Lithuania's vision and evaluation: be careful what you wish for
ENLithuania’s economic and technological relations with China have never been particularly important. The focus on European integration and the transatlantic relationship implied that other new directions of trade and investment, in particular to regions such as Asia, have been mostly discussed as vague but promising paths to diversification explored as a bargaining chip with Lithuania’s EU single market membership in mind. Thus, since the late 1990s, the majority of Lithuania’s trade and investment relationships have been with EU member states, although the geographical location of bordering non-EU countries provided incentives for economic exchange and the provision of transit services to Belarus, Russia and the countries beyond them. The EU as a customs union aligns the external trade policies of its members. However, investment and other policies beyond trade remain mostly within the competences of its member states. For some time, Lithuania’s officials, similar to other countries in the region, have expressed their interest in developing economic ties with China through what was formerly the 16+1 group of Central and Eastern European countries and participating in China’s Belt and Road initiative. However, changing perceptions of China as an increasingly aggressive actor conducting espionage activities, and alignment with US policies restricting the use of Chinese technologies, has led to the adoption of a more cautious approach.The deterioration of economic ties accelerated in late 2021 when China introduced unofficial sanctions against products originating from Lithuania in response to the Lithuanian government’s decision to allow the opening of the Taiwanese representative office in Vilnius. The decision, taken by the conservative-liberal ruling coalition government, followed Lithuania’s exit from the 17+1 group of countries in May 2021. China’s sanctions extended beyond products of Lithuanian origin, freight trains to Lithuania were halted and was pressure applied to Germany and other European companies to stop using components produced in Lithuania. The use of secondary sanctions by China, seemingly unexpected by Lithuanian officials, failed to pressure countries into changing policies. Rather, it is likely to reduce economic ties between Lithuania and China, which have been limited anyway. Russia’s war against Ukraine has further intensified the debate about economic decoupling between liberal democracies of the West and authoritarian countries which can weaponize economic interdependencies. [Extract, p. 76-77]
