Lithuania Seeks Pragmatic China Reset

In 2021, Lithuania did something Beijing was determined to punish. It allowed a Taiwanese representative office to open in Vilnius under Taiwan's name, rather than the more carefully coded "Taipei" formula usually used in Europe. China downgraded diplomatic relations and then went after Lithuanian exports, including EU supply chains that had Lithuanian parts inside them (Reuters, WTO DS610).

Five years on, Lithuania is trying to steady the relationship. Its designated foreign minister, Kestutis Budrys, says Vilnius wants normal ties with China, but on terms shaped by international law and by Lithuania's EU and NATO commitments (LRT, Euronews). That is not a climbdown so much as a lesson learned by a small state that carried most of the cost itself. For Ireland, another small EU member with an economy deeply tied into global supply chains, the question is familiar enough: when pressure comes from outside, does EU solidarity arrive before the damage is done?

What Lithuania's Crisis Built

The row became more than a Vilnius-Beijing dispute when the European Commission brought a WTO case against China over discriminatory trade measures. Trade policy belongs to the EU, not individual member states, so the Commission could act for the whole bloc. That changed the frame. Pressure on one capital was treated as pressure on the single market.

It also pushed Brussels to create a new weapon. The Anti-Coercion Instrument, adopted in 2023, is meant to work in stages. First, the Commission investigates whether a non-EU country is using economic pressure against a member state. Then the Council, where national governments sit, decides by qualified majority whether coercion has taken place. Qualified majority means large countries carry more weight, but no single government can veto the decision on its own. If coercion is found, the Commission can propose countermeasures such as tariffs, procurement bans or investment restrictions.

The mechanism exists. It has not been used. The EU Institute for Security Studies summed up the problem: Europe does not need more trade weapons. It needs to be willing to fire the ones it has.

Three Countries, Three Reasons to Hesitate

Whether the anti-coercion instrument is ever used will depend on governments whose own China relationships make confrontation costly.

Germany has the largest exposure. Its imports from China reached €170.6 billion in 2025, leaving a trade deficit of €89.3 billion (Süddeutsche Zeitung/dpa). Berlin's approach is to keep commercial channels open while fencing off sensitive sectors. That sits neatly enough with Lithuania's attempt to reset relations. It also explains why Germany may hesitate if another member state asks the EU to hit back.

The German debate, as Tagesschau presents it, is increasingly about industrial competition from China in electronics and electric vehicles. Defending smaller allies from economic coercion is a harder argument to land when German factories and exporters are already worried about their own position.

The Netherlands sees the issue through technology control. The Hague's export restrictions on advanced chipmaking equipment are driven by security concerns, while the Nexperia ownership dispute with Beijing remains unresolved. The Dutch instinct is to secure strategic technology first and keep the rest of the relationship functional where possible.

Hungary draws the opposite lesson. Chinese investment in its battery sector is put at more than €26 billion, with projected capacity above 198 GWh by 2030 (Növekedés). Budapest reads Lithuania's experience as evidence that symbolic stands can cost factories and jobs. Telex reports that Chinese competition could affect a quarter of Hungarian exports, but the government's answer is accommodation rather than collective defence.

Lithuania's Baltic neighbours tell a quieter version of the same story. Estonia, Latvia and Lithuania had all left China's 16+1 cooperation format by 2022 (Reuters, Latvia MFA). Contacts continue bilaterally and through EU channels. The diplomacy carries on, but the institutional trust has gone.

The Answer the Tool Still Owes

The anti-coercion instrument was designed so that one country cannot block action. That matters. But qualified majority still requires enough governments to agree that coercion is happening and to accept the price of retaliation. The hard test is whether Germany, Hungary and others would back action when the pressure is falling on someone else.

Lithuania's reset shows the EU now has a mechanism for the next case. It has not yet shown that the mechanism will move quickly enough to stop a small state paying the bill alone.