VILNIUS – China's recent decision to downgrade its diplomatic relations with Lithuania to the chargé d’affaires level will lead to a drop in bilateral business cooperation and many projects might be frozen, the head of the Lithuania-China trade association says.
Lithuania's food industry's exports to China might bear the brunt of the situation, Rokas Radvilavicius says.
"Lithuanian businesses providing various technology, including bio, to China, their operation has not been affected by the cooling of relations yet as the Chinese need them. And areas like the food industry, is not vital for China, so this business sector might find it much harder. They might see disruptions, and probably major ones, as Lithuania, not the Chinese, need that more," Radvilavicius told BNS.
In his words, the association is not helping some 20 Lithuanian technology and laser companies to develop their contacts in China but the political "cooling" between the two countries will slow cooperation for now at least.
"We do not directly represent Chinese businesses in Lithuania or Lithuanian ones in China, but we help them to implement projects more easily, therefore the souring of the diplomatic relations is undoubtedly bad for trade and economy. More disruptions will follow, including the supply and cooperation areas, and many projects might be frozen," the association head said.
The diplomatic crisis is already affecting the Chinese' plans to invest in renewable energy projects in Lithuania, Radvilavicius says, adding that Chinese companies, especially state-owned, are currently on the watch and do not respond negatively but also hint that relations have cooled-off.
"China is now still interested in renewable – wind and solar – energy projects in Lithuania. These would be large-scale investments but the Chinese are now on the watch and cooperation has cooled. Obviously, China's state-owned companies will not invest their money in such a situation, unless there's a specific agreement with the Lithuanian government," Radvilavicius said.
As the Lithuanian government blocks Chinese investments, especially into strategic projects or equipment with cyber security risks, Radvilavicius says he has not noticed yet any restrictions for Chinese companies to take part in renewable energy projects.
China announced on Sunday its decision to officially downgrade its diplomatic relations with Lithuania to the level of chargé d’affaires.
The move comes in response to the opening of a Taiwanese representative office in Vilnius last week and means that Chinese and Lithuanian ambassadors would not work in Vilnius and Beijing and diplomatic representations would be led by lower-level diplomats, chargé d’affaires.