China’s economic pressure on Lithuania represents a major threat to “the most sacred part” of the European Union, according to a senior German politician, and raises the likelihood that the European countries will wind down economic relations with the truculent communist power.

“What the Chinese are effectively doing [is] they are trying to undermine the most sacred part of Europe's common policy, which is the single market,” Germany’s Reinhard Butikofer, who leads the China delegation in the European Parliament, told the Washington Examiner. “China is trying to break the principles that are governing that common European project.”

Lithuania, a small member of the European Union on the shores of the Baltic Sea, came into China’s crosshairs following the recent decision to allow Taiwan to open a de facto embassy under its own name, despite Beijing’s claim to sovereignty over the island democracy. That decision sparked a diplomatic and economic crisis, as Chinese officials weaponized the economic unity of the European Union by demanding that multinational companies pull out of Lithuania or risk losing their access to the massive and lucrative Chinese market.


“Nobody should be foolish enough to believe that if China would be allowed to break Lithuania, they would refrain from making more and stricter demands next time, if another government ... does something they don't like,” said Butikofer. "The appetite of this authoritarian system to force others to do its bidding is not limited, and we will have to act accordingly.”

Chinese officials deny taking any steps to harm Lithuania’s economy, as they insist that any trouble for Lithuanian companies flows naturally from the Lithuanian government’s relationship with Taiwan.

“What Lithuania did has gravely undermined the political foundation of China-Lithuania diplomatic relations and the atmosphere of practical and mutually beneficial cooperation between the two countries,” Chinese Foreign Ministry spokesman Zhao Lijian said on Dec. 24.

Lithuania’s relationship with China has deteriorated over the years through an accumulation of disputes. The Baltic state was one of the first NATO allies to issue a public warning of Chinese Communist espionage, and officials in Vilnius cited national security when refusing to sell China a controlling stake in a key port.

The Chinese Communist crackdown on Hong Kong also produced a backlash in Lithuania, which gained independence following the collapse of the Soviet Union, and Lithuanian officials withdrew from the economic dialogue that Chinese officials have used to expand ties with the smaller economies of Europe.

“I also learned that many Chinese companies no longer see Lithuania as a trustworthy partner for cooperation,” Zhao added. "When facing difficulties in economic and trade cooperation with China, Lithuania must look for causes from within.”

And yet, Lithuanian officials have accused China of demanding that major multinational European countries cut ties with Lithuanian entities. The German-Baltic Chamber of Commerce urged the Lithuanian government to find “a constructive solution to restore Lithuanian-Chinese economic relations” in a letter that outlined major new Chinese restrictions on their operations.

“China’s recent measures against Lithuania are having the effect of a trade boycott with repercussions throughout the EU,” the Federation of German Industries concurred. “In the long run, the escalation on the Chinese side is a devastating own goal. It shows that China is willing to decouple itself economically from politically disagreeable partners.”

Germany is the premier economy of the European Union, raising the stakes of the complicated Western efforts to thwart China’s use of German companies to put pressure on Lithuania. The controversy has spurred a trans-Atlantic dialogue about how to counter the pressure, including a recent call between Secretary of State Antony Blinken and EU High Representative for Foreign Affairs Josep Borrell.

“[Blinken and Borrell] discussed the widening international impacts of China’s unilateral actions, which all evidence suggests are severely impeding trade in goods not only with Lithuania, but now also impacting companies from other member states and the United States,” Borrell’s team said last week, emphasizing that Borrell “reiterated that the EU will stand together against all political pressures and coercive measures applied against any of its members.”

Butikofer, after acknowledging the unattractiveness of “general decoupling” from China, suggested that Chinese Communist officials might leave them without a choice.


“They are now pursuing their own decoupling,” he said. "And they're basically telling their international economic partners, 'either you do as we tell you or we will cut you off; we will cut you loose.’ And I think that will have a considerable effect, and countries will look more deeply at their dependencies, and make strategic calculations to avoid being put in a dead end.”