Is Taiwan Fever Breaking in Lithuania?
By Thomas Shattuck - An Indo-Pacific Recalibration in Vilnius
One of Taiwan’s most significant foreign policy achievements since the COVID-19 pandemic was the expansion of its unofficial diplomatic cooperation with Lithuania. Both countries opened unofficial representative offices in each other’s capitals—in 2021, Taiwan’s office opened in Vilnius, and in 2022, Lithuania’s office opened in Taipei. The announcement of the “Taiwanese Representative Office in Lithuania” resulted in a coercive firestorm from Beijing. Since then, the People’s Republic of China (PRC) has utilized various diplomatic and economic mechanisms to pressure and punish Lithuania. The two nations’ relations remain at the chargé d'affaires level, with both countries’ embassies remaining closed.
After the fall 2024 elections in Lithuania, the new government in Vilnius has made the reestablishment and normalization of Lithuania-PRC relations a foreign policy priority. As these debates continue in Lithuania, it is essential to analyze the state of Lithuania’s relationship with Taiwan, the implications of backing down to Beijing, and the current state of the Lithuanian economy and trade vis-à-vis PRC economic coercion.
Taiwan-Lithuania Trade and Investment
After the PRC announced trade repercussions for the enhanced Taiwan-Lithuania relationship, it was incumbent upon Taipei to demonstrate that it could be a reliable trade partner and make it worth the aggravation for Vilnius. After all, the PRC removed Lithuania as a country of origin, preventing anything from Lithuania from entering the PRC. During the first few months, Taiwanese people went out of their way to purchase items from Lithuania that were banned from entering the PRC.
To her credit, then-President Tsai Ing-wen announced several new initiatives to encourage Taiwanese investment in Lithuania and to spur joint projects. The Tsai administration set up a $200 million investment fund for high-tech industries and a $1 billion credit fund for joint projects. Some funds have been utilized, but not as many as those figures would presume. Most of the investments were related to fintech and laser technologies. According to an official familiar with Lithuania’s relationship with Taiwan, Lithuanian politicians are more confident about the bilateral relationship than Lithuanian businesses are since there is a general unfamiliarity with Taiwan and how it conducts business. There are not a lot of easy wins for either country due to the types and sizes of their economies. Nevertheless, trade between Taiwan and Lithuania increased by 50 percent in 2022 from 2021.
Taiwan did its part to demonstrate that it supported Lithuania during the diplomatic crisis. However, that spirit was not extended through businesses utilizing these new opportunities, so while the funds are there, the follow-through has been lacking. But that does not mean Lithuania is now worse off because of its trade situation with the PRC.
One would assume that the PRC cutting off all trade with a country like Lithuania would be economically devastating. After several years, the opposite has turned out to be true.
Is Lithuania Worse Off?
One would assume that the PRC cutting off all trade with a country like Lithuania would be economically devastating. After several years, the opposite has turned out to be true. The reason for this is simple: Lithuanian exports to the PRC accounted for under one percent, while PRC imports to Lithuanians were only 4 percent. At the outset of the crisis, some Lithuanian industries were heavily affected because the sanctions essentially turned off their business with the PRC overnight. The industries hit hardest by the crisis were furniture, lasers, and high-tech manufacturing. Companies in these industries lost tens of millions of euros from the loss in business in the initial shock. However, this is not the whole story. These companies and industries found new opportunities elsewhere in the European Union, Indo-Pacific, and the United States (not to mention the PRC quietly reduced its economic sanctions on Lithuania). The industries needed time to diversify away from the PRC and shift to other markets. In fact, “the total exports of Lithuanian origin goods to the ten Indo-Pacific countries increased by 60.4 percent [during January-June 2022], exceeding the volume of exports to China by four times (compared to January-June 2021).” Trade between Lithuania and the PRC has improved since 2022—a reason cited by the European Commission when asking the World Trade Organization to suspend the European Union’s case against the PRC. Lithuanian exports to the PRC are still not at the pre-crisis level, but they reached the floor in early 2022, with a slow but steady increase since then.
At the macro level, Lithuania’s gross domestic product has fluctuated but remained positive since the PRC crisis. In 2021, it grew by 6.4 percent; in 2022, it grew by 2.5 percent; and in 2023, it grew by 0.3 percent, with projections for 2024 of over 2 percent. A Lithuania official noted that Lithuania and its economy were not affected by PRC actions because imports and exports recovered due to the ease of finding new markets for certain commodities.
