China’s use of trade as a weapon in diplomatic disputes appears to be now targeted at Lithuania, home to fewer than 3 million people, after the Baltic nation agreed to exchange diplomatic offices with Taiwan. But Beijing’s unofficial halt to its already limited trade with Lithuania is more about sending a warning to the rest of Europe, analysts have said. Lithuania and Taiwan have agreed to establish mutual representative offices as a sign of deepening ties between the two governments. In response Beijing recalled its ambassador from Vilnius and expelled Lithuania’s from Beijing. The Chinese embassy in Vilnius, Lithuania China recalls Lithuania ambassador in Taiwan diplomatic office row Read more It has since suspended rail freight to Lithuania, according to Taiwan’s foreign affairs ministry, and reportedly halted export permits for the country’s producers, including from the agriculture, animal husbandry, and timber industries. The director of Lithuania’s state food and veterinary services, Mantas Staskevicius, told the Baltic Times on Sunday that discussions with China about export permits for some items had been getting more difficult since the beginning of the year but they had now just stopped audit and certification processes, without explanation. “So far, our office has not directly received any additional questions or indications that something has stopped, but a month ago, the Chinese contacted us and gave a list of certain non-compliances, and one of our beer exporters was taken off the list [of companies] allowed to supply products to China,” he said. Advertisement The trade tactic mirrors those used against in previous disputes with countries such as Australia and its exports of coal, wine, and beef. But while Australia’s economy is largely dependent on China, Lithuania’s trade was “negligible”, said Noah Barkin, a Europe-China expert at US research group Rhodium. Any economic leverage China had was limited “but by taking retaliatory steps, [Beijing] is sending a message to other countries that there will be consequences if they cross its red lines on Taiwan.” China’s Communist party has never governed Taiwan, but Beijing considers it to be a province of China that must be retaken, and accuses the government of separatism. It is increasingly hypersensitive to any signs of support for Taiwan, which maintains it is already an independent nation. Lithuania does not have formal diplomatic ties with Taiwan but it maintains increasingly friendly relations, including pledging vaccines. It is a vocal critic of China, and has withdrawn from key China-led multilateral groups. The EU has been critical of China’s human rights abuses, but treads a careful line. Tit-for-tat sanctions saw ratification of a long-negotiated trade deal effectively suspended in May. “The use of coercion by China on Lithuania is likely to tarnish China’s image and standing in Europe and in the wider world, and it is unlikely to achieve the objective it has, at least in terms of reversing Lithuania ’s policy towards Taiwan,” said Prof Steve Tsang director of the SOAS China Institute. “The big question is how far the EU will stand with Lithuania on this? With a few EU member states being particularly well disposed to China, a strong and united front by the EU backing up Lithuania is not going to be easy to forge.” State media has gone hard, calling Lithuania a “buffoon”, and running multiple reports which both overemphasised the trade links while threatening they could end. On Sunday China’s hawkish tabloid, the Global Times, published an incendiary editorial calling for the government to make plans to cut ties with Lithuania. Dr Andreas Fulda, a senior fellow at the University of Nottingham Asia Research Institute, suggested such attacks were expected. “In the absence of real leverage the Chinese party-state will continue to vilify the Lithuanian government through propaganda,” he said. There are other factors to consider. Lithuania has also deepened ties with the US, which has an increasingly hostile relationship with China (and is also increasingly supportive of Taiwan). The US has pledged support to Lithuania against “China’s unilateral aggressive actions and political pressure”. Kitty Smyth, head of China-focused UK consultancy firm, Jingpinou, said this pivot seems to be as much about Russia as about the US. “Lithuania’s political leaders seem to be gambling that they will be better off under the protection of the United States. It is interesting and perhaps telling that they feel that way because it is likely that they had discussions with Poland and Germany via EU channels before coming to that conclusion.” The Lithuanian ministry of foreign affairs would not comment on China’s halts to trade, or the suspected reasons behind it. In a statement it said Lithuania was “determined to pursue mutually beneficial ties with Taiwan like many other countries in the European Union and the rest of the world do”. “We hope that the recent issues in Lithuanian and Chinese relations will be resolved by diplomatic means based on mutual respect and international law.”