Friday, January 28, 2022

China is pushing Lithuania out of global supply chain

 China is pushing Lithuania out of global supply chains, says Zhigimantas Mauricas, chief economist at Luminor. 

In November last year, a Taiwanese representative office was opened in Vilnius. Lithuania broke with 'diplomatic customs,' allowing the mission to have "Taiwan" instead of "Taipei" in the name of the mission. Since then, China has suspended diplomatic relations with Lithuania and initiated a blockade of economic exchange.

Currently, 40 percent of Lithuanian companies are already experiencing difficulties because of the conflict between Vilnius and Beijing.

As a result of the political conflict with China, Lithuania found itself in a dangerous economic situation. According to Mauricas, China will put pressure on companies such as the German auto parts giant Continental to stop using Lithuanian components.

Indirect pressure from Beijing may also reduce Lithuania's investment attractiveness as foreign investors choose politically stable countries.

Politicians from the opposition parties want Lithuania to consider changing the name of the Taiwanese mission in Vilnius and thus reducing tensions in relations with China.