The Battle of the Narrative
However, measuring the impact of the PRC’s actions on possible deals with other companies and countries worried about angering the PRC is difficult. During the height of the crisis, Beijing was pressuring companies and governments not to use Lithuanian components. There was a general fear of reprisal for anything Lithuanian and how Beijing could expand that punishment beyond Lithuania. While the economic figures speak for themselves, it appears that the PRC has won the battle of the narrative by emphasizing how much worse off Lithuanians are due to Vilnius’ decision to enhance cooperation with Taiwan.
Part of this narrative warfare is the failure to make Lithuania the “gateway” in Europe for Taiwan.
In early 2024, a study by the Eastern Europe Studies Centre found that 47.6 percent of Lithuanians believed that “China is a profitable market and that Lithuania should be pragmatic and refrain from criticizing it.” About 44 percent still thought Lithuania’s “economy would struggle without investments from China,” even though GDP figures point to a different reality.
Most tellingly, 37 percent believed that “support for Taiwan does not bring any economic benefits to Lithuania and is less important than maintaining good economic relations with China.” However, 40 percent had no opinion, and 22 percent disagreed.
These numbers are a shift from another survey conducted in 2022 by GLOBSEC. Slightly over 42 percent of Lithuanians agreed that the PRC “presents a danger (significant threat)” to Lithuania, and 71 percent disagreed with the statement that “the Chinese regime could be an inspiration” for Lithuania.
This skepticism could be attributed to President Gitanas Nausėda’s consistent disagreement about allowing the Taiwan office to be named “Taiwanese Representative Office” and not “Taipei.” He emphasized this point regularly since the beginning of the crisis and continues to do so. Current Prime Minister Gintautas Paluckas campaigned on getting the Lithuania-PRC relationship back on track, but has remained silent on what the future holds for the name of the Taiwan office in Vilnius. He noted that he would work towards restoring full ties “without humiliating ourselves, falling to our knees, and begging for anything.”
One of the architects of the expansion of Taiwan-Lithuania relations, Gabrielius Landsbergis, who was serving as foreign minister then, is no longer serving in parliament after his party only won twenty-eight seats in the 2024 parliamentary elections. He maintains that allowing Taiwan to open an office and use the word “Taiwanese” was the correct decision. He traveled to Taiwan for the first time in January 2025 to receive an award from President Lai Ching-te. While in Taipei, he said changing the name of the office in Vilnius would be an “enormous mistake” and that “it is more than just a name. It is part of [Taiwan's] identity.”
Landsbergis reminded the world that the crisis occurred because the PRC created it through sanctions against Lithuania. It is not really up to the current government in Lithuania to fix a problem that it did not create.
Looking Ahead
The most crucial issue for Lithuania remains the closure of its embassy in the PRC, which makes it difficult for Vilnius to conduct diplomacy with Beijing. It is difficult for people to obtain visas to visit the country for business or pleasure. A Lithuanian official interviewed on these topics noted that the United States and most of the world maintain an embassy in Russia despite the war in Ukraine. Aggressors and competitors can conduct diplomacy, but this is not the case for Lithuania and China.
The sticking point is allegedly the name of the “Taiwanese Representative Office,” and according to one school of thought, the change in the name will fix all problems. If the current government in Vilnius backs down after years of being resolute, it would mark a significant blow to democratic nations standing up to PRC coercion. The PRC’s actual problem lies with the fact that Lithuania expanded its cooperation with Taiwan, not one specific word. The name is just a detail of a larger part of PRC coercion of third parties to limit Taiwan’s international space and ability to conduct its foreign policy. What happens if Vilnius requests that Taipei change the name of its office and Beijing does not fully restore the Lithuania-PRC political and economic relationship for a different reason—like the fact that it left the China-CEE in 2021? That would be a serious blow to the legitimacy of the government, especially in a country that has a history of standing up to authoritarian regimes.
Lithuania needs an open and operating embassy in the PRC, but it is incumbent upon Beijing to change its coercive behavior, not Vilnius to back down.
Thomas J. Shattuck is a Fellow in the Eurasia Program at the Foreign Policy Research Institute and is a Senior Program Manager at the University of Pennsylvania’s Perry World House.