Following its decision to allow Taiwan to establish a representative office in Lithuania under the denomination “Taiwanese”, Lithuania has found itself in a diplomatic dispute with China. As China sees this as a violation of the EU’s One China Policy, it should not be surprising that a few days after the office was officially opened in Vilnius, the Chinese government decided to downgrade its diplomatic relations with Lithuania from the level of ambassador to chargé d’affaires. Not only was this an escalation of earlier ambassadorial recalls when both sides asked their envoys to leave their respective postings, but Lithuania also accused China of implementing trade sanctions against Lithuanian companies.
With the Lithuanian foreign minister Gabrielius Landsbergis demanding the EU to upgrade its support for Lithuania from a purely rhetorical to a more substantive level, the EU is finding itself drawn into the Lithuanian-Chinese dispute, which is causing further tensions at a time of already strained relations. Indeed, the EU is currently investigating Lithuania’s complaints about a Chinese embargo on its exports to and imports from China, with the European Commissioner for Trade Valdis Dombrovskis mentioning the possible use of the EU’s new anti-coercion instrument. The instrument is, however, only at its proposal stage and ought to be applied as a last resort.
With this in mind, this op-ed looks at the development of Lithuanian-Chinese relations, outlining the reasons behind the ongoing dispute, whilst attempting to suggest what the European Union should do, looking at the feasibility of a united 27+1 approach towards China. This is an option preferred by Lithuania and other Central and Eastern European (CEE) states. The argument goes that a united approach would strengthen the EU’s position in its relations with China and it also fits within the bloc’s pursuit of strategic autonomy, which revolves around the EU’s ability to walk its own path, defending its interests and values in a world marked by competition between the US and China.
Lithuania’s Big Bang: Leaving the 17+1
Arguably the clearest sign of deterioration in Lithuanian-Chinese relations was Lithuania’s decision to leave the 17+1 framework of cooperation between China and the CEE countries. Following this, the framework reverted back to its original format of 16+1, which had become 17+1 following the inclusion of Greece in 2019. During the last 17+1 summit which took place in February 2021, Lithuania was one of the six countries that did not upgrade its participation to the highest level, sending ministers instead of heads of states or governments. This was the case even though the summit was for the first time chaired by President Xi Jinping himself, indicating a charm offensive by the Chinese side in order for the framework to gain more traction in CEE.
The motivation for Lithuania’s decision not to send a higher-level representative was consistent with the reason for the decreasing popularity of the framework amongst other CEE countries, which was the lack of economic benefits. Lithuania’s rationale for joining the 16+1 back in 2012 was purely economic, as the country was, similarly to other European countries, seeking to diversify its economic relations amidst the effects of the global financial and Eurozone crises. Since Lithuanian-Chinese economic relations were negligible prior to the establishment of the 16+1, the country was hoping that the framework would facilitate an increase in Chinese investment in Lithuania and Lithuanian exports to China, thus addressing the trade deficit Lithuania had, and still has, with China. In 2018, the overall trade deficit the Baltic three (Lithuania, Latvia and Estonia) had with China stood at around 2,3 billion EUR, with Lithuania’s exports to China accounting for less than 1% of its total exports in 2020.
This shows that Lithuania and the other Baltic states remained low on China’s list of priorities. Not only was China trading the least with the Baltic states but Chinese FDI flows to the three republics were also persistently smaller than those to the Balkan and V4 states (the latter being the Visegrád Four countries of the Czech Republic, Slovakia, Poland and Hungary). Although the overall Chinese FDI stock in CEE increased between 2018 and 2020, it was still nowhere near western European levels, indicating China’s preference for bilateral relations with the big players, namely Germany and France. It is therefore not surprising that several CEE analysts downplay the significance of possible Chinese economic repercussions against Lithuania. Nevertheless, as Lithuania’s export-oriented economy relies heavily on global supply chains, China’s indirect sanctions through multinational corporations may cause significant damage, with German, French and other European companies that have Lithuanian suppliers reporting difficulties in accessing the Chinese market.
It is important to note that not all countries entered the 16+1 with purely economic goals in mind. Countries like Hungary and Serbia utilise the framework also on political grounds, as leverage against their domestic opponents as well as the EU. The last 17+1 summit, which concluded without the usual guidelines and plans for the next summit, revealed an emerging north-south divide, with the Baltic and some of the V4 states being increasingly critical, while most of the Balkans remaining supportive of their engagement with China.
Long Time Coming
Lithuania has been gradually shifting its approach towards China for several years prior to leaving the 17+1. 2019 is often cited as a year of significant worsening in Lithuanian-Chinese relations. Not only did Lithuania’s Ministry of National Defence identify Chinese espionage as a threat to the country’s national security, but there was also a public clash between pro-Beijing and pro-Hong Kong protesters on the streets of Vilnius.
Considering its communist past, Lithuania has always prided itself on prioritising normative over economic considerations in the country’s foreign policy. Nevertheless, references to a values-based foreign policy have become increasingly popular since the 2020 parliamentary elections that brought to power a three-party coalition promising to focus on human rights and democratic freedoms in Lithuania’s foreign affairs. The current Minister of Foreign Affairs Gabrielius Landsbergis is the grandson of one of Lithuania’s most prominent politicians who led the struggles for Lithuania’s independence from the Soviet Union.
