Lithuania as a Litmus Test of EU-China Relations

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Lithuania as a Litmus Test of EU-China Relations

Insights from Jonathan Hackenbroich.

Lithuania as a Litmus Test of EU-China Relations
Credit: Depositphotos

The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Jonathan Hackenbroich policy fellow for Economic Statecraft European Council on Foreign Relations (ECFR) in Berlin is the 311th in “The Trans-Pacific View Insight Series.”

Explain the impact of Lithuania-China tensions on the national interests of EU member states.

The initial dispute over the Taipei Office name change, which has been transformed into a Taiwan Representative Office, did raise some questions about whether politically sensitive issues need not be closely coordinated with all other Europeans – especially if a country like Lithuania would like to count on European solidarity in the case of economic or political cost. But China went quite far on restricting Lithuanian trade and it even decided to go beyond trade with Lithuania: When Beijing began targeting non-Lithuanian companies from across Europe in an effort to redirect broader trade flows away from Lithuania to increase the pressure on Vilnius, it was clear that this constituted a threat to the integrity of the single market and the EU as a whole.

China is weaponizing access to its market to force unrelated third companies to cease trading with firms from another EU member state. This interference with intra-European trade should be a source of great worry for European businesses and governments. If China is willing and able to threaten European companies over a country it has political disagreements with – in this case, Lithuania – it is easy to imagine it doing the same to curb European trade with Taiwan, or another place whose political relations with China suddenly deteriorate. In the future, then, European companies could find themselves subject to Chinese pressure for trading with, say, South Korea, should there be a dispute between Beijing and Seoul.

What is the impact on EU convergence and divergence in managing China as a “systemic rival” in broader EU-China relations?

Acceptance is growing across member states that China is posing a structural challenge and will continue to be a challenge for European countries. The joint Xi-Putin announcement of a new era in international relations drove this point home to all Europeans. Vladimir Putin’s invasion of Ukraine, bringing war back to Europe like it had not seen since the middle of the last century and despite all Chinese attempts to signal some ambiguity, clearly with the support of Beijing, is a wake-up call to the EU. It has rarely looked this united. Taken together with China’s demonstrated willingness to weaponize its economy and to pressure other countries into behaving according to Beijing’s own political vision, Europeans more and more see clearly that there is an increasingly important element of systemic rivalry in EU-China relations.

Analyze the degree of EU political resolve to withstand or counter Beijing’s punitive measures against EU countries supporting Lithuania.

The EU is building its defenses, for example with the proposal of an “anti-coercion instrument,” which would allow Brussels to take swift and decisive economic countermeasures in the face of economic coercion. We could see a greater integration of all the EU’s external policy dimensions following the Ukraine shock. The China-Lithuania dispute already underscored the importance of the debate around the anti-coercion instrument. The escalation has demonstrated exactly for what kind of situations the EU needs such an instrument, and what it is currently lacking the most: a credible tool powerful enough to deter coercive behavior and the ability to apply counter measures quickly, if needed.

The key here is that even the EU’s deterrent and credibility before the Russian aggression on Ukraine would have been stronger had the anti-coercion instrument already been in place. This is because it requires qualified majority support – and not unanimity of all 27 member states – for imposing tough countermeasures. It is too easy for countries like China or Russia to convince one member state to block EU action under unanimity rules.

But the EU’s effort goes beyond this one instrument: Europe will reform its Blocking Statute to make it fit for the China challenge and tackle secondary sanctions. Instead of putting businesses between a rock and a hard place by simply prohibiting them from complying with Chinese pressure, the EU could turn it into a tool that helps companies in sharing information about grey-zone pressure that has no paper trail, like the pressure on companies to stop trading with Taiwan.

How does the Lithuania factor weaken or strengthen the EU’s strategic position in China-Taiwan tensions?  

China has sent a powerful signal to Lithuania and all of Europe that it won’t tolerate even the possible insinuation that Taiwan is an independent country. Of course, the goal was to make others think twice about any change in position. But it also resulted in underscoring to everyone in the EU what economic coercion from China could soon look like. As I said before, maybe there’ll be pressure on German, Swedish, Dutch, and French companies to stop trading with Taiwan or South Korea if a crisis erupts. And many in Europe are aware that Taiwan could be the next Ukraine. This does not mean that Europeans will necessarily become more vocal on Taiwan, but China’s “understanding” of the Russian expansionist project, which has unified Europe like nothing else over the last years, is a wake-up call: Europeans have noted Japan’s, South Korea’s, and Australia’s support on Ukraine. China’s and Russia’s actions are closing the ranks between allies and like-minded partners.

Assess the role of the United States in the Lithuania-China-Taiwan equation and its implications for transatlantic relations.

The war in Ukraine has underscored the importance of the U.S. for Europe, especially Eastern Europe that finds itself on the front line of the revisionist attempts to change the international and European order. From the point of view of Europeans, Vilnius could have coordinated more closely with its fellow EU partners before taking what has turned out to be a consequential decision for all of Europe. But Europe also has to get better at reassuring its Eastern member states of its strong support alongside the U.S. Again, the war in Ukraine will result in just that.