When the Lithuanian government last year permitted the establishment of a Taiwanese Representative Office on its soil — a name more suggestive of Taiwan’s nationhood than Beijing’s preferred formulation of “Taipei Representative Office” — a long line of precedent suggested that it could weather the countermeasures it would face from China.
As Beijing has a long history of employing unofficial bilateral trade restrictions to bully countries that defy it, the natural next step appeared to be two-way economic coercion, which would be limited by Lithuania’s scarce economic links with China.
Weighed against the benefits Lithuania expected from lending political support to Taiwan — some of them ideological, some perhaps self-interested, given the favor the move would curry with the US — the cost-benefit analysis appeared to be a no-brainer.
Few could have anticipated that Beijing’s response to this particular provocation would far surpass its precedents. Rather than simply blocking Lithuanian goods entering China, Beijing also targeted multinational corporations that merely had links to Lithuania to ratchet up the pressure, Reuters reported.
The Lithuanian government is now facing loud calls from within and without to reverse course, including from powerful German companies, and the Lithuanian minister of foreign affairs, who was generally defiant in his public messaging on China, has proposed changing the name of the office to make it more palatable to Beijing.
While this might be a favorable outcome for Beijing, a closer examination reveals that there are significant potential downsides to its approach. In a worst-case scenario, Beijing’s bullying of Vilnius could lead to a significant rift with the EU, damaging Beijing’s efforts to foster Europe as a counterweight to US influence as it faces a deteriorating international environment.
Beijing’s internationalization of its dispute with Lithuania by targeting companies based in other countries appears to have been based on a dubious cost-benefit analysis. Accustomed to manipulating foreign businesses eager to maintain their economic links to China, Beijing correctly determined that these businesses would place significant pressure on Lithuania to change course if those links were threatened.
However, in bringing the dispute to Germany, China also invited consequences of far greater material significance than the name of an office in Vilnius.
By more vividly and more directly demonstrating its coercive power to the authorities in Berlin and elsewhere in the EU, China appears to have sparked concerns over not only its ability to interfere in affairs in Lithuania, but also its capacity to undermine the foreign and economic policies of the bloc as a whole.
The move’s full consequences could become clear in the coming months, but there are already indications that it was a mistake.
One indication is the EU’s response to the controversy, with the bloc on Jan. 27 initiating a case against China at the WTO.
Joao Aguiar Machado, the EU’s permanent representative to the WTO, at the same time sent a letter to his Chinese counterpart requesting consultations over Beijing’s restrictive measures that “predominantly concern goods or services from or destined for Lithuania or linked in various ways to Lithuania, but [that] also have an effect on supply chains throughout the EU.”
While WTO litigation is perhaps not a step China has much reason to fear, the unusual speed with which the EU resorted to the lawsuit suggests heightened concern over the issue, German lawmaker Nils Schmid, who is the Social Democratic Party (SPD) caucus’ foreign policy spokesman, told Axios, urging a unified European policy toward China.
Another indication that Beijing’s actions were a miscalculation is the German government’s increasingly pessimistic rhetoric about its relations with China.
Following initial reports by the New York Times that German Chancellor Olaf Scholz of the SPD had signaled that he would not substantially deviate from his predecessor’s engagement-heavy China policy, German lawmaker Lars Klingbeil, who coleads Scholz’s party, told Reuters he doubts that the “decades-old concept” that one can change authoritarian states through close ties would still work.
While these signals have been overshadowed by Germany’s scramble to respond to the threat of a Russian invasion of Ukraine, they have likely been heard domestically, as well as in China.
These reactions come at an important time for China.
As US-China tensions worsen under the administration of US President Joe Biden and Washington continues to secure growing levels of support from its allies and partners in pushing back against China, Beijing needs to counter the US more than at any point in the post-Cold War era.
If it succeeds in alienating counterparts who might otherwise have been disposed toward pragmatic, economics-oriented cooperation, it will lose a potential bulwark against US influence in Eurasia.
If this should come to pass, even if Beijing succeeds in getting Vilnius to change the name, it will have little to show for it. While annoying to Beijing, calling offices “Taiwanese” rather than “Taipei” does not materially expand Taiwan’s international space.
Even if every country with a Taipei Representative Office were to rename it a Taiwanese Representative Office, Taiwan’s relations with those countries would remain unofficial.
Indeed, games of nomenclature do more than reveal countries’ appetite for symbolic gestures of support for Taiwan; they also reveal their unwillingness to take concrete measures that would commit them to anything in the only contingency that matters: a Chinese attack on Taiwan, which looks increasingly likely in the not-too-distant future.
Even if the US, Taiwan’s indispensable protector, were to change the name of the Taipei Economic and Cultural Representative Office in Washington to the Taiwan Representative Office, it would hardly influence the US’ decision whether to go to war.
Compared with the costs of alienating Europe, Beijing’s victory will have been a small one.
Beijing might have avoided this situation if it had adhered to its old playbook on economic coercion and targeted only two-way trade with Lithuania.
As it is, it faces the prospect of a pyrrhic victory over a tiny rival, all for the sake of a controversy that might otherwise have been lost to history.
Connor Swank is an analyst at the Center for Advanced China Research.
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