Written by Jozef Huljak.
Image credit: The inauguration of the Taiwanese Representative Office in Lithuania by the Ministry of Foreign Affairs / License: Government Website Open Information Announcement.
On 27 July 2026, Lithuania’s Foreign Ministry confirmed the resumption of negotiations with the Taiwanese Representative Office on an economic cooperation action plan. The talks, which cover semiconductors, defence technology, agriculture and joint projects in Ukraine, had been suspended in June after a coalition reshuffle brought Prime Minister Mindaugas Sinkevičius and a reconfigured Social Democrat led government to power. The resumption matters far beyond the Baltic: it is a live test of whether a European state that bore the full brunt of Chinese economic coercion can deepen its engagement with Taiwan even as its new leadership openly courts a diplomatic reset with Beijing. Lithuania’s experience offers a template, and a warning, for the rest of the European Union.
From coercion to resilience
When the Taiwanese Representative Office opened in Vilnius in November 2021, the name alone, “Taiwanese” rather than the diplomatically softer “Taipei” used elsewhere in Europe, provoked an unprecedented Chinese response. Beijing downgraded diplomatic relations to the chargé d’affaires level, removed Lithuania from its customs system, and imposed what the EU later called “discriminatory” and “coercive” trade restrictions. Lithuanian exports to China plummeted by more than 80 per cent within a year, and Beijing introduced informal secondary sanctions, warning multinationals that sourcing Lithuanian components could jeopardise their own access to the Chinese market.
The economic shock, however, proved more manageable than either Beijing or Lithuanian sceptics expected. Lithuanian exports to China had accounted for under one per cent of total exports. Industries initially hit hardest, including furniture, lasers and high-tech manufacturing, diversified towards EU, Indo-Pacific and US markets. Between January and June 2022, Lithuanian exports to ten Indo-Pacific countries rose by 60.4 per cent, exceeding the volume of pre-crisis exports to China by a factor of four. GDP growth remained positive throughout: 6.4 per cent in 2021, 2.5 per cent in 2022, and 0.3 per cent in 2023, with a recovery above 2 per cent in 2024. Beijing itself quietly eased some restrictions from 2023 onwards. The EU, galvanised by Lithuania’s ordeal, filed a WTO case against China’s trade measures and fast-tracked the Anti-Coercion Instrument, which entered into force in December 2023.
Yet China won the battle of the narrative. A 2024 study by Lithuania’s Eastern Europe Studies Centre found that 47.6 per cent of Lithuanians believed China to be a profitable market that Lithuania should not criticise, and 37 per cent felt that support for Taiwan brought no economic benefit. President Gitanas Nausėda repeatedly called the naming decision a mistake, and the Social Democrats’ 2024 election campaign promised to get the Beijing relationship “back on track.” The perception of economic damage outlasted the damage itself.
A new government’s tightrope
Sinkevičius’s government, which took office on 14 July 2026, has attempted to walk a fine line. Its coalition agreement pledges to “normalise diplomatic relations with China to the level maintained by other EU member states,” and on his first day the new prime minister described the 2021 decision to allow Taiwan’s de facto embassy as “maybe too brave.” At the same time, his government has neither asked Taipei to rename the office nor withdrawn from the economic cooperation talks that his predecessor’s administration launched in March.
The action plan under negotiation is a tangible expression of this dual-track approach. Initially pitched by senior presidential adviser Asta Skaisgirytė, it was discussed in April between Taiwan Envoy Constance Wang and Deputy Foreign Minister Vidmantas Verbickas. Its scope covers semiconductors, lasers, AI, green energy, drones, defence industry and cooperation projects in Ukraine, precisely targeting the strategic sectors where Lithuania and Taiwan have complementary strengths. Lithuania’s world-leading laser industry has already attracted Taiwanese capital: in 2024, Taiwan’s Taiwania Capital invested 3.5 million euros in Lithuanian femtosecond laser firm Litilit, and the Industrial Technology Research Institute set up an Ultrafast Laser Innovation Centre in Tainan using Lithuanian laser sources.