The Tibet issue had long been a thorny one in Lithuanian-Chinese relations, but under current President Gitanas Nausėda and the governing coalition led by the centre-right Homeland Union, Lithuania has crossed several of China’s other red lines, including on Hong Kong, Xinjiang and Taiwan, in both its domestic politics and foreign affairs. Following Taiwan’s donation of masks and PPE equipment to Lithuania in April 2020, Lithuania’s former Minister of Foreign Affairs Linas Linkevičius lobbied for Taiwan’s observer status at the World Health Assembly (WHA). During the election campaign, Landsbergis and Mantas Adomėnas, the latter of whom became a Vice-Minister of Foreign Affairs, published a joint op-ed calling for Lithuania’s pursuit of stronger ties with Taiwan and support for Taiwan’s international space. The current government even included support for Taiwan in their coalition agreement, although it has been omitted from the government programme. What is more, the rising criticism of China and support for Taiwan cuts across party lines. One of the parliamentarians who travelled to Taiwan as part of a joint Baltic delegation in November 2021 was Dovilė Šakalienė from the opposition Social Democratic Party, who was also one of the lawmakers sanctioned by China in March 2021.
Other examples of Lithuania’s rising scepticism towards China include the government’s decision to prevent China from having a controlling stake in the strategically important port of Klaipėda, exclusion of Huawei from building the country’s 5G infrastructure, and as of 2021, the government’s calling on the general public to stop using Chinese Xiaomi phones, citing security concerns in all of these cases. Aside from history and economics, security is the most important factor that influences Lithuania’s approach towards China, with the 2017 joint military drills by Russia and China in the Baltic Sea interpreted as a sign of China’s rising security threat to the country.
The “Lithuanian Model” and Prospects for an EU-Wide China Policy
All three Baltic states had lawmakers attending the Open Parliament Forum in Taiwan, yet neither Latvia nor Estonia are likely to adopt Lithuania’s level of hawkishness in their approach towards China, at least not in the short term. Both countries share with Lithuania the lack of economic benefits brought about by the 17+1 (now again 16+1) initiative, in addition to an emphasis on human rights in their foreign policies, and security concerns associated with Russian-Chinese cooperation. Nevertheless, excluding some China-critical positions held by certain politicians, the Estonian government has not expressed an intention to leave the 16+1, and the struggles currently faced by Lithuania in accessing the Chinese market could further dissuade both Estonia and Latvia from doing so. Simultaneously, with both countries being amongst the delegations that did not send a higher-level representative to the last 17+1 summit, they seem to be limiting their participation in the framework.
Baltic-Chinese cooperation in all three countries has been focused on logistics and high-tech, although most projects have thus far not materialised. Similarly to the Lithuanian government’s suspicion about Chinese investment in the port of Klaipėda, the Estonian government has been hesitant about Chinese involvement in the construction of the Tallinn-Helsinki Tunnel. However, unlike Lithuania’s now unsuccessful attempt to become China’s fintech gateway to Europe, Chinese ride-sharing company Didi Chuxing has invested in an Estonian company of the same kind called Taxify (known previously as Bolt), allegedly to rival Uber’s dominance in Europe. Latvia’s case is even more interesting, since despite being the only Baltic country to host a 16+1 summit, which took place in Riga in 2016, and a 16+1 institution, namely the CEEC-China Secretariat on Logistics Cooperation, it was until recently the only Baltic country to host a Taipei Mission. Nevertheless, Latvia is unlikely to follow the “Lithuanian model” of promoting relations with Taiwan at the expense of relations with China. Not only does China seem to be less of a topic amongst political elites but positive and neutral views of China prevail over the negative views amongst the Latvian public, at least based on the 2020 opinion polls conducted by the Sinophone Borderlands.
All Baltic states have continuously expressed their preference for engaging China either on bilateral terms or as part of a united 27+1 approach. This is supported by Slovenia, which holds the current presidency of the Council of the European Union, as well as other CEE EU member states. It may therefore be time to revisit the abandoned idea of the Leipzig EU-China summit, which did not take place due to the COVID-19 pandemic. The EU’s ability to clearly demarcate its approach towards China by aligning the interests of all member states is of utmost importance, especially as it tries to pursue strategic autonomy amidst deteriorating US-China relations. With the defence of multilateralism against unilateralism being at the core of the EU’s strategic autonomy, incorporating the interests of CEE countries into its China policy would indeed be a good start for making the EU more resilient on the global stage. Measures like the EU’s anti-coercion instrument and the Strategic Compass could further enhance this resilience, in both economic and security spheres, although the bloc would need to be careful about when to implement these, especially considering that not all member states are supportive of such measures. When it comes to the Baltics, it is important to note that they are some of the least economically reliant countries on China amongst the EU member states. They are also some of the most pro-NATO countries in Europe, and so they may inevitably be left with no choice but to align themselves with the US, which is their main security guarantor. The 27+1 approach is therefore crucial, as it could not only serve as an incentive for more CEE countries to leave the 16+1, but it would also offer guarantees for the small states’ interests to be taken into consideration in the bloc’s foreign and security policy.
In the meantime, further economic sanctions may be placed on Lithuanian and other EU exporters and it may take several years for Lithuanian-Chinese relations to normalise. The only precedent the EU has in terms of a prolonged diplomatic dispute between China and its member state dates back to 1981 when the Netherlands decided to sell submarines to Taiwan, following which Dutch-Chinese relations remained downgraded to the chargé d’ affaires level for three years. Such steps are unusual for China to take, thus indicating the seriousness of the current situation. The Lithuanian public is also becoming sceptical about the government’s China policy, with more people seeing the government’s decision to involve itself in a confrontation with China negatively, which is yet another reason why other Baltic and CEE states may abstain from following the Lithuanian example. It is therefore reasonable to assume that even if the 16+1 becomes downgraded to a more compartmentalised or sub-regionalised format, CEE countries are unlikely to leave the framework without a feasible alternative in the form of an EU-wide China policy which would be based on a coordinated 27+1 format.
Author: Dominika Remžová, EIAS Junior Researcher
Photo credits: Wikimedia Commons