The interaction between Beijing and Vilnius has always left much to be desired. But bilateral relations all but broke down after Lithuania allowed Taiwan to open an official embassy in late 2021, sparking a sharp political and economic conflict between Beijing and Vilnius. The small, but proud, Baltic republic would not have gone into confrontation with the Chinese superpower if it had not known that the West would support it in this matter. And so it happened.
Lithuania has become a “torpedo” against China with two goals: 1) to check how Beijing is ready to use economic tools for political pressure on other players; 2) tie the EU into a clash with the Chinese that is disadvantageous for the Europeans. The case has taken an extremely risky turn for Beijing and continues to develop. Meanwhile, for us, Ukraine, Lithuania is a benevolent state, helping to defend against Russia. However, we have good economic ties with China - that is, Kyiv should have its own position on this geopolitical mess. I mean, what is the essence of the conflict between Beijing and Vilnius? What is its global subtext? And how should we respond to it?
The newly independent Lithuania chose as its identity the role of a victim of Soviet communism, its ardent anti -Moscow rhetoric allowed Vilnius to become the main conductor of US policy in Europe according to the former US Secretary of Defense Donald Rumsfeld.
Of course, China, with its authoritarian system and Leninist-Marxist state apparatus, came under criticism from Vilnius: during intergovernmental commissions, Lithuanian officials raised issues of Tibet, Hong Kong, Taiwan, the Uighurs and the Falun Gong sect (法轮功 fǎ lún gōng) that were uncomfortable for their Chinese colleagues. Although political relations remained cool, Lithuania, like most countries in the world, was able to find a pragmatic basis for economic cooperation with China.
Firstly, Vilnius and Beijing began to actively trade - over the past 10 years, Lithuanian exports to China have grown sevenfold - from $50 million to $350 million.
Secondly, Lithuania has joined the group of European countries cooperating with China within the framework of the 17+1 platform.
Thirdly, the Lithuanian port in the city of Klaipeda is one of the largest transit arteries in the Baltic States - and Vilnius, having joined the Chinese initiative "One Belt One Road", activated the potential of the Klaipeda port. Over the past four years, the number of TEU containers passing through it has grown one and a half times - from 472,000 in 2017 to 667,000 in 2021. The main role in this was played by the launch of trains loaded with goods from China. Vilnius income from transit amounted to hundreds of millions of dollars, and the net profit of carriers is tens of millions.
Trade turnover of the Baltic ports
Dynamics of transit through the leading ports of the Baltic States
But in 2018, Lithuania made vehement anti-Chinese statements, such as advising its citizens not to use Chinese-made devices and openly accusing Beijing of espionage. Vilnius refused to modernize the infrastructure of the port of Klaipeda to Chinese investors, and then the Lithuanians left the 17+1 platform.
Economic ties remained, but it became clear that the Chinese pragmatic approach to make Lithuania politically neutral did not work. Vilnius, close to Washington, is a full-fledged geopolitical opponent of Beijing, and the logical result of this position was the Lithuanian-Chinese gap due to the opening of the Taiwan embassy. But the Lithuanians hardly expected such reactions from the eastern giant.
In November 2021, Vilnius allowed Taiwan to open a representative office. It was called "Taiwan Representative Office" and not as in other countries "Taipei Office". If China turns a blind eye to the second name, then the first one arouses anger in Beijing because of the violation of the “One China” principle (一个中国原则 yī ge zhōng guó yuán zé). The furious reaction was not long in coming.
First: The Chinese Foreign Ministry and propaganda resources subjected Lithuania to severe criticism. The most provocative expression was "China will swat Lithuania like a fly" (像打一只苍蝇一样 xiàng dǎ yī zhī cāng ying yī yàng) .
Second: relations were severed - ambassadors and employees of diplomatic missions were recalled.
Third: Beijing applied painful economic sanctions:
- The Chinese market was closed for Lithuanian goods. In the last month of 2021, exports from Lithuania to China fell by more than 90%. The Chinese simply deleted the Baltic country from their customs systems. Lithuanian cargo stuck in ports;
- Beijing has warned Western corporations that it will block their supplies to China if they do not refuse components made in Lithuania. German car manufacturers were the most vulnerable. Pragmatic Germans already crush to Vilnius in order to force it to make concessions to Beijing - to close the Taiwan embassy. It is in the interests of European business to end China's economic blockade of Lithuania as soon as possible;
- PRC stopped transit through Lithuania - Chinese trains were redirected to Russian St. Petersburg. To clarify: Lithuania was an important transit point for Chinese goods to Northern Europe through the Baltic Sea (port of Klaipeda) - but not unique node of the northern branch of One Belt One Road.
Vilnius clearly did not expect economic sanctions. President of Lithuania Gitanas Nauseda announced that the country recognizes the principle of 'one China' and said - "the use of the word Taiwan in the name of the representative office was a mistake." But for China, which for the first time so openly uses economic sanctions and threatens to disrupt global supply chains, it is important to force Vilnius to fully comply with political demands. Half-measures will not suit Beijing - Lithuania has crossed a conditional "red line" and it needs to defiantly and harshly point out the fallacy of its policy. China understands - if it doesn't and lets it go - then other countries may repeat the violation of the "one China" principle. Beijing has made it clear to the world that it is ready to take economic losses in order to teach a lesson to others.
Lithuanian Ministry of Foreign Affairs acknowledged that Vilnius did not take into account all the consequences of Beijing's reaction. One can see in these miscalculations Lithuania's poor awareness of today's China.
