7 minute read
GEOPOLITICS
DAVID VERSUS GOLIATH?
Despite China’s coercive trade measures, tiny Lithuania and Slovenia continue to bolster relations with Taiwan.
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SYNERGIA FOUNDATION
RESEARCH TEAM
Close on the heels of Lithuania, another member of the European Union – Slovenia has established reciprocal representative offices with Taiwan. The decision itself is nothing out of the ordinary, as most major countries have an unofficial diplomatic relationship with the self-governed island. In fact, Slovenia is one of the very few countries in the EU which does not have a Taiwanese mission to speak of.
What has been controversial, however, is the choice of a name. As opposed to calling it the office of ‘Chinese Taipei’ to appease Beijing, certain reports have suggested that Slovenia might follow Lithuania’s example in designating it as the ‘Taiwanese Representative Office’. Slovenian Prime Minister, Janez Jansa, has also stirred up a hornet’s nest by calling Taiwan a ‘democratic country’, in a clear snub to China. It remains to be seen whether this sparks yet another trade embargo or economic retaliation by China, as was seen in the case of Lithuania.
APPLICATION OF SOFT POWER
The unification of Taiwan with mainland China remains very much on the cards; in Beijing’s perspective, it is only a matter of time before a historical anomaly is corrected, irrespective of global opinion. It is all part of a narrative about the Middle Kingdom coming of age and taking its rightful place in the international order.
Leveraging its significant economic heft, with its growing military power smouldering in the background, Beijing has laid down clear ground rules for those wishing to interact with Taiwan commercially or diplomatically. Any whisper of a formal diplomatic exchange is strongly contested, with punitive action being meted out. Not surprisingly, only fourteen nations, mostly in South America and Asia, have continued to maintain some kind of formal relations with the East Asian Republic. No major powers, including the U.S. and even India, have tried to breach this Beijing-stipulated protocol.
Therefore, when the small state of Lithuania allowed Taiwan to open a controversially named ‘Taiwan representative office’ in its territory, all hell broke loose. A visibly enraged Beijing viewed it as an affront to its ‘One China’ principle, prompting it to downgrade diplomatic relations with Vilnius and expel the Lithuanian ambassador. It also reportedly imposed a customs block on exports from the Baltic nation by revoking its status as a ‘country of origin’.
However, as opposed to targeting the Central European country alone, Beijing also inflicted comprehensive sanctions on the entire industry supply chain. It threatened to prevent any European products that had elements made in Lithuania to enter the country, thereby affecting EU traders in the region. Against this backdrop, the recent move by Slovenia is expected to invite similarly stringent actions by China. In fact, the Slovenian-Chinese Business Council has already reported that partners in China are terminating contracts and exiting previously agreed investments.
CROSSING A RED LINE?
At a time when global trade is at a premium, the fact that China has risked its commercial relations with the whole of Europe by targeting industry supply chains has come as a surprise. In this context, it becomes critical to examine the strategic thinking in China.
Firstly, the diplomatic overtures by Lithuania and Slovenia have been bad for optics. The fact that smaller countries are defying the carefully orchestrated Chinese Wolf Warrior policy vis à vis Taiwan is a worrying factor, especially when the military is flexing its muscles in the Taiwan Straits. It takes the shine out of China’s power projection on a global scale. More importantly, it is also conveying a message to NATO, already engaged in a faceoff with Russia over Ukraine, as both these Baltic countries are part of the security bloc.
Secondly, China appears to have recalibrated its red lines over Taiwan for the past few years. Since the election of Taiwanese President Tsai Ing-wen in 2016, it has consistently sought to rein in the expansion of Taipei’s international space, whether it is political, military or economic. Therefore, for Beijing it is not the size or influence of a nation that diplomatically rehabilitates Taiwan on its soil that matters; it is the gesture that needs to be nipped at the bud.
