European Central: Lithuania Receives Large Investments from Taiwan
Lithuania took a large risk standing up for what it believes in, and the country may be able to even avoid economic repercussions for doing so. As a result of having diplomatic relations with Taiwan, China has started a trade war to apply economic pressure to force Lithuania to break off diplomatic ties with Taiwan. Lithuania allowed Taiwan to open an embassy using the name Taiwan in Vilnius which is the first in the world for an internationally recognized country. Taiwan also has an embassy operating under the name Taiwan in Somaliland, but in any other countries embassies use the name of its capital city, Taipei. This resulted in China downgrading its own diplomatic relations with Lithuania and has been determined to make life as difficult as it can financially. This has proved to be difficult however as Taiwan is able to assist Lithuania financially, this may be a moot point. Taiwan has committed to creating a 200-million-dollar fund in order to invest in Lithuanian businesses. A couple weeks later and Taiwan announced another fund worth 1 billion dollars which will be target. The billion dollar fund will focus primarily on developing semiconductors. Lithuania’s economic minister, Ausrine Armonaite, aims to open a trade representation in Taiwan in spring of 2022.
Some of China’s tactics to force Lithuania to comply include blocking Lithuanian cargo that arrived to Chinese ports from entering the country. Taiwan responded to this by buying 20,000 bottles of Lithuanian rum that were blocked from entering China, floating at sea. China also attempted to force the German company Continental that produces automotive parts to stop using parts manufactured in Lithuania. This is grounds to take this matter to the WTO which the European Union has done, but the problem is that the process may take years. This would allow China to continue to pressure Lithuania economically in order to comply, however Lithuania appears unwilling to crack under pressure from Beijing. As long as China can source imports from elsewhere instead of Lithuania, China may continue to block imports from Lithuania indefinitely.
Compared to other nations, Lithuania is more outspoken due to its history of being part of the Soviet Union. When Lithuania became independent, the country had to reinvent itself as it could no longer depend on the Soviet Union economically. Other countries may be intimidated by this, but Lithuania seems confident that if it did it once before, it can replicate this success again by shifting trade away from China if it has to in order to fight for the values it believes in such as democracy. Due to the support of Taiwan which is much smaller than China 24 million vs 1 billion citizens), but significantly larger than Lithuania itself (2,800,000 citizens) and along with being part of the European Union’s single market Lithuania appears it will be able to overcome these challenges. Lithuania has invested over 10 times more in China than vice versa. Lithuania has invested 40 million euros in China while China has only invested 3 million. Lithuania’s foreign ministry however also wants to reassure Chinese consumers that the country does not have malicious intentions towards China. The foreign ministry envisions Lithuania having the opportunity to grow into an important financial country such as the Netherlands or Singapore, two smaller countries as well.
Taiwan is not the only way that Lithuania has upset China. Besides Taiwan, Lithuania has also been concerned with the treatment of Uyghurs in the Xinjiang province of China. In May of 2020 the Lithuanian Parliament described the situation in Xinjiang as genocide in a nonbinding resolution, supported by 60 percent of the Parliament. Other countries have described the situation as a genocide as well, but little has been accomplished as many are concerned about losing financially if they upset China. The same resolution from the Lithuanian Parliament also condemned the national security law in Hong Kong and allow for religious freedoms for the follower of the Dalai Lama. Lithuania however does not see things the same way and Dovile Sakaliene, a member of the Lithuanian Parliament recalls Lithuania’s history as a communist country for why she feels it is important to stand up for the Uighurs.
If more countries took a stand like Lithuania, countries may be deterred from attempting to bully countries economically into accepting human rights violations and poor behavior in general. If other countries would step up as Taiwan has it would be considerably easier for other nations to follow the path of Lithuania. While the Chinese market is significant in size, it is still only a portion of the world economy. The same can be said for any country and should be a reminder that as economies of developing countries continue to grow, bullying will be harder as the economic power of developed nations diminishes.
