The name of a small office at the top of a drab skyscraper in the centre of Vilnius has set off a geopolitical firestorm that threatens billions of dollars in trade.
This is the Taiwanese Representative Office in Lithuania, a diplomatic outpost so new that the chief of mission’s business cards still carry the address of his previous posting in Latvia.
At issue is the fact that the name of the mission explicitly refers to the disputed island of Taiwan — and not, as is more common, its capital city of Taipei. To Eric Huang, who heads up the office, this makes complete sense. “We are representing Taiwan, not the city of Taipei,” he says.
But for the Chinese, the opening in Lithuania of what amounts to a de facto embassy represents a big step towards formal recognition of Taiwan, which Beijing claims as part of its territory. And it has retaliated furiously to this perceived provocation, not just by stopping direct imports from the Baltic country but by taking aim at global supply chains — stopping German companies, for instance, from using Lithuanian components in China.
For many policymakers in Europe, Asia and the US, the tactics that China is deploying in the dispute with Lithuania mark a watershed moment for the global economy. Although China has long used various types of economic coercion in political disputes with countries from Canada to Australia, this represents the first time the Chinese government has tried to prescribe where companies can, or in this case cannot, source parts for goods they make in and sell to China.
The precedent being set by China should send shockwaves, say officials in the Baltic country. “It is Lithuania today,” says economy minister Ausrine Armonaite. “It…