Lithuania will open an “enterprise office” in Taiwan by the end of the year, its Ministry of Economy and Innovation said on Wednesday, a move that risks irking Beijing at a troubled time for the European country’s relations with China.
The office will be aimed at “strengthening and diversifying of economic diplomacy in the Asian region”, a department spokesperson said, confirming an earlier Reuters report.
The move by Lithuania is just the latest sign of discontent by a member state in the “17+1”, an informal trade group of China and 17 Central and Eastern European (CEE) countries founded in 2012.
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Also on Wednesday, Foreign Minister Gabrielius Landsbergis told the local news outlet LRT.lt that Lithuania gets “almost no benefits” from the group.
“I am not saying that we are leaving and it’s the end, but we should really consider what is the useful way of building a relationship with China,” Landsbergis said.
Though Landsbergis held off endorsing a departure, analysts said it might be imminent: “I believe it could be next week but it might come earlier,” said Konstantinas Andrijauskas, an associate professor in Asian Studies at Vilnius University.
“It is rather apparent that the parliament, the government, they are settled. So the big question is about coordination among the Baltic states and the big question is whether the Estonian-Latvian Alliance will move together,” he said.
A disillusionment with the “lack of tangible outcomes” of engagement in both the 17+1 and China’s Belt and Road Initiative, combined with the changing perception of China’s security risk and human rights records, has led some member nations to reassess the bloc’s viability, said Alicja Bachulska, an analyst at the Asia Research Centre of the War Studies University in Poland.
“As the economic results of cooperation are minimal and the political costs are increasingly higher, CEE states are reassessing their attitude towards Beijing,” she said.
The most recent 17+1 summit – held in February and attended online by Chinese President Xi Jinping – was snubbed by the leaders of six member states: the Baltic nations of Estonia, Latvia and Lithuania, as well as Bulgaria, Romania and Slovenia.
Xi’s offer to double imports over the next five years appears to have done little to endear the Baltic nations. Since the event, the Estonian foreign intelligence service issued a scathing report on alleged Chinese attempts at influence in the country.
Earlier, Lithuania drew criticism from Beijing for banning Nuctech, a Chinese state-owned maker of security-screening equipment, from providing equipment to three airports in the country.
The Chinese embassy in Vilnius did not respond to a request for comment.
Richard Bush, a Brookings Institution senior fellow specialising in Taiwan, said that should Vilnius open a representative trade office there, it could expect repercussions from China. Beijing considers Taiwan a wayward province that must be reunited with the mainland, by force if necessary.
“I think there will be blowback, Lithuania‘s leaders will need to be prepared for that. They will need to work out in advance what their response is going to be,” he said, adding that while many other countries have similar presences in Taiwan, those were mostly established in calmer times.
Of the 17+1 grouping, the Czech Republic, Hungary, Poland and Slovakia have trade missions in Taiwan, along with a handful of other European states.
Other countries that have fallen foul of China due to diplomatic spats – including Australia, Norway and Canada – have often faced economic consequences because of significant reliance on China for trade and investment.
Lithuania, though, has less exposure, analysts said, and is thus more emboldened to work with Taiwan without fear of major economic reprisals from Beijing.
Chinese customs data indicate that Lithuania sold less than US$500 million worth of goods to China last year, and Bank of Lithuania statistics show that in the first three quarters of 2020, just €8.76 million (US$10.58 million) in Chinese investment flowed into Lithuania.
“The fear of possible Chinese retaliation will always be part of the calculation. However, recent events show that China lacks proper leverage vis-à-vis Central and Eastern European countries,” said Matej Šimalčík, executive director of the Central European Institute of Asian Studies in Slovakia.
He noted that when the president of the Czech senate, Milos Vystrcil, visited Taiwan last year and when then-Slovak President Andrej Kiska met the Dalai Lama in 2016, China’s reaction was mostly rhetorical.
Other CEE nations are keen to retain strong ties with Beijing, including Hungary, Serbia and other in the Balkan nations that are not members of the European Union. For this reason, there is unlikely to be a total dissolution of the format.
“China is still seen as a valuable partner for the vast majority of 17+1 members, and while the format might not get them much, they probably also see maintaining any sort of ties with China as in their interests,” said Austin Doehler, an independent analyst of Europe-China affairs.
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