Lithuania shows that China’s coercive trade tactics are hard to deal with

It’s been two weeks since the door to the Chinese market slammed shut close the door to Lithuanian products.

Making up just 0.2% of global exports, the Baltic nation’s problem is trivial to the rest of the world. But it is just the latest example of China using a weapon other countries have yet to find a shield for: coercive economic regulation.

Beijing has targeted foreign companies or industries to “punish” their governments for policies with which they disagree. The measures include suspending rare earth exports to Japan following a maritime clash off the disputed Senkaku Islands, and restricting imports of Norwegian salmon after awarding the Nobel Peace Prize to the main dissident. Liu Xiaobo and banned Australian barley and alcohol imports in retaliation for Canberra’s demand for an investigation into the origins of Covid-19.

Likewise, after Lithuania allowed the opening of a Taiwanese representative office in Vilnius, this office disappeared from the China Customs Administration’s country list on December 1, making it impossible for companies to submit customs paperwork.

“Every country uses economic coercion in some way — the United States has a global sanctions regime,” said Emily Kilcrease, at the Center for a New American Security, a Washington think-tank. face.

However, she noted, democracies are at a disadvantage: under its authoritarian system, Beijing can target companies or products without invoking any relevant laws to justify justify his actions.

When South Korea deployed an American anti-missile system in 2016, Chinese travel agents stopped group tours to the country, and the Chinese public turned away from pop and pop songs. Korean opera. In either case, it is difficult to hold the Chinese government accountable.

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“Such off-the-books measures, which China has in its entirety, are not something the United States or other democracies can use because they turn back,” says Kilcrease, co-author of a new book. party control of the economy. report about how other countries might respond to China’s coercive economic status. “In the US, we are limited by the legal authority we have in place.”

Moving to the World Trade Organization’s dispute settlement mechanism could take years to bear fruit and may not even be an option because governments lack evidence that the Chinese authorities behind boycotts or import disruptions.

Just a week after the initial export was blocked, Lithuania’s name reappeared on China’s customs menu. However, the Lithuanian shipments have not yet cleared customs.

“Customs brokers are receiving ‘error’ reports from their IT systems when they try to process shipments. This is the case in different ports and for all types of products,” the European Commission said, adding that Chinese companies have also canceled orders for Chinese products. Lithuania without explanation.

Observers say Beijing wants to warn others. Shi Yinhong, a foreign policy expert at Renmin University, says both Lithuania and Australia remain defiant towards Beijing. “But not taking punitive action will increase the likelihood that other countries will take similar steps to establishing ties with Taiwan, and it will be difficult to explain that to people back home,” he said. .

European observers agree. Joerg Wuttke, president of the EU Chamber of Commerce in China, said the measures had “no immediate impact on multinationals” as there is almost no sourcing from Lithuania. “But it is a clear warning to other EU countries not to follow Lithuania’s example,” he said. “For example, the Czech and Slovak economies are already deeply involved in the German car supply chain.”

Both Central European countries have recently increased their contacts with Taipei because of the region’s enthusiasm for the benefits of close ties with China. decline.

The EU has threatened to bring China into the WTO if all obstacles preventing Lithuanian exports from accessing the Chinese market are not removed. Brussels also has present an “anti-coercive instrument” that it wants the EU to retaliate against for such economic coercion.

But analysts are skeptical because China’s status as the world’s second-largest economy gives it great influence.

Even their sanctions tend to do some damage to the home country, Shi predicts: “China’s countermeasures against such countries will become more and more frequent. stronger and stronger.”

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