The defunct Lithuanian embassy in China’s capital of Beijing.
Meanwhile, Lithuanian officials were scrambling to help companies deal with millions of dollars worth of merchandise floating in the Pacific without buyers. Beyond that possible loss, the potentially staggering cost to Lithuanian businesses would include paying for storage at Chinese ports. Leaning on democratic allies was the country’s ultimate solution, according to Neliupšienė, who was then Lithuania’s deputy economy minister. Japan, Taiwan and South Korea bought many of the goods.
“One of the lessons we learned is that doing business with authoritarian regimes where decision-making is not based on a market economy, on the rule of law, is always a risk,” Neliupšienė said.
China made its fury clear back in Europe, too.
Beijing downgraded its Vilnius embassy to an office for a chargé d’affaires, the diplomatic rank below ambassador. China implemented the change with the speed of a one-party state — but it befuddled Lithuania, which does not have a legal framework for such an office and where parliament would need months of debate to pass a law creating the new classification.
Chinese officials began telling multinational companies to choose between doing business with China or Lithuania.
From an economic point of view, the choice for these companies was clear. Morally and politically, major international principles were suddenly in question: sovereignty and the E.U.’s promise that its members behave as a single market, the basis of European global power.
As China stopped exporting some components to factories in Lithuania, German businesses with big operations there urged Lithuanian officials to back down, Reuters revealed.
By January, a survey commissioned by Lithuania’s foreign ministry found that 60% of the country opposed the government’s China policy. Gitanas Nausėda, the country’s president, publicly said the approach to opening the Taiwanese office failed to involve appropriate consultations.
Lithuania’s ruling conservatives faced skepticism both domestically and internationally.
“What does the country get from breaking relations with China?” said Vida Mačikėnaitė, a Lithuanian professor at the International University of Japan. “I find it very difficult to assess it… Most of the E.U. would always go for democratic values; that’s our history, that’s in our blood. My question as an academic is, ‘What’s the bigger strategy?’”
Her research into the economic impact of the fight with Beijing offered alarming findings. While Lithuania’s sales to China plummeted, it continued to rely on Chinese imports and consumed even more than it had before the crisis.
“The trade deficit between China and Lithuania has expanded significantly,” Mačikėnaitė told HuffPost. Neliupšienė at the foreign ministry estimated that Lithuanian exports to China are currently at 15% to 20% of their previous level.
Vilnius is a compact capital dominated by bars and restaurants; its intelligentsia soon began circulating criticisms and gossip about the Taiwan policy. One common rumor held that Lithuania was privately refusing to open its office in Taipei until the Taiwanese delivered major economic support to compensate for the loss from China.
The State Department’s Fernandez recalled visiting Vilnius at the end of January. He noted “tensions within the government” and said he met counterparts who “felt beleaguered.”
“They felt they were in a fight with a bully, and they could not win,” he said.
Conscious of a Financial Times report claiming American officials told Lithuania to change the name of the Taiwanese office, Fernandez said he thrice repeated one message to the Lithuanians before they began their discussions: “We will support you in whatever decision. We believe in sovereignty.”
As a Cuban refugee, “I know very well the political price that some countries have paid for standing up for principles and also the anguish that political leaders feel when they’re putting their people at risk,” Fernandez later told HuffPost.
A year into the fight, two factors have largely turned a conversation about vulnerability and finger-pointing into one about solidarity and overdue change, analysts and officials say.
The first is Russia’s horrific invasion of Ukraine, which broadly bolstered the idea that democratic nations must defy dictators. The second is related: Lithuania and its friends ultimately agreed that it was vital to show China its tactics would not work.
Lithuanian officials already knew Beijing saw economic pain as the way to shift political calculations, according to Mickevičienė. After the Lithuanians publicly spoke of cooperating with Taiwan on pandemic preparedness, Chinese authorities suddenly said Lithuanian wheat — one of the country’s top exports to China — was infected with an obscure fungus and could no longer enter their country. Less than a year later, Chinese officials quietly communicated that the designation could disappear if Lithuania’s leader attended a summit with Xi.
“It became very obvious that it’s a political fungus,” Mickevičienė said. “Fungus has happened before and probably will continue happening if we don’t defend our interests.”
Photo by -/CNA/AFP via Getty Images
A Lithuanian Model
Increasingly, China’s bid to keep Lithuania in line seems set to backfire, inspiring more resistance in Europe and elsewhere.
