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Exclusive Lithuania braces for boycott of Chinese-led businesses

December 9, 2021

By John O’Donnell and Andrius Sytas

FRANKFURT/VILNIUS (Reuters) – China has asked multinational companies to sever ties with Lithuania or face closure of the Chinese market, a senior government official and an industry body said. with Reuters, dragging the companies into the dispute between the Baltic nation and Beijing.

China downgraded diplomatic relations with Lithuania last month, after Taiwan opened a representative office in Vilnius. In November last year, Lithuania’s ruling coalition agreed to support what it described as “freedom fighters” in Taiwan, putting the country’s relationship with China at risk.

China considers self-ruled and democratic Taiwan to be its territory and has stepped up pressure on countries to downgrade or sever ties with the island.

Earlier last month, a spokesman for China’s foreign ministry said in a statement that Lithuania had ignored China’s “strong objections” to the opening of an office in Taiwan.

China’s Foreign Ministry did not immediately respond to Reuters’ request for comment for this story.

Taiwan has other offices in Europe and the United States but they use the name of the city of Taipei, avoiding reference to the island itself.

Lithuania’s direct trade with China is modest, but its export-based economy is home to hundreds of companies that manufacture products such as furniture, lasers, food and clothing for multinational companies. country sold to China.

“They (China) have sent a message to multinational companies that if they use parts and supplies from Lithuania, they will not be allowed to sell to the Chinese market or source there. more,” Mantas Adomenas, Lithuania’s deputy foreign minister, told Reuters.

“We have seen some companies cancel contracts with suppliers in Lithuania.”

He did not name any companies or suppliers affected.

THREE FOUNDATION OF TRUTH

The Federation of Lithuanian Industrialists, which represents thousands of Lithuanian companies, confirmed that a number of multinational companies purchasing from Lithuanian suppliers are being targeted by China.

Federation president Vidmantas Janulevicius told Reuters: “This week is the first time we have seen direct Chinese pressure on a supplier to reduce Lithuanian-made goods. “In the past, we only had threats it could happen, now they’ve become a reality.”

Janulevicius mentions the multinational: “For us, the most painful part was that it was a European company. “Many Lithuanian businesses are suppliers to such companies.”

He did not name any companies.

Lithuania is considering setting up a fund to protect local companies from Chinese retaliation, a senior government official told Reuters.

The Lithuanian government is negotiating with companies at risk of failure from the China dispute over possible financial assistance, such as loans, the government official said.

Lithuania has also appealed to the European Commission for assistance.

In a letter sent earlier this week to top Commission officials and seen by Reuters, Lithuanian foreign minister Gabrielius Landsbergis asked for assistance in countering China.

“A strong response is needed at the EU level to send a signal to China that politically motivated economic pressure is unacceptable and will not be tolerated,” the letter read.

The European Commission responded in a statement that the EU is ready to stand up to all types of political pressure and coercive measures imposed on any member state.

“The development of China’s bilateral relations with individual EU Member States has an impact on EU-China relations as a whole.”

When asked about China’s actions, George Magnus of Oxford University’s China Center said that while China “constantly has tons of toys thrown out of carts”, targeting third party companies are unusual and never seen before.

Adomenas said that Chinese authorities are also cutting exports to Lithuania, including stopping export credit guarantees for Lithuanian imports from China.

“It has affected food, lasers, raw materials, pharmaceuticals, furniture, clothing.”

“We will not bow to this pressure,” he said. “What we decided to do, by calling Taiwan Taiwan, is up to Lithuania, not Beijing.”

(Written by John O’Donnell; additional reporting by Ryan Woo in Beijing. Editing by Jane Merriman)

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Bobby Allyn

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