Before deepening ties with Taiwan, the Lithuanian Foreign Ministry considered possible retaliation from China. But nobody expected that Beijing would go after Lithuania’s trading partners in Europe, Deputy Foreign Minister Mantas Adomėnas has said.
According to him, Lithuania expected deterioration in bilateral relations with China and minor losses for Lithuanian businesses after a Taiwanese representative office was opened in Vilnius.
“The risk assessment was based on our bilateral economic relations, ie, exports and imports from China that were not significant and were not likely to cause major economic losses,” Adomėnas told LRT TV.
But one possible risk was overlooked.
“China is responding not only bilaterally, but has also imposed sanctions on the EU single market. This is the new unforeseen element that could not have been predicted in the light of historical developments,” the deputy minister said.
Beijing has reportedly been pressuring international companies trading with China to drop Lithuanian suppliers.
According to economist Aleksandr Izgorodin, Lithuania’s direct exports to China are not significant, accounting for only 1 percent of the country’s GDP. But losses could be much greater if Beijing goes after Lithuania’s partners.
“If China continues to put pressure on Western European and Scandinavian companies not to buy certain services or components from Lithuania, the impact will be significant,” Izgorodin said.
“[This is because] 80 to 90 percent of Lithuanian exports are based on contractual manufacturing exports to other EU countries,” the economist added.
Such Chinese pressure on European companies could also negatively affect the investment climate in Lithuania, according to Rimantas Rudzkis, a professor at Vilnius University (VU).
“Bearing in mind that big global companies want to enter the Chinese market, which is currently biggest in the world, it immediately makes Lithuania a country of high risk,” he said.
According to Adomėnas, the foreign ministry hopes for international organisations’ involvement in mediating Lithuania’s conflict with China.
“The ministry has immediately contacted the European Commission, which is responsible for implementing the EU's trade policy,” the deputy foreign minister said. “We are also talking to all EU governments to use the available EU instruments to resolve the issue, including by taking the case to the WTO.”