Explained: Why Taiwan purchased 20,400 bottles of Lithuanian rum amid trade war with China

Taiwan Tobacco and Liquor Corp. said that it was buying the consignment of alcohol from Lithuanian MV Group Production last month after learning that the shipment was going to be blocked by Chinese authorities.

“TTL stood up at the right time, purchased the rum and brought it to Taiwan,” a statement from the company read, according to a South China Morning Post report. “Lithuania supports us and we support Lithuania – TTL calls for a toast to that.”

Taiwan’s support for Lithuania is not limited to alcohol alone. Demand for other products, including chocolate, has also skyrocketed ever since China allegedly blocked trade with Lithuania for publicly strengthening ties with the island late last year. Taipei has also said it will set up a $200 million fund to invest in Lithuania amid its face-off with China.

Why didn’t China permit the Lithuanian rum to enter the country?

Last month, Lithuania said that China had blocked all imports from the Baltic nation after it allowed Taiwan to set up a de facto embassy here, which has been seen as a sign of growing ties between both places. The new office also bears the name ‘Taiwan’, instead of ‘Chinese Taipei’, twisting the knife even further as far as its relationship with Beijing is concerned.

In May last year, Lithuania also backed out of Beijing’s ‘17+1’ group with other Central and Eastern European nations.

While China has denied blocking Lithuania’s exports, it downgraded bilateral relations and called Lithuania a “treacherous” supporter of Taiwanese separatism. China claimed that the move undermined its “sovereignty and territorial integrity” and set a “bad precedent internationally”.

Vilnius alleged that Beijing has delisted it as a country of origin, as a result of which its products can no longer clear customs. It has also been rejecting all import applications. Later that month, Lithuanian diplomats began to swiftly leave Beijing citing security concerns.

Refusing to back down, Lithuanian Prime Minister Ingrida Simonyte defended her country’s support of Taiwan, saying: “Our government’s programme says Lithuania wants a more intense economic, cultural and scientific relationship with Taiwan.” But she added that her country still supported the ‘One China’ policy.

The Baltic nation’s support of the island comes at a time when China has been ramping up pressure and has repeatedly threatened to seize it by force.

This is not the first time Beijing has imposed sanctions on countries after a diplomatic falling out. Currently it has blocked the import of coal, wine and lobsters from Australia, as well as pineapples from Taiwan.

What is the ‘One China’ policy and what does it have to do with Taiwan?

Under Beijing’s ‘One China’ policy, the United States and other major countries recognise only one Chinese government. The policy traces back to 1979, when the US moved to recognise the People’s Republic of China (PRC) and de-recognise the Republic of China (ROC). The US stated that the government of the PRC was “the sole legal Government of China.”

It means that its strategic partners have formal ties with China, and not the island of Taiwan, which China refuses to recognise as an independent nation. While countries like the US and Japan have built commercial ties with Taiwan, their diplomatic relationship is exclusively with China.

Under its One China principle, which is not the same as its One China policy, the country insists that Taiwan is part of China and will one day be reunified with the mainland. The policy resulted in self-ruled Taiwan’s diplomatic isolation.

To put things in perspective, after the victory of the communists in 1949, the Chinese republicans of the Kuomintang government retreated to Taiwan, and it has since continued to be known as the Republic of China (RoC).

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Last year, amid heightened tensions with China at the LAC, there were suggestions that India should review its own One China Policy, and develop more robust relations with Taiwan to build pressure on Beijing.

How has the world responded to China’s crackdown on Lithuania?

The European Commission has since protested against Beijing’s bullying campaign against Lithuania and has taken up the issue of sanctions with the World Trade Organisation.

China’s crackdown on Lithuanian imports affects other European nations as well. The country has also imposed trade restrictions on goods from countries like France, Germany and Sweden, which include parts from Lithuanian supply chains, Politicoreported.

As a result, France and Germany have been pushing for stronger EU action against Beijing. The US has also condemned Beijing’s actions, stating that Chinese pressure against Lithuania was unwarranted.

“We have immediate concern about the Government of China’s attempt to bully Lithuania, a country of fewer than three million people,” US Secretary of State Antony Blinken said. China, however, claimed that the US was simply using Lithuania to “contain China”.