China has warned multinational companies to sever ties with Lithuania or face being shut out of the Chinese market, Reuters reported on Thursday.
China has been angered lately by Lithuania's decision to open a Taiwanese representative office in Vilnius. It has downgraded diplomatic ties with Lithuania. Last week, there were reports about China dropping Lithuania from its customs registry.
Lithuanian politicians have repeatedly said that the dispute will not hurt the country’s economy because its exports to China account for around one percent of Lithuania's total exports.
But according to Reuters, Lithuania is home to hundreds of companies that make products, such as furniture, lasers, food, and clothing, for multinationals that sell to China.
“They (China) have been sending messages to multinationals that if they use parts and supplies from Lithuania, they will no longer be allowed to sell to the Chinese market or get supplies there,” Mantas Adomėnas, Lithuanian Deputy Foreign Minister, told Reuters.
According to him, some companies have already cancelled contracts with Lithuanian suppliers, although he did not name specific firms or suppliers affected.
The Lithuanian Confederation of Industrialists also confirmed to Reuters that some multinational companies that work with Lithuanian suppliers have been targeted by China.
“This week was the first time we saw direct Chinese pressure on a supplier to drop Lithuanian-made goods. Previously, we only had threats it could happen, now they became reality,” said Vidmantas Janulevičius, the Confederation president.
He said it was a European company he was talking about but did not specify which one.
According to Adomėnas, Chinese authorities were also curtailing exports to Lithuania, including by stopping export credit guarantees.
“It has affected food stuffs, lasers, raw materials, pharmaceuticals, furniture, clothing,” he said.
The Lithuanian government is in talks with companies at risk of fallout from the dispute with China about offering possible financial support, such as loans, a senior government official told Reuters.
Lithuania has also appealed to the European Commission for support. In a letter sent earlier this week to top officials at the Commission, Lithuanian Foreign Minister Gabrielius Landsbergis asked for support in rebuffing China.
"A strong reaction is necessary at the EU level in order to send a signal to China that politically motivated economic pressure is unacceptable and will not be tolerated," the letter said.
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