Nevertheless, Lithuanian frustration with the pace of Taiwanese investment has been a consistent undercurrent. Taiwan committed a 200-million-dollar investment fund for high-tech industries and a one-billion-dollar credit programme after the 2021 crisis, but utilisation has been limited. Total Taiwanese investment in Lithuania since 2021 stands at 16.8 million euros, a fraction of the headline figures. By contrast, Taiwan has over one billion euros in foreign direct investment in the Czech Republic, where Foxconn alone employs 5,000 people. Eric Huang, head of Taiwan’s MOFA Department of European Affairs and the first chief of the Vilnius office, acknowledged this gap in April 2026, pledging to encourage more Taiwanese firms to invest. The bilateral trade trajectory is more encouraging: Lithuania’s exports to Taiwan reached 60 million dollars in 2025, up 63 per cent year on year, while Taiwan’s exports to Lithuania grew 13.6 per cent to 105 million dollars.
The wider European stakes
Lithuania’s balancing act is not occurring in a vacuum. Across Europe, the terms of engagement with Taiwan are shifting. The Czech Republic has moved from parliamentary gestures to coordinated governmental outreach, including an unprecedented presidential phone call with Taipei in 2023 and the opening of a CzechInvest office in Taiwan. The European Parliament has sent delegations to Taipei to study Taiwan’s counter-disinformation defences. In April 2026, Germany and the Czech Republic reportedly denied overflight to Taiwan’s presidential aircraft, a reminder that even states sympathetic to Taipei will avoid direct confrontation with Beijing when the political costs appear immediate.
The risk for Lithuania is that conceding on the name, or signalling readiness to do so, would not only undermine the credibility of a democratic state that withstood authoritarian pressure, but also validate Beijing’s coercive playbook. As former Foreign Minister Gabrielius Landsbergis, the architect of the 2021 opening, argued in January 2025, changing the name would be “an enormous mistake” because “it is more than just a name; it is part of their identity.” If Lithuania capitulates after years of resilience, it signals to every European government that Chinese pressure, however economically marginal, will eventually prevail. The Global Taiwan Institute has framed Lithuania’s experience as a potential “lighthouse” for EU states seeking sustainable Indo-Pacific partnerships. But lighthouses only work if they stay lit.
There is also no guarantee that Beijing would fully restore relations even if Vilnius were to ask Taipei to rebrand the office. The deeper offence, in China’s eyes, was the expansion of cooperation itself, not a single word on a plaque. Lithuania’s 2021 withdrawal from the China CEE cooperation format would remain a sore point. Backing down on the name without a reciprocal Chinese commitment would leave Vilnius with diminished credibility in Taipei, no assured gains in Beijing and a weakened hand in Brussels.
The resumption of economic cooperation talks suggests Vilnius understands this calculus. By deepening the material foundations of the relationship through trade, investment, joint R&D in lasers and semiconductors, and defence industrial cooperation, Lithuania can make the Taiwan partnership structurally resilient regardless of which coalition holds power. For Taipei, the lesson is equally clear: headline pledges must translate into tangible capital flows, particularly in sectors where both countries gain. Lithuania needs visible Taiwanese factories and jobs, not just credit lines. Taiwan, for its part, needs reliable European partners willing to absorb the political costs of engagement. The action plan, if finalised, could turn a relationship built on symbolic solidarity into one grounded in mutual economic interest, the only foundation durable enough to withstand both Chinese pressure and domestic political cycles.
Jozef Huljak is a PhD student in political science at the Department of Philosophy and Political Science, Constantine the Philosopher University in Nitra, Slovakia. His research focuses on Taiwan’s cultural and public diplomacy and the role of soft power in international relations. His work has been published by The Diplomat, the Lowy Institute, CEIAS, and PolSci Dialogues, where he authored Conceptual and Theoretical Foundations of Cultural Diplomacy.
LinkedIn: https://www.linkedin.com/in/jozef-huljak/.