China wipes out Lithuania in “draconian” trade ban

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China wiped out an entire country with a “draconian” trade ban. It has been called ‘childish’, but it does not bode well for Australia.

After two years of intimidating Australia to no avail, China has a new target for its economic outrage: little Lithuania.

This weekend, Lithuanian exporters discovered something strange.

When it came to doing business with China, it was as if they no longer existed. The Chinese customs system simply rejected any attempt at contact.

Lithuania, a small Baltic country of some 2.8 million people, expected a backlash.

He had, after all, expressed concern over the alleged espionage of some of China’s major international companies. And he had opened a representative office in Taiwan last month.

All of these measures were likely to anger China. But to bring about a complete ban on trade?

“This is unprecedented,” said Perth USAsia Center research director Dr Jeffrey Wilson. “Outside of the conditions of war, total trade bans are extraordinarily rare – think of North Korea, US-Iran sanctions, and so on. This delisting is – de facto – the most serious commercial sanction that the PRC can apply. He’s never done this before.

Australia thought she was in pain. But he was not faced with a complete trade blackout.

Thirteen high-value products, ranging from seafood and beef to charcoal and wine, were barred from entering China. But no iron ore or gas.

In total, around a quarter of Australia’s total exports go to China. For Lithuania, it’s around one percent.

And that is what is so strange about this draconian move from Beijing. The international reaction against it will probably be far more damaging to itself than any economic pain inflicted on the Lithuanian capital Vilnius.

Hammers vs. Eggshells

“What this tells us is that China is not in a de-escalating mood after trying and failing with Australia,” Dr Wilson told news.com.au on Monday. “They haven’t learned anything from us. Instead, they are going even stronger against Lithuania. And that doesn’t bode well for the rest of the world, because global trade is a global problem. “

Lithuania is not the only other nation facing Beijing’s economic wrath. Others include Japan, the Philippines, Taiwan, South Korea, Norway, Canada, and Mongolia.

“It’s not like it’s the first time. This is not the second time. It’s been nine times. It’s not as if these reactions can be considered one-off, ”explains Dr Wilson. “The point is, China can literally wipe a country off the global economic map and still be a member of the World Trade Organization?” Can the rest of the world be cool with this? And can China continue to do so? “

Norway has seen its salmon exports cut off. The Philippines saw their banana trade crushed. Pineapples from Taiwan have been turned away.

Even Australia, which has angered China at its calls for an investigation into the origins of Covid-19 and increasingly open support for Taiwan, has not faced a complete blackout of trades.

Lithuanian Foreign Minister Gabrielius Landsbergis has said he will seek help from the European Commission this week over the “unannounced sanctions”.

Its exports, including timber and furniture, are blocked at ports. The reason, he says, is that Lithuania simply no longer exists on China’s electronic customs declaration system.

“It’s a bit childish,” says Dr Wilson. “Anyway, they had already banned all trade with Lithuania. It’s a bit like removing your ex’s number from your phone and blocking them. It’s purely to get a raise, and it doesn’t have any substantial impact anyway. “

Is this good?

China is the world’s second-largest economy and the world’s largest exporter. Beijing knows this gives it immense leverage.

Lithuania, however, has other ideas.

Less than 1% of Lithuanian exports go to China. Trade sanctions will “not have a fundamental impact” on its economy, said Finance Minister Gintare Skaiste.

And Lithuania is used to being bullied.

The small state’s Baltic ports have long been an object of lust for Russia and President Vladimir Putin. He has faced almost daily intimidation from his irritable neighbor since seceding from the Soviet Union in 1990.

Carnegie Moscow analyst Denis Kishinevsky says Vilnius pulls the neck to win the support of the West.

“Vilnius now considers criticism of Beijing as one of the most effective forms of defense against Moscow,” he said. “It combines values ​​politics, anti-communism, the quest to keep Washington’s attention on the region, and the desire to develop beyond the narrow niche of the eternal criticism of Russia.

“Finally, the United States is ready to support Lithuania in its efforts: the Baltic state could help push the former EU countries to more anti-Chinese positions, as well as serve as a litmus test to see until where Beijing is ready to go. response to severe criticism and rapprochement with Taiwan.

Vilnius is the only European country to host a Taiwanese representative office. It is a foot that Beijing cannot bring itself to tolerate.

He therefore recalled his ambassador to Lithuania last month. He then demoted relations to those of a simple charge d’affaires.

“In the short term, it is painful for any country when your contracts are cut,” Foreign Minister Landsbergis said. “But it’s in the short term because the markets are adjusting. Businesses are adapting.

Smoke and mirrors

Beijing has yet to release any official comment on the trade embargo. But the outspokenness controlled by the Communist Party World time denies that such an embargo exists. Kind of.

“A World time investigation… revealed that Lithuanian products were still listed in official customs systems on Sunday, contrary to what some media suggested, ”one editorial read.

“But in light of the growing risks, Chinese traders and industry insiders are diversifying their import sources after reducing or halting trade with Lithuania to address potential risks posed by political tensions. Chinese officials have also said Lithuania will pay the price for its mistake in challenging China’s sovereignty. “

“That’s the problem with double talk. It is designed to be impossible to understand, ”says Dr. Wilson. “Lithuania is the ninth country to do this, and every time it’s just like that. ‘Punishments? How dare you accuse us of sanctions? ‘.

What is at issue is Beijing’s business conduct, its membership in a rules-based global trading system and the reaction of other members when “ground rules are shamelessly ignored.”

“Time will tell,” said Dr Wilson, adding that Beijing’s behavior does not bode well for the future of trade relations with Australia.

“China has drawn a lot of international criticism for what it has done to Australia. And he did not meet his targets because Australia did not back down, ”he said this morning. “Some of us may have hoped Beijing could have learned a lesson, stopped doing it and looked for a way to calm things down. But no. Now they are gone and done something much more ridiculously illegal and childish.

Jamie Seidel is a freelance writer | @JamieSeidel

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