Lithuanian exports nearly obliterated from China market amid Taiwan row
- Chinese customs data gives first glimpse of the scale of unofficial blockade, with 91.4 per cent drop in shipments from the Baltic state in December
- Beijing denies an official embargo, telling EU sources local businesses will not buy goods from countries that ‘attack China’s sovereignty’
Chinese government customs data released on Thursday showed shipments from Lithuania to China dropped by 91.4 per cent last month from a year earlier.
Compared to November 2021, the drop was 91.1 per cent, offering support to Lithuanian exporters’ complaints that they have been frozen out of the Chinese market in recent weeks.
Beijing reacted with fury when the Taiwanese Representative Office opened in Vilnius in November and soon afterwards businesses said Lithuania had been wiped from the Chinese customs system, meaning they were unable to fulfil shipments.
Just US$3.8 million worth of Lithuanian goods entered Chinese ports last month, compared to US$43.1 million a year earlier, or US$42.8 million just a month earlier.
Sectors crucial to the Lithuanian economy faced total obliteration from the Chinese market, including unwrought copper-zinc alloy, the top export a year earlier, and wood products such as fir, another top five export. Others faced a virtual wipeout.
Sales of hi-tech lasers, the No 2 export in December 2020, fell by 95 per cent to just US$308,418, diagnostic reagents by 98 per cent, while peat shipments – important to Lithuania’s agricultural sector – tumbled by 92 per cent.
At the same time, Chinese exports to Lithuania boomed, rising 27.1 per cent from a year earlier.
According to European Union sources, Beijing continues to deny a coordinated campaign, instead saying that businesses have decided not to buy goods from countries that have “attacked China’s sovereignty”.
The Chinese government says Lithuania is in breach of the EU’s one-China policy, a charge vehemently denied by both Vilnius and Brussels.
The situation has evolved since before Christmas, when the customs authority in Beijing initially refused to meet EU officials in the capital because it was “too busy” dealing with the coronavirus pandemic. It subsequently directed the diplomats to the respective local Chinese port authorities.
Meanwhile, Lithuanian President Gitanas Nauseda has said the naming of the Taiwanese office was a “mistake”, while government-mandated public opinion polls suggested Lithuania’s China policy was overwhelmingly unpopular.
Vidmantas Janulevicius, president of the Lithuanian Confederation of Industrialists, said the situation had not improved.
“Companies are trying to receive money back or to receive their goods back which have been sent before and which have still stayed under customs clearance,” he said, adding that the data tallied with the anecdotal evidence he had gleaned from his members.
Lithuania is among the EU nations least dependent on trade with China, a fact often used to explain the government’s aggressive stance towards Beijing.
However, the complex European supply chain has seen other countries become entangled in the dispute, with the EU gathering evidence for a potential World Trade Organization (WTO) case against China.
Companies from Germany, France, and Sweden are among those to have reported having goods being stopped at Chinese ports because they contain parts made in Lithuania, creating headaches for authorities in Brussels and other capitals across the bloc.
While the EU has backed Vilnius rhetorically, it has few avenues of action it can take to address China’s alleged coercion.
Sources said businesses were reluctant to provide evidence for a potential WTO suit for fear of being frozen out of the Chinese market, suggesting that if Beijing was trying to muzzle criticism, it had achieved some modicum of success.
Brussels is developing an anti-coercion instrument, a powerful trade weapon that could see countries accused of economic bullying frozen out of lucrative European markets, but this is not expected to be ready for months, or even years.
“We criticise the coercion by China. As you know, there is an anti-coercion system on the table and part of our response under the French presidency will be to speed up the text so that coercive measures by China in relation to Lithuania cease,” French Europe and Foreign Affairs Minister Jean-Yves Le Drian said last week.
On Tuesday, European lawmakers urged the bloc to take firm action against China, or face further coercion from Beijing.
Slovenian Prime Minister Janez Jansa said this week that the country was in talks with Taipei over exchanging diplomatic offices. He heaped praise on Taipei, while slamming Beijing, earning a rebuke from Beijing in response.
“They are a democratic country. It’s difficult to listen to a capital with a one-party system lecturing about democracy and peace around the world. You know, a country which is democratic and respects all international democratic standards, international law included,” Jansa said.