With the collapse of relations with China, there are unpleasant scenarios: so far we count only a small part of the losses

Wasn’t there an error?

Žygimantas Pavilionis, chairman of the Seimas Foreign Affairs Committee, when asked about the establishment of the Taiwan Mission in Delfi TV Facts and Opinions, assured that such decisions were not a mistake.

“I remember a lot of people called for the declaration of independence thirty years ago and said it would not be worth it financially. I remember the calls of some business sharks when we were negotiating free trade with the European Union, which, by the way, had an impact, we took a six-year period where the Estonians asked for zero and made the tremendous progress that we have succeeded so far in some areas, we try to catch up. I think it is certainly not a mistake, as you see, the changes in relations with China have been going on for a good decade.

Maybe we just don’t notice them, we don’t care much about them, but we are currently forming some geopolitical blocs, the outlines of which you will see in Washington in December when the Democracy Summit meets, where countries without diplomatic labels. In fact, we will be invited to think that we defend the rules, our business, our standards, so today we have a kind of solidarity that I do not remember since I joined the EU and NATO. Today, the highest US foreign policy strategists and congressmen are calling us, ”says Ž. Pavilion.

At the request of Ž. The interlocutor asked if the consequences could be considered when making certain decisions on one issue or another, and the interlocutor assured that it is necessary to look at the long-term perspective.

“I gave sixteen years of my life to the integration of Lithuania in the West. I received several calls when they told me that another step towards the West could end badly for you personally, but I knew very well that when Lithuania joined the EU, we would have a stable market of five hundred, at that time a little smaller, rules, where everyone duties will be abolished for entrepreneurs. Mr. Karbauskis himself, I remember that he did not really want to join. Agriculture filled us with all kinds of fish on the roads, it blocked us. Now we know how happy farmers are to receive these direct payments, and when we start to cut them a little, they even resist, “says the politician.

Janulevičius: The economic aspect, of course, feels

Vidmantas Janulevičius, president of the Lithuanian Confederation of Industrialists, commented at the fair that China now has a part of the supply of strategic materials that are not available in Europe.

“Whether it is a mistake or not, it is a mistake, only the future will show. Clearly, with such a small country at the forefront, I also remember the example of Iceland. This is a very small country that supported us in 1991 and was the first to recognize the independence of Lithuania. In part, history repeats itself, the circle turns. Clearly, the Taiwanese, being a relatively small nation, although ten times larger than us, also expect that. There are two aspects here. Economic aspect, of course, you feel. Frankly, no one thought that there were so many subcontractors on the Chinese side that supplied certain raw materials and supplies.

Subcontractors are raw materials or components, mainly related to electronics, semiconductors, which are used in part by Lithuania or our investors from Germany, Norway and France. Many have invested. From the pharmaceutical industry, which sources some of the sub-components, to simple small companies that assemble certain electronic blocks and use certain parts from China.

I don’t want to talk about other colleagues, but as far as I know, many components and manufacturers of the same drugs have up to twenty to thirty percent simple components from China. During the pandemic, Europe has repeatedly pointed to the lack of a chain in pharmaceuticals in particular, because most of the building blocks of the pharmaceutical giants are made in China and we in Europe have long since abandoned them. This was the biggest problem during the pandemic. As for the entire industry, we have given up a lot and China now has part of the supply of strategic materials, ”the interlocutor told the program.

Teacher: Error in not establishing a representative office

Teacher. Rimantas Rudzkis, an economist, argued that the real reason Lithuania-China relations were collapsing was not the opening of a representative office, it was just a pretext.

“It just came to our knowledge then. It is difficult to predict everything now. First of all, opening a representative office was not a mistake. The only question was whether it was necessary to call it a representative office in Taiwan, or to name it, as most of the countries, a representative office in Taipei, and anyway, I think the main reason for the collapse of Lithuania’s relations with China was not the opening of a representative office. The main reason we are ending collaboration in the 17 + 1 formats.

I think this has mainly bothered China, ”says the professor.

According to him, at the moment it is fun for Lithuanian politicians to feel part of international politics.

“I don’t want to judge by foreign policy. Of course, all those calls are nice, I understand how much fun it is for Lithuanian politicians to feel political internationally, but I look more at what awaits the economy and business,” he added. .

Three main aspects

When asked if Lithuania’s anger at China is good from an economic point of view, the professor assured that there are three main aspects that need to be addressed.

“It just came to our notice then. I will comment right away that there are three aspects. First of all, exports. Currently, exports to China are low. Here is one more negative aspect towards the future, if we think about the search for new markets and the developing our exports for five, seven or more years, of course, we are drastically reducing our opportunities.

The second aspect is imports. China already has a bigger role to play here. As in many countries, many components come from companies in China. If China resolutely puts us on the wheels, some companies will run into difficulties.

Most importantly, supply chains can be disrupted. And the most negative aspect is that politics is political, but business looks to business. If there is such a clear confrontation with China, I think that country will not be attractive to most foreign investors. Many countries will not want to resort to economic contradictions. I believe this will drastically reduce our long-term investment appeal. Although I may be wrong ”, says the teacher.

Will investors not choose Lithuania?

According to the professor, shareholders still demand profits first, so when companies have to choose where to invest, they really don’t want to take risks.

“In politics as in chess. There is a strategy, there is a tactic. First of all, what Pavilionis mentioned, there is no doubt that Lithuania’s accession to the EU or NATO was a total success. It can certainly be enjoyed, but now let’s look ahead. Despite the fact that two separate blocs are formed at the political level, the dominant bloc of the United States, to which Lithuania also belongs at the political level. The next block clusters around China.

Apparently, the rivalry between the United States and China for the role of hegemony in the world will continue, but that does not mean that globalization will disappear economically. The Western world itself has benefited greatly from globalization. During the last twenty, thirty or even forty years, the great economic growth of the world has been precisely the result of globalization. I do not believe that the World Trade Association will be abolished or that globalization will disappear completely.

If we look at the economic relations between the EU and other countries, China is a bigger partner than the United States in terms of trade between them. As I mentioned, the main danger is that once we are as visible as an entity in conflict with China, the country becomes potentially unattractive to foreign investors. If a new investor has doubts about whether to develop production in Lithuania, Latvia or Slovakia, where all conditions are similar, he really does not want to take risks and choose Lithuania ”, says the professor.

What will the core be?

When asked how this conflict could end, Professor Rudzkis assured that it would not be Lithuania that would determine the outcome of the Taiwan-China conflict.

“I wonder how politicians can avoid a clear question. I have heard a lot about what Mr Pavilion has done, but I have not understood whether it is trying to improve relations with China a little or never. And as for the fate of Taiwan, the question is really acute. It is being closely scrutinized by world experts, even the military conflicts over Taiwan are being modeled, and American experts cannot yet claim that the conflict will end in the West’s favor.

The fate of Taiwan is not very clear. Even more so knowing that there are about fifty to fifty voters in Taiwan. One part is for a friendly dialogue with China, the other is for Taiwan’s complete secession from China. I don’t know how the Taiwan question will end, but I don’t think Lithuania will decide the end, ”says the professor.

According to V. Janulevičius, the short period may be the most painful in terms of the Lithuanian-Chinese conflict.

“I hope that, at least in the near future, Lithuania’s tone will be somewhat neutral and we will try to solve these problems, because it is the short periods that will be the most painful for Lithuanian companies and businesses.” The same business maintains all of Lithuania. In the long term, I think we must strengthen European industry, but today we must ensure that the economic benefits that Professor Rudzkis says are represented with the help of our other partner countries. “