Finally, Beijing apprehends that Lithuania and Slovenia may set the wrong precedent for other Central and East European Countries (CEEC), with whom it has been seeking to scale up economic cooperation as an entry point to the EU. Lithuania has already pulled out of the 17+1 initiative, which was intended to promote business and investment relations between China and the CEEC. Now, if Slovenia follows suit, the group will dwindle to 15+1, hampering China’s ambition to woo smaller European nations through market access and land connectivity.
As it is, many states are actively seeking to diversify their supply chains away from the Asian giant. The much-publicised EU-China investment accord has also been stalled for quite some time. In this context, unless a strong warning is issued about the consequences of decoupling from China, the PRC fears that the 16+1 forum may be irreparably tarnished.
WEIGHING THE COST
For Lithuania, the political and economic consequences of opting out of the China-CEEC forum and bolstering relations with Taiwan are not necessarily dire. In its view, the 17+1 partnership had done little to improve market access with Beijing, and there was no significant improvement in its existing trade balance. In fact, China was a relatively small export market for the country, accounting for only 1.18 per cent of its exports, unlike bigger EU countries such as France and Germany.
The same is true for Slovenia. As per 2019 data, its exports to China had been four times lower than its imports. Given this limited economic exposure, it had no qualms about taking a hardline stance against Beijing. In other words, it had relatively little to lose from China’s settling of scores. to gain politically by taking a stand. Having been under the Communist yoke of Moscow and Belgrade respectively, until the last century, standing up to a Communist PRC has its own appeal for certain sections of the population. The Lithuanians take pride in being the first Republic to have declared their independence from the USSR, paving the way for a democratic transition. For them, facing up to an authoritarian China and supporting a democratic Taiwan had an almost romantic fervour to it. It is a nostalgic reminder about their own national history, comparable to the proverbial ‘David versus Goliath’ story.
FUTURE COOPERATION BETWEEN CHINA AND CEECS
In a keynote speech of Chinese President Xi Jinping while chairing the China-CEEC Summit via video link in Beijing on February 9, 2021, several cooperation areas were marked between China and Central and Eastern European countries (CEECs)
China intends to import, in the coming five years, more than $170 billion of goods from CEECs.
The two sides will deepen agricultural cooperation, in a bid to double CEE countries’ agricultural exports to China and raise two-way agriucltural trade by 50% over the next five years. China supports establishing a university in Hungary by Fudan University. China will work towards the establishment of a China-CEEC customs information center and focal point for customs clearance coordination for countries along the China-Europe Land-Sea Express Line.
China supports setting up a dialogue mechanism on e-commerce cooperation between China and CEECs.
China supports setting up a China-CEEC alliance in the public health industry.
China stands ready for vaccine cooperation with CEECs.
Source: Xinhua SYNERGIA FOUNDATION
Assessment
As the international community laments the global backslide in democracy, there may be some lessons to be learnt from the world’s newer democracies. Countries like Lithuania and Slovenia have demonstrated that even smaller nations have diplomatic heft against hegemonic powers. It is, however, important to acknowledge that their limited economic exposure to China affords them the luxury to take such risks, whereas bigger powers like the U.S. or Western Europe shy away from it.
If Lithuania and Slovenia emerge relatively unscathed from their political and economic confrontation with China, it could be a dampener for the latter’s long-established selfdictated foreign policy norms. Therefore, Beijing will do all in its power to discourage such actions, even if it means devastating sanctions on industry supply chains which in the long run will be costly to its own economic outreach.
In imposing harsher sanctions, however, Beijing will risk an even more fraught relationship with the EU. Although there are those within the bloc who favour a stronger economic partnership with China in the name of strategic autonomy, the latter’s resort to economic coercion has served to alienate them. In fact, EU foreign ministers have overcome their strategic differences to pledge solidarity with Lithuania in its trade dispute with China. It appears that Beijing’s strategy of playing EU member states off against each other is no longer working.