To begin with, there is a lack of understanding that the era of "reform and opening up" (改革开放 gǎi gé kāi fàng), when economic growth at any cost was the main thing, and politics was turned a blind eye, ended. The "New Era of Xi Jinping" (习近平新时代 xí jìn píng xīn shí dài) has begun – now in Beijing political priorities are higher than economic ones. China has changed. China has designated its area of interest in the Pacific region and will fight for it. The Taiwan issue is key to Xi's legitimacy in society; public intellectuals in China speak about the return of Taiwan until 2027.
Then, Lithuania has lost much economically from the Sino-Taiwan confrontation, more than Beijing and Taipei themselves. China and Taiwan continue to cooperate pragmatically - to make money. Taiwan is heterogeneous; there are sentiments on the island regarding peaceful reunification with China. For example, such supporters are the Kuomintang Party (国民党 guó mín dǎng) and part of the military elite. The Taiwan issue is very complex and different from the Ukrainian one. It will most likely be resolved in a different way.
In the end, some criticism of China by Lithuanian politicians looks overtly ideological. For example, in 2019 they publicly supported the Falun Gong sect , hardly knowing about: 1) the totalitarian nature of this cult - it is easier to get into it than to get out of it; 2) the ultra-right nature of the organization - Falun Gong followers openly consider themselves better than other races and with the help of violence re-educate the "wrong" fellow tribesmen.
While Vilnius does not make concessions, Taiwan, the EU and the USA have joined the confrontation. And this already carries geostrategic risks for China.
A big clash with little Lithuania is dangerous for China for two reasons.
1) Beijing will be drawn into a full-fledged confrontation with the EU, which is geostrategically unprofitable for China. Lithuania is a member of NATO and the EU. China needs a geopolitically neutral Europe in the fight against the US. In addition, the European market and technology. It is the rational benefit, from the point of view of China, that pushes Western Europe to a pragmatic position - the EU should turn a blind eye to the Lithuanian-Chinese conflict and continue to cooperate with China. However, Brussels has already filed a complaint with the WTO regarding Chinese trade sanctions, and France has publicly supported Lithuania. Beijing will now be very careful not to upset relations with the EU - therefore, it will not escalate the conflict, although it will not back down from its red lines;
2) Beijing has spent a lot of resources to promote its positive image in the world. Xi Jinping issued the concept of "community of common destiny of mankind" (人类命运的共同体 rén lèi mìng yùn de gong tóng tǐ): China's global leadership, surrounded by loyal or neutral countries. However, this use of economic leverage to achieve political goals seriously undermines China's international reputation. After the Lithuania incident, many players will reconsider their economic relationship with Beijing due to security risks, and turn their attention to over-reliance on China. For example, in Japan, such a study has laready been made.
If the main motive of Vilnius was to achieve greater cohesion with America and confirm its status as the main American ally in the Baltics by breaking off relations with China (a non-main trading partner), this goal was achieved. The United States publicly supported Lithuania, promising economic and technological assistance. However, let's be frank: it is unlikely that against the background of statements by American officials about what is needed reduce costs of international obligations, assistance from the United States will be substantial.
Taiwan has also joined the process. Taipei promised Vilnius: a) $200 million investment; b) a loan of $1 billion; c) buy Lithuanian food products – beer, rum, sweets; d) train Lithuanians to make semiconductors and open a plant for their production in Lithuania.
This all sounds very good, of course. But is potential and does not compensate for the fact that Vilnius dropped out of the "One Belt One Road" - Lithuania is losing its transit status. Moreover, it is not clear how to compensate for the losses if European corporations, under pressure from Beijing, stop buying Lithuanian components.
And how can businesses that functioned thanks to exports to China get out? Now they are on the brink of ruin.
In general, the above reasons signal that it is beneficial for both Vilnius and China to end the fight as soon as possible.
Lithuania - in order to partially normalize economic relations with China and not be an "exclusion zone" for Beijing.
China - to avoid further geopolitical and reputational risks; it already visually taught a lesson to other actors about respecting red lines on the Taiwan issue.
As soon as emotions subside, Lithuania is likely to make concessions to China. Then Beijing will partially ease the pressure and economic pressure. However, there will be no full restoration of relations - trust between the countries has been undermined.
Lithuania is our ally in the struggle for survival with Russia. We, of course, are grateful for the help on international platforms, weapons and moral support. Ukraine also says thanks to the United States, which is now supporting us afloat.
However, it must be admitted that both the US conflict with China and the confrontation between Lithuania and China are external for us. Even though George Soros has publicly challenged Xi Jinping and the anti-Chinese agenda is circulating in the domestic media, we must remain neutral. Any attempts to seriously involve Kyiv in further geopolitical showdowns will have a negative impact on our stability and will critically affect relations with China.
The fact that after the incident with Motor Sich (and many other cases), Beijing continues to cooperate with Ukraine, shows that we have not crossed the Chinese red lines and have maintained confidence. On the issue of relations with China, Kyiv must strictly adhere to the policy realism – Ukraine is not in a position to sacrifice national/economic interests for the sake of abstract ideological things.
Moreover, against the background of problems with global supply chains and the announcement by the West of China as the main geo-economic competitor, Kyiv can offer global business (Western and Asian) opportunities to locate production in Ukraine. We have everything to realize this mission: geographical location, resources, people. With a smart, strategic approach, we can become the “South Korea” of Europe, capitalizing on the growing confrontation between the West and China.