Taiwan’s Plan to Cement Its Newfound Alliance With Lithuania

Taiwan’s Plan to Cement Its Newfound Alliance With Lithuania
Photo Credit: Ministry of Foreign Affairs of Taiwan

What you need to know

Taiwan’s investment plan for Lithuania needs to be economically sound, and cannot rely simply on geopolitical conflict.

2021 ended in a diplomatic victory for Taiwan in Europe. In November, Taiwan opened a representative office in Vilnius, the capital of Lithuania, the first de facto embassy bearing the name “Taiwan” instead of “Taipei.” The move angered China, who recalled its ambassador from Vilnius and asked Lithuania to withdraw their officials from Beijing.

The opening of a Taiwan office within the borders of a European Union member state is significant for the Asian democracy. There are already a number of Taiwanese outposts scattered throughout the region, but they are all forced to employ names such as “Taipei Representative Office” or “Taipei Trading Office” to avoid drawing the ire of China. “We are slowly making progress and strengthening our ties with the EU”, said Eric Huang, who was appointed head of the Taiwanese office in Vilnius, to The News Lens.

But the decision of the democratic Baltic nation with a population of 2.7 million to pioneer a new way to interact with Taiwan will have severe repercussions. China has swiftly imposed sanctions to demonstrate that switching allegiance will simply not be tolerated. Taiwanese officials are cooking up a plan to shield their new European friend from harm.

A multi-pronged plan

By the end of December, China initiated its first move to punish Lithuania. Authorities blocked a shipment of more than 20,000 bottles of Lithuanian rum. But the Taiwan Tobacco and Liquor company, owned by the state, stepped in and bought the shipment. Shortly after, Taiwan's National Development Council distributed cocktail recipes via social media to Taiwanese people to advertise the rum that would be on sale.

The rum drama leaves one wondering how many times Taiwan will be able to help Lithuania sidestep China’s economic retribution. China is blocking the import of parts from EU member states if they contain components made in Lithuania. Notably, some German companies in the car industry have been pressured by Beijing to cut off Lithuanian part suppliers.

Taiwan’s plan to protect Lithuania economically and prove that it is indeed possible for European countries to change the way they interact with it, is a multi-pronged investment. Taiwan is not only investing in Lithuania financially but also connecting the industries of both countries.

Taiwan and Lithuania have signed six memoranda of understanding to improve collaboration in industry fields including semiconductor manufacturing, satellite robotics, fintech, and biotech. 

For Taiwan, Lithuania’s edge in the processing of satellite components seems especially interesting. “People are now talking about 5G, but the sixth generation of communication will most likely take place via satellites. Lithuania has gotten very adept at developing satellites,” Huang said. “We want to bring a team of Lithuanian and Taiwanese experts together to develop some satellite applications. For example, we are already developing a global fishery satellite system with a Lithuanian company.”

Taiwan is setting up direct invest funds to soften the blow that Lithuanian companies might suffer from their government’s confrontation with China. On January 6, the Taiwanese Office in Vilnius announced an investment fund of 200 million dollars in Lithuania. A second fund holding about one billion dollars was unveiled less than a week later. “The 200 million dollar fund serves for direct equity investments. If we find some good opportunities, which we will aggressively attempt to identify, we will invest in either new companies or joint ventures,” Huang explained. 

Behind this investment plan is Taiwan’s National Development Fund, which propelled the country to the forefront of the global supply chain decades ago.

Win-win game?

The question on the mind of many European politicians and industry leaders is whether the region will see Taiwanese chip giants like TSMC establish holdings in Lithuania. Europe, once responsible for producing 35% of the world’s semiconductors in the 90s, retains only a puny market share of 9% today. An ambitious chip plan, dubbed the EU Chip Act, brought forward by the European Commission in September, aims to reverse this decline. The plan leans heavily on a German financial injection of 3 billion euros earmarked for chip production.The EU Chip Act is projected to allow Europe to reclaim a global market share of 20% by 2030.

A Taiwan infused chip production emerging in Lithuania was never part of the plan. Were one to come to fruition, it would prove beneficial for the ambitions of the EU and may convince other member states to embrace Taiwan. At least, that’s how Huang hopes it will play out. “A group made up of Taiwanese academics, public experts, and private key players of the semiconductor industry will visit Lithuania and determine what part of this ecosystem can thrive there. This will be beneficial for the whole region in the long term,” he said.

Meanwhile, it is equally important for Huang that the heads of EU officials are once again turning toward the situation in the Taiwan Strait due to the Taiwan-Lithuania resolve. While Russia is looking towards Ukraine to fend off possible NATO expansion and bolster its own regional presence, the events in Lithuania serve as a reminder to the EU that it cannot afford to lose track of China either. “Taiwan is so crucial right now for democracy and the global supply chain. I think it’s important for the international community to continue voicing their concerns for the security of Taiwan,” Huang concluded.

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TNL Editors: Nicholas Haggerty (@thenewslensintl)

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