Exclusive Lithuania has backed a Chinese-led corporate boycott by Reuters

By John O’Donnell and Andrius Sytas

FRANKFURT / VILNIUS (Reuters) – China has told multinationals to break off relations with Lithuania or leave China’s market, a senior government official and an industry organization told Reuters that the company is in a dispute between the Baltic state and Beijing.

China’s diplomatic relations with Lithuania declined last month after Taiwan opened a representative office in Vilnius. The Lithuanian ruling coalition agreed in November last year to support Taiwan’s so-called “freedom fighters”, jeopardizing its relations with China.

China considers Taiwan to be a self-governing and democratically governed country, and has stepped up pressure to reduce or break the country’s relations with the island.

Chinese Foreign Ministry spokesman Wang Wenbin said on Thursday that China was following international trade rules and again criticized Lithuania for its stance on Taiwan.

“Taiwan has created a false impression that it is separated from China, has severely damaged China’s sovereignty and territorial integrity, and has set a tremendous precedent among the international community,” he said.

“China will firmly defend its sovereignty, territorial integrity and basic interests.”

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

Lithuania’s direct trade with China is modest, but there are hundreds of companies that make products such as furniture, lasers, food and clothing for multinationals that sell to China in an export-based economy.

“They (China) send messages to multinationals that if they use Lithuanian parts and supplies, they will no longer allow them to sell or buy supplies in the Chinese market,” said Mantas Adomenas, Lithuania’s deputy foreign minister. he told Reuters.

“We have seen some companies cancel their contracts with Lithuanian suppliers.”

He did not name the affected company or supplier.

THREATS WERE MADE A REALITY

The Lithuanian Confederation of Industrialists, which represents thousands of Lithuanian companies, confirmed that some multinational companies that buy goods from Lithuanian suppliers were targeting China.

“This week was the first time that we saw direct pressure from China to abandon Lithuanian products to a supplier,” Confederation President Vidmantas Janulevicius told Reuters. “Before, we only had threats that could happen, now they have become a reality.”

“For us, the most painful thing is a European company,” he said, referring to the multinational Janulevicius. “Many Lithuanian businesses are suppliers to such companies.”

He did not name a company.

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

The Lithuanian government is in talks with companies at risk as a result of the Chinese lawsuit to provide possible financial assistance, such as loans, the government official said.

Lithuania has also asked the European Commission for help.

In a letter sent to senior Commission officials earlier this week and viewed by Reuters, Lithuanian Foreign Minister Gabrielius Landsbergis called for help in refusing China.

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

The European Commission responded in a statement that the EU was ready to oppose any kind of political pressure and coercive measures against any Member State.

“The development of China’s bilateral relations with individual EU Member States has an impact on the overall EU-China relationship.”

Asked about China’s actions, George Magnus of the University of Oxford’s China Center said that despite China’s “constant drum of toys being thrown out of the car”, it was an unusual destination for third-party companies and had not been seen so far.

Adomenas said Chinese authorities were also reducing exports to Lithuania, among other things by halting export credit guarantees for imports from China to Lithuania.

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

“We’re not going to bow to this pressure,” he said. “What we decide to do by calling Taiwan Taiwan belongs to Lithuania, not Beijing.”

(Written by John O’Donnell; Additional feature by Ryan Woo and Yew Lun Tian in Beijing. Edited by Jane Merriman)