How a tiny European country took on China over Taiwan

Taiwanese and Lithuanian flags pictured at the Taiwanese Representative Office in Vilnius, Lithuania on January 20.

(CNN)A curious spat has unfolded in recent months between Lithuania, a small, Eastern European nation of fewer than 3 million people, and China, a superpower with an economy that could soon exceed that of the United States.

It all started last year, when Lithuania poked Beijing in the eye -- twice in the space of a few months.
First, it withdrew from the so-called "17+1" group, a forum in which 17 eastern and central European countries engage with China, before encouraging others to do the same. Given China's numerous business interests in the region, most notably the so-called Belt and Road Initiative (BRI) focused on infrastructure projects, any kind of European pushback is unwelcome in Beijing.
    Then in November, Lithuania became the first country in Europe to allow self-ruled Taiwan to open a de facto embassy under the name "Taiwan." Other such offices in Europe and the United States use the name Taipei, Taiwan's capital, to avoid references that would imply the island's independence from China. Taiwan's Foreign Ministry said the opening of the Taiwanese Representative Office in Vilnius would "charter a new and promising course for bilateral relations between Taiwan and Lithuania."
      The move enraged Beijing, which saw it as an affront to its "One China" principle that insists Taiwan is part of China, rather than an independent sovereign territory, despite the two sides having been governed separately for over seven decades after a civil war. As a rule, those who want a relationship with China must recognize the policy diplomatically.
      The lobby of the Taiwanese Representative Office is pictured on November 18, 2021.
      Lithuania says the new Taiwan office does not have formal diplomatic status and does not conflict with its One China policy. But Beijing reacted by immediately downgrading diplomatic relations with Vilnius. Lithuania also claimed that China has prevented Lithuanian goods from entering China, effectively creating a trade barrier. The Chinese government has repeatedly rejected these claims, blaming Lithuania for harming China's "core interest" and sending bilateral ties to a deep freeze.
      Taiwan reacted by buying up Lithuanian produce that was destined for China -- including 20,400 bottles of rum -- and pledging to invest hundreds of millions of dollars in Lithuanian industry to support the country in the face of Chinese pressure.
        The spat has pulled in the European Union, which is backing member state Lithuania. Brussels sees Beijing's treatment of Lithuania as a threat to other EU nations, many of whom have deeper economic links with China and would like to deepen them further.
        On Thursday, the EU launched a case against China at the World Trade Organization, accusing Beijing of "discriminatory trade practices against Lithuania, which are also hitting other exports from the EU's Single Market."
        The WTO case could be just the start of the EU taking a more hardline stance on China, though there are reservations about whether doing so could prompt Beijing to retaliate in the form of trade wars or canceled investments in Europe.

        'China needs to learn lessons'

        In 1990, Lithuania became the first member of the Soviet Union to declare independence from Moscow's ruling Communist Party. It then joined the EU European Union and NATO in 2004 -- the very organization intended to be a check on socialist expansion.
        In that context, a nation like China displaying aggression in its own region, notably against Taiwan -- as well as using trade as a weapon against smaller European nations -- naturally alarms those who remember life under Soviet rule.
        "China needs to learn lessons because until now, they have been allowed to behave in a way that doesn't adhere to our values and rules, simply because they were so wealthy," Lithuania's former Prime Minister Andrius Kubilius told CNN.
        "I don't see that bigger EU countries would have taken it upon themselves to stand up. Maybe from Lithuania it will spread to others and in time, Europe will stand united against a country that doesn't meet our standards," he added.