Konstantinas Andrijauskas teaches at Vilnius University, a centuries-old hub of Lithuanian patriotism steps away from the country’s presidential palace. He feels pretty good these days about his nation’s approach to China.
“Chinese economic pressure has not produced the dire results that pessimists expected,” Andrijauskas told HuffPost, noting the apparent failure so far of the secondary sanctions that Beijing tried to apply on Lithuania via multinational companies and other European states. Instead, “China is trapped. Its image is being damaged; it is losing its soft power in the entire region.”
The U.S. Export-Import Bank’s massive credit was a coup for Lithuania that surprised even other parts of the Biden administration. And while Taiwanese backing for Vilnius took longer to materialize, last month’s announcements addressed the biggest Lithuanian priorities — semiconductors and lasers — and hinted at more good news to come. The day Taiwan unveiled those plans, Lithuania inaugurated its Taipei office.
Taiwan’s new funds to invest in Lithuania and its neighbors are “unprecedented” because Taipei has previously only used such programs to jumpstart its economy, Huang of the Taiwanese office in Vilnius told HuffPost.
Neliupšienė, the Lithuanian deputy foreign minister, said her government is courting a range of other Asian markets to diversify the Lithuanian economy and become less reliant on China. Taiwan can help, Huang noted: It’s a major trade partner for wealthy Japan and rising powers like Vietnam.
The strategy is almost exactly what many other Europeans wary of China want.
Charlie Weimers, a Swedish member of the European Parliament, called Lithuania’s acceptance of the Taiwanese office a “bold move.” He designed a bill last year that urged European countries to upgrade their relations with Taiwan. It won so much support across the legislature’s partisan divides that it passed with what Weimers described as “a North Korean majority.”
The goal is not to spark a conflict by breaking conventions around Taiwanese independence, Weimers said, but to become more confident about expressing sovereignty and support for human rights — and less afraid of Chinese wrath.
“If the Taiwanese can live with the status quo… so can we, and we should be practical,” he continued. He hopes that European “countries who struck deals with China can be reassured that this is a long-term effort in which we will find new partners to work with.”
“We will not just close trade routes,” Weimers said. “We will redirect them.”
Just as China tried to turn other Europeans against Lithuania, the Chinese ambassador to the E.U. pushed European officials to scuttle the Taiwan resolution, Weimers told HuffPost. And Beijing has previously put sanctions on European legislators for raising other sensitive issues like China’s crackdown on its Muslim minorities.
Huang said his country recognizes the risk of opening offices abroad and is cautious about doing so. Last month, Taiwanese voters delivered a big win to their country’s more China-friendly political party in local elections, and most Taiwan watchers believe the population is not interested in a major confrontation with Beijing.
Yet Lithuania also saw a significant vindication for its approach this year when its neighbors Latvia and Estonia — the other Baltic nations often seen as its closest parallels — withdrew from the Chinese-led dialogue for European countries.
The distinction makes sense to Mačikėnaitė, the Lithuanian professor. She told HuffPost it is important to differentiate between two issues in analyzing the Lithuania-China kerfuffle: Firstly, Lithuania’s willingness to pull away from China, and secondly, how close the country will truly become with Taiwan.
Ryan Hass, a former Biden advisor now at the Brookings Institution think tank, made a similar point this summer amid international anxiety over House Speaker Nancy Pelosi’s trip to Taipei. “I do not detect enthusiasm in Washington or elsewhere for dramatic shifts in government policies on Taiwan, barring an aggressive move by Beijing,” Hass wrote. “Taiwan’s best path for gaining greater international support for its political autonomy, economic dynamism, and dignity on the world stage is by continuing to demonstrate its steady, principled, and practical… approach.”
Lithuania is trying to do the same and hoping China will notice. When it opened its Taipei office this fall, it notably mirrored the Taiwanese office name — not calling the facility an embassy or consulate.
Mickevičienė, who until last month was the ambassador to China, told HuffPost the Lithuanians still have an ongoing dialogue with their Chinese counterparts.
“We’re patient — we understand that it’s always sensitive. That’s what China told us when we first had these intentions to host the Taiwanese. They said, ‘Oh, it’s too sensitive, not now.’ But the years are passing,” she said. “You can’t wait forever for China to become less sensitive.”
A Transatlantic Media Fellowship from the Heinrich Boell Foundation supported reporting for this story.
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