned, to understand the impact of these measures”. Naturally, Pinho added, “we will seek clarification from our counterparts in China to better understand what is actually at stake”.

But Beijing’s political objective is obviously to gain leverage in negotiations with the governments of EU member states, by targeting small strategic companies and perhaps softening future decisions in Brussels – the classic method of economic coercion, which is not directed at giants such as Rheinmetall, which are economically robust enough to command government protection, but at smaller firms that are fundamental to the productive fabric. This is an unscrupulous move following months of tensions between Beijing and Brussels, with cancelled summits and closed doors – particularly on the Chinese side – to which the EU has consistently responded by urging the resumption of dialogue: just last Thursday saw the conclusion of the European Parliament’s Foreign Affairs Committee’s mission to Beijing and Shanghai, led by David McAllister, who met with Chinese Foreign Minister Wang Yi and the leadership of the National People’s Congress precisely to try to keep open a channel of dialogue on Ukraine, trade and, not coincidentally, the issue of dual-use goods, which Brussels is asking Beijing to halt. This is a sign of how the EU, even in the face of targeted retaliatory measures such as those against European companies, continues to opt for institutional dialogue for fear of an open confrontation.