Lithuania

Lithuania

Lithuania has maintained diplomatic relations with China since 1991. While in the 2010s there were high expectations for deeper economic engagement with China, 2021 marked a fundamental shift in bilateral relations, which deteriorated rapidly and led to a diplomatic row.

Lithuania

Written by Vida Macikenaite.

Background

Lithuania declared its independence from the Soviet Union as early as March 1990, but the first country to officially recognise it as an independent state was Iceland in February 1991. As the Soviet Union was disintegrating in the final days of August 1991, the Icelandic Government, along with eight other European states, established formal diplomatic relations with Lithuania, paving the way for a rapid proliferation of relations with other countries. Lithuania’s diplomatic ties soon rapidly expanded worldwide, including with the People’s Republic of China (PRC), which established diplomatic relations on 14 September 1991—one of the first Asian countries to do so (North Korea would follow in 10 days and Japan one month later).

In the 2010s, China gained more attention in Lithuania as it seemed to offer opportunities for trade and economic cooperation. However, after Lithuanian president Dalia Grybauskaitė (in office from 2009 to 2019) met privately with the Dalai Lama in 2013, China temporarily put on hold all economic negotiations. Despite this political setback, Lithuania’s relations with China developed steadily throughout the decade. The first substantial achievement in bilateral relations occurred in 2015, when the managers of JSC Lithuanian Railways and the Chinese logistics company China Merchants Logistics Holding, a subsidiary of the state-owned China Merchants Group, signed an agreement to set up a joint company providing freight forwarding and logistics services in Lithuania. In 2016, Lithuania officially confirmed it was joining the Belt and Road Initiative (BRI).

In this way, Lithuania’s relations with China followed a pattern common to several other small European countries. Yet, recent years have marked a fundamental shift in their bilateral relations. After parliamentary elections in late 2020, a new coalition government led by the Homeland Union–Lithuanian Christian Democrats (TS–LKD) (previously in power from 2008 to 2012) was formed in Lithuania. Bilateral relations between Lithuania and China rapidly soured the following year. Some members of the ruling coalition parties are long-time supporters of closer informal relations with Taiwan, and this government significantly changed Lithuania’s China policy. Members of the ruling coalition explicitly indicated the government was turning away from authoritarian Beijing towards democratic Taipei in pursuit of values-based foreign policy. Relations between the two sides eventually escalated into a diplomatic row and Beijing downgraded bilateral relations.

First, in February 2021, the Lithuanian Government refused to send the highest-level representative—the president or prime minister—as requested by China to the meeting of the 17+1 platform, instead participating only at the ministerial level. In May, Lithuania officially confirmed it was withdrawing from the platform completely and called on other European Union countries to follow. In March, Lithuania had announced plans to open a trade representative office in Taiwan, and it was later confirmed that Taiwan was opening a representative office in the capital, Vilnius. In response, on 10 August, Beijing recalled its ambassador and requested Lithuania do the same.

On 18 November 2021, the Taiwanese Representative Office was opened in Vilnius. China officially denounced this as a violation of the One-China Principle and undermining China’s sovereignty and territorial integrity. In response, China unilaterally downgraded its diplomatic ties with Lithuania to the level of chargé d’affaires. Immediately after, the Chinese Embassy in Lithuania suspended issuance of visas ‘due to technical reasons’. The following month, Lithuanian Minister for Foreign Affairs Gabrielius Landsbergis announced Lithuania had recalled all its staff from Beijing for ‘consultations’ to work remotely for the time being, as Beijing demanded Lithuania change the status of its Beijing embassy into a lesser chargé d’affaires office, resulting in uncertainty over the legal status of Lithuanian diplomats in China.

In December, Lithuania became the target of economic measures from China. At first, Lithuania was removed from the Chinese customs declaration system. While customs clearance for Lithuanian imports were renewed within days, Lithuanian exporters complained that their goods were being blocked at Chinese ports. Reports surfaced of China pressuring multinationals to cut ties with Lithuania or face being shut out of the Chinese market. For instance, German car parts giant Continentalwas reportedly told to stop using components made in Lithuania. There had been similar accounts even before the opening of the Taiwanese Representative Office about Thermo Fisher Scientific, Lithuania’s flagship foreign investor, being warned by Beijing that its operations in mainland China would be at risk if the Lithuanian Government did not back down.

At the end of January 2022, the European Union referred China to the World Trade Organization (WTO) for discriminatory trade practices against Lithuania.

BRI Status

In 2016, Lithuania officially confirmed it was joining the BRI. The following year, Lithuania’s Ministry of Transport and Communication signed a memorandum of understanding (MoU) with China covering transport, logistics, infrastructure, technological innovation, and other areas. In April 2018, the same ministry signed an MoU with China’s state-owned postal operator that included developing the rail connection between China’s Chongqing and Vilnius for postal shipments. As a result, in April 2020, Europe’s first postal train from China arrived in Lithuania. It was scheduled to run once a week and deliver international parcels to be transferred to 36 European countries. In August 2021, as tensions in bilateral relations continued to escalate, China reportedly suspended railway services to Lithuania. According to media reports, as late as November 2021, China–Europe trains continued transiting through Lithuania without stopping, making the container drop-off in Vilnius complicated.

