Lithuania is preparing for a China-led corporate boycott
* Lithuania in dispute with China over Taiwan
* Multinational corporations should avoid the Baltic state, officials say
* Lithuania’s manufacturing sector targeted (Adds Chinese spokesman’s comment)
FRANKFURT / VILNIUS, Dec 9 (Reuters) – China has advised multinational corporations to cut ties with Lithuania or be excluded from the Chinese market, a senior government official and an industry body told Reuters, causing a dispute between the Baltic state and Reuters Beijing.
China downgraded its 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 the “freedom fighters” in Taiwan, which put their relations with China at risk.
China regards self-governing and democratically ruled Taiwan as its territory and has increased pressure on countries to downgrade or sever relations with the island.
China’s Foreign Ministry spokesman Wang Wenbin said Thursday that China is abiding by the rules of international trade and has again criticized Lithuania for its stance on Taiwan.
“It created the false impression that Taiwan was separated from China, seriously damaged China’s sovereignty and territorial integrity, and set an egregious precedent in the international community,” he said.
“China will firmly defend its sovereignty, territorial integrity and core interests.”
Taiwan has other offices in Europe and the United States, but they use the name of the city of Taipei to avoid referring to the island itself.
Lithuania’s direct trade with China is modest, but its export-oriented economy is home to hundreds of companies that manufacture products such as furniture, lasers, food, and clothing for multinational corporations selling to China.
“They (China) have told multinationals that if they use parts and supplies from Lithuania, they will no longer be allowed to sell or source supplies in the Chinese market,” said Mantas Adomenas, Lithuania’s deputy foreign minister, told Reuters.
“We saw some companies terminate contracts with Lithuanian suppliers.”
He did not name any companies or suppliers affected.
THREATS BECOMING REALITY
The Lithuanian Industrial Association, which represents thousands of Lithuanian companies, confirmed that some multinational companies buying goods from Lithuanian suppliers are being targeted by China.
“This week was the first time we saw direct Chinese pressure on a supplier to drop goods made in Lithuania,” Confederation president Vidmantas Janulevicius told Reuters. “We used to only have threats that it might happen, now they have become a reality.”
“For us the worst is that it is a European company,” said Janulevicius, referring to the multinational. “Many Lithuanian companies are suppliers to such companies.”
He didn’t name any companies.
Lithuania is considering setting up a fund to protect local businesses from Chinese retaliation, a senior government official told Reuters.
The Lithuanian government is in talks with companies threatened by the consequences of the China dispute to offer possible financial support, such as loans, the government official said.
Lithuania has also asked the European Commission for assistance.
In a letter sent to senior Commission officials earlier this week and viewed by Reuters, Lithuanian Foreign Minister Gabrielius Landsbergis asked for assistance in rejecting China.
“A strong response is needed at the EU level to send a signal to China that politically motivated economic pressures are unacceptable and will not be tolerated,” the letter said.
The European Commission responded in a statement that the EU was ready to oppose all forms of political pressure and coercive measures applied to any Member State.
“The development of China’s bilateral relations with individual EU member states has implications for relations between the EU and China as a whole.”
When asked about China’s actions, George Magnus of the China Center at Oxford University said that while China had thrown a “constant drumming of toys out of the stroller” it was unusual and previously not seen targeting third-party companies.
Adomenas said the Chinese authorities are also curbing exports to Lithuania, including by suspending export credit guarantees for Lithuanian imports from China.
“It has affected food, lasers, raw materials, pharmaceuticals, furniture, clothing.”
“We’re not going to give in to that pressure,” he said. “What we decide to call Taiwan Taiwan is up to Lithuania, not Beijing.” (Letter from John O’Donnell; additional reporting by Ryan Woo and Yew Lun Tian in Beijing. Editing by Jane Merriman)