Deputy Minister Neliupšienė on economic relations with China and Belarus: she cannot learn to shoot herself

How will the geopolitical situation of warming affect Lithuanian companies and will Lithuania be able to maintain its political principles without damaging the country’s economy? This was discussed with Jovita Neliupšienė, Deputy Minister of Economy and Innovation, in the Business Approach.

Lithuania’s foreign policy is consistent

According to Deputy Minister J. Neliupšienė, in Lithuania, as in other countries, people debate long before decisions are made on foreign policy issues. The Constitution of the Republic of Lithuania also establishes that the President of the Republic, together with the Ministry of Foreign Affairs, exercises foreign policy. According to the deputy minister, Lithuania’s position on foreign policy is not unexpected and the government is carrying out the work previously planned. “We must not forget that the Government, which began its work at the end of last year, has planned certain things both in the program and in the coalition agreement, as well as in the strategic plan, which it is now implementing. These include diversification of the market, which includes actions related to Taiwan and the establishment of our sales office in that country.

Attitudes toward Belarus, the eastern neighborhood, haven’t changed in probably 30 years, so it shouldn’t surprise us. On the other hand, during the last year and a half, the situation in this country has changed, the regime is dealing with its own people, they have to leave the country. Therefore, the appropriate decisions and the position of the State are made. In some cases, we can predict what action to take. Not in vain did we talk about how we could change some of the markets we had in the East, specifically Belarus. Let’s not be afraid to admit that we have to work with undemocratic regimes and their leaders, whose decisions are not always logical and measurable. ” TV Delfi J. Neliupšienė told it on air.

China does not impose sanctions

Asked if the hosts of the “Business Perspective” program could have foreseen China’s reaction to the establishment of a Taiwanese representative office in Lithuania, J. Neliupšienė states that draft laws and legal acts have been drawn up on the establishment of an office of Harmonized representation since the end of last year. It should also be appreciated that the EU has a presence in Taiwan and is one of its most important trading partners. It is difficult to say what the reaction of the undemocratic regime will be. On the other hand, China applies certain sanctions that are probably not exclusively related to Lithuania’s decisions.

We have a very difficult situation, which started much earlier and has nothing to do with Lithuania’s foreign policy. COVID-19 has disrupted many supply chains and makes logistics more expensive. When assessing the impact on the Lithuanian, EU or world economy, we must consider not only our own decisions, but also the whole context, due to which the situation in the economy has deteriorated significantly ”, says a representative of the Ministry of Economy and Innovation.

The companies note that the signing of certain documents and contracts with Chinese partners is stalling. Speaking of possible Chinese punishments towards Lithuania, the vice minister said that although some doubts are heard from the company, no official sanctions have been introduced. “Keep in mind that the situation is not entirely clear. This is not good for business or for us as a state. However, it is difficult to identify specific sanctions.”

TV Delfi The Vice Minister of Economy and Innovation, who visited the program, considered that such a reaction from China may have been caused by increased sensitivity to changes in foreign policy. “If we look at what is happening around us in the global world, we will see that the presidents of the United States, both past and present, are taking a pretty strong stance on China. Not only have tariffs been introduced to balance trade between United States and China, but it has also been said that certain principles of human rights, child labor and exploitation must be respected. To increase its influence, China is investing and taking on strategic sectors, so we see a strong and constantly sharpened position not only in the US, but also in the EU on this issue ”, says the interlocutor.

New opportunities open up for business

Despite certain restrictions, J. Neliupšienė also realizes the new opportunities created by the pandemic. “We see our exports grow during the pandemic. How does this relate to China? Trade with countries beyond Europe or the United States has decreased due to broken supply chains. We took advantage of that crisis, and our business, industry and its exports grew. successfully because they managed to occupy an open niche. When companies and countries see what could happen as a result of a pandemic, they begin to think about the importance of monitoring where China is investing and bringing certain supply and production chains closer together geographically and in value ” .

The deputy minister says that companies should assess development risks for themselves. “Every company, which starts and expands its business, creates not only business, but also risk assessment and management plans. When we invest in an authoritarian state, be it Belarus, China or Russia, we know that there are many risks involved in obtaining of great benefits. Therefore, everyone must find a balance for themselves. Thinking about the future, we as a state must help companies to diversify their markets “, says the interlocutor.

TV Delfi J. Neliupšienė, who visited the fair, also sees great untapped potential of cooperation with Taiwan. He also mentions that it is planned to open the South Korean embassy in Lithuania by the end of the year and closely develop economic diplomacy with Japan. The opening of a new embassy in Singapore is also planned. “As these markets are receptive and highly solvent, I hope they will be attracted not only to our fast-moving consumer goods, but also to our high-value-added exports.”

He adds that when thinking about market diversification, the focus also shifts to the US, where another trade attaché position is planned to help companies communicate with US authorities. “The change in the Chinese market cannot happen quickly and by itself, but there are opportunities. Efforts are needed, “said the Vice Minister of Economy and Innovation.

The most important thing is to take advantage of the potential available

After asking whether the editors of the Business Approach program could financially measure how much the deterioration of relations with China could cost the Lithuanian economy, J. Neliupšienė says that the Bank of Lithuania has calculated the impact on GDP. “If the worst scenario happened suddenly and everything closed, the impact on the economy would be, but for certain sectors, such as food and agricultural products, the furniture industry and the laser. However, so far we have not seen a complete stop.

In the case of Belarus, the impact would be more significant economically, since our economic turnover and our exports to this country are much higher than to China. But so far we don’t see the worst case, either, because no matter how much you want to punish one or the other of your neighbors or states for a particular position, the other party is counting the potential impact all the time. So he doesn’t learn to shoot himself in the legs. “

J. Neliupšienė also mentions the measures that would be taken with the help of the stricter sanctions against China. “We are thinking about additional financial guarantees. We are currently discussing all this and gathering information. I hope that we will be able to form adequate financial instruments from the information, seeing the real potential impact,” the deputy minister shares the government’s work plans.

According to the interlocutor, as the Lithuanian economy grows, the most important thing for business is to expand, not be tied to a single customer or supplier and look for new alternative markets, because we have a lot of potential.