The real reason for China’s trade war on Lithuania

China is waging a trade war against Lithuania in order to test the West’s resolve to stand up to Beijing, according to the foreign minister of the embattled Baltic state.

Gabriel Landsbergis told The Telegraph that Lithuania was being targeted with a “weapon of economic destruction” that could “basically be used in any other country and by any other non-democratic country that has issues with another country that it doesn’t like”.

China was challenging the rules-based international order by deploying trade restrictions that are “most probably illegal”, he said, adding: “This is a test for the European Union because it is a trade union but it is a test for the West as well.”

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Trade war

Lithuania was hit with the economic blockade by Beijing after becoming the first EU member state to allow Taiwan to open a de-facto embassy under its own name, in Vilnius last summer.

Most governments acquiesce to Chinese pressure and require Taiwanese entities to operate under the name Chinese Taipei.

Beijing has “restricted trade with Vilnius and even begun pressuring European multinationals to ditch Lithuanian suppliers”, The Telegraph reported.

Taiwan “has tried to cushion the losses to Lithuania from shrinking Chinese trade”, announcing a $1bn credit programme “to help fund joint projects between Lithuanian and Taiwanese companies in the semiconductor industry as well as biotechnologies, satellites, finance and scientific research”, the paper continued. But China “has continued to ramp up the pressure”.

Beijing’s economic shock treatment “goes against the trade regulations that China has assigned itself to” under the World Trade Organization (WTO), Landsbergis said.

He added: “I don't believe that allowing the people from the Taiwan Island who are asking to be called l Taiwanese is infringing on the one China policy. Let them be called Taiwanese. It’s normal.”

The clash poses a conundrum for the EU, which is trying to organise a summit with Beijing in March. But member states appear to have “backed Lithuania”, said euronews.

The EU’s High Representative, Josep Borrell, told reporters last week that the bloc had “clear solidarity” with the Baltic state.

Test of unity

Speaking after a meeting of EU foreign affairs ministers in Brest, Borrell said that “some things [with China] are going well, some less well”, adding: “We talked about Chinese activities in Lithuania and the impact of these activities in terms of the EU as a whole.

“Member states expressed clear solidarity with Lithuania and we discussed how we can actively press on with de-escalation in terms of this crisis.”

His comments “will come as welcome news” to the Lithuanian government, which is trying “to sell its row with Beijing as an EU-wide issue impacting the whole single market”, said euronews.

In a further boost for Vilnius, France’s Emmanuel Macron told reporters on Friday that China’s action towards Lithuania “continues to worry us”.

The Chinese state-owned Global Times fired back a warning shot in an editorial that described Lithuania as a “country in crisis” that “has systematically alienated itself from the world's second-largest economy”.

The paper claimed that “Taiwan separatists are actively encouraging Lithuania to double down on failure, even when its own population do not support them being a party to this dispute”, and that the government in Taipei was “a swindler making false and disingenuous promises to countries that disrupt their ties”.

In The Washington Post, columnist Anthony Faiola said the message coming from Beijing was that countries should think twice before “messing with the Middle Kingdom”. But whether China’s tactics will work “very much depends on the European answer”, he continued.

“There is a possibility that Europe, that European companies, the big multinational companies, will pressure Lithuania.” But alternately, “if we stand in solidarity, if we give a very clear response that such coercion is not just against one country”.

“The escalation level that China decided to choose is beyond anything that’s happened before against any other country in the world,” Faiola warned. “This is like the Spanish Inquisition, which nobody had expected.”