Current Economic Relations

Trade: Lithuania’s trade with China remains limited. In 2020, China was Lithuania’s thirteenth-largest trading partner, with a total trade volume of 1.5 billion EUR. China ranked 22 among Lithuania’s export destinations, with exports from Lithuania to mainland China amounting to 0.3 billion EUR. China was seventh among Lithuania’s import partners. Imports worth 1.2 billion EUR in 2020 comprised mostly electrical and electronic equipment and parts (19%), machinery (12%), textiles (9%), optical and photography technical equipment (6%), and vehicles other than railway and tramway (5%).

Investment: Among European countries, Lithuania has some of the lowest foreign direct investment (FDI) from China, which was ranked 40 among investors in the country in 2020, according to the Ministry for Foreign Affairs.

Key Controversies

Security Concerns over Chinese investment: In 2015, the Lithuanian Government warmly welcomed the possible investment by China Merchants Group (CMG) in Klaipėda port, Lithuania’s only seaport and a strategic hub for the North Atlantic Treaty Organization (NATO) in the Baltic states. Lithuania’s then prime minister Algirdas Butkevičius (in office from 2012 to 2016) welcomed CMG’s plans to establish a logistics park for Chinese manufacturers in Klaipėda, invest in the port, and become one of the controlling shareholders of the terminals and a potential partner for further infrastructure development. In 2018, Parliamentary Speaker Viktoras Pranckietis denied any link between Chinese investment in Lithuania and national security.

However, following growing concerns about Chinese investment in the European Union and the United States, by 2019, Lithuania had changed its position on the issue. In the summer of 2019, Lithuanian President Gitanas Nausėda (in office since 2019) rejected the possibility of Chinese investments in the port, citing concerns over national security. Later that year, the country’s Defence Minister, Raimundas Karoblis, stated that any Chinese investment in the port could pose strategic risks as the majority of US and overseas NATO forces arrive via Klaipėda.

In 2020, in their annual national security threat assessment, the Lithuanian security services identified China as a potential threatp. 34 for its attempts to gather technical intelligence on Lithuanian information systems and gain access to critical infrastructure. The Chinese Embassy in Vilnius expressed its strong disagreement with this assessment and urged ‘Lithuanian intelligence authorities to abandon its Cold War mentality and zero-sum game mindset’.

Security Concerns over 5G Network: In 2019, Lithuania’s security agencies recommended excluding companies like Huawei from sectors and infrastructure of special importance. In 2020, Sweden’s Telia Company, one of the major telecommunication service providers in Lithuania, announced it would replace all 4G telecoms equipment from Huawei in Lithuania and would not use it for 5G networks, due to the geopolitical situation.

Concerns around Attempted Influence: In 2020, Lithuanian media cited a high-ranking Lithuanian official speaking off the record that he had received numerous letters from China asking for an apology for statements directed against Beijing. Another cause of concern was an incident in August 2019 involving Shen Zhifei, China’s Ambassador to Lithuania, which was widely regarded as an example of China’s increasingly assertive efforts to use its diaspora to further Beijing’s interests. At that time, a rally in Vilnius supporting the protests in Hong Kong and Tibet was met by a smaller group of Chinese protesters. As verbal clashes and minor scuffles ensued, two Chinese protesters were fined by the police for creating a disturbance. Although the Embassy of the PRC denied it was involved in the counter-rally, a report by an investigation team from Lithuania’s national broadcaster revealed that members of the diplomatic staff did take part, including the Chinese Ambassador himself, the defence attaché, his deputy, and the second secretary of the embassy.

Economic Coercion against Lithuania: In late 2021, China imposed unofficial sanctions and exerted pressure through multinational corporations on Lithuanian businesses in response to the opening of the Taiwanese Representative Office in Lithuania in November of that year. In search for support, the Lithuanian Government appealed to the European Union, which later filed a case against China at the WTO.

Key Sources

Andrijauskas, Konstantinas. 2020. ‘The Dragon and The Knight: China’s Growing Presence in Lithuania.’ 16 February. Vilnius: Eastern Europe Studies Centre, Vilnius University. Link.

Andrijauskas, Konstantinas. 2020. ‘Sino-Lithuanian Relations in Lithuania in 2020: Shedding the Masks?’ 30 November. Vilnius: Eastern Europe Studies Centre, Vilnius University. Link.

Lithuania Radio and Television English website. Link.

Cover Photo: Sunset over Vilnius, Lithuania. Credit: @sinava (CC), Flickr.com

Updated on 18 April 2022.


Vida Macikenaite is Assistant Professor at the International University of Japan. She holds graduate degrees from Keio University in Japan and Fudan University in China. While her major research interest centres on China’s foreign relations, recently she has been looking into perceptions of China in Europe. She is also interested in authoritarian regimes and state capacity in comparative perspective.