Lithuania looks for China reset

In 2021, Lithuania opened a Taiwanese representative office in Vilnius. Beijing responded by downgrading diplomatic ties and squeezing Lithuanian exports, as well as EU supply chains that included Lithuanian parts (Reuters, WTO DS610). Five years on, designated foreign minister Kestutis Budrys says Vilnius wants to normalise relations with China on pragmatic terms, while staying within international law and its EU and NATO commitments (LRT, Euronews).

That matters for Malta because Lithuania's problem was the classic small-state problem: take a political position, absorb the economic punishment, then wait for larger partners to decide whether solidarity is worth the cost. Vilnius paid much of the price on its own. The question left behind is whether the EU shield built afterwards can protect the next small member state before the invoice lands.

What Lithuania's Crisis Built

The row stopped being only a Lithuanian-Chinese dispute when the European Commission brought a WTO case against China for discriminatory trade measures. Trade policy is handled at EU level, so the Commission could act for the whole bloc. That changed the frame: pressure on one capital became pressure on the single market.

The episode also pushed Brussels to create a new legal weapon. The Anti-Coercion Instrument, adopted in 2023, has three stages. The Commission first investigates whether a non-EU country is using economic pressure against a member state. The Council, where national governments sit, then decides by qualified majority whether coercion exists. Qualified majority means larger countries carry more voting weight, but no single government can block the decision alone. If coercion is confirmed, the Commission can propose countermeasures such as tariffs, procurement bans or investment restrictions.

So far, the instrument exists only on paper. It has never been used. The EU Institute for Security Studies said the quiet part clearly: Europe does not need new trade weapons; it needs to be willing to use them.

Three Countries, Three Reasons to Hesitate

Whether that happens depends less on the regulation than on the governments whose China ties make confrontation expensive.

Germany has the most exposed industrial relationship. Imports from China reached €170.6 billion in 2025, with a trade deficit of €89.3 billion (Süddeutsche Zeitung/dpa). Berlin's formula is to keep commercial channels open while fencing off strategic sectors. That fits Lithuania's reset. It also makes Germany a possible brake if retaliation against Beijing risks German business.

The domestic argument, as Tagesschau presents it, is moving towards industrial competition with China in electronics and electric vehicles. It is not primarily framed around defending smaller EU states from coercion.

The Netherlands sees the issue through technology control. The Hague's export controls on advanced chipmaking equipment are driven by security concerns, while the Nexperia ownership dispute with Beijing remains unresolved. The Dutch instinct is clear enough: secure the strategic technology first, then keep the rest of the relationship workable.

Hungary uses the Lithuanian case to argue against confrontation. Chinese battery-sector investment is described at over €26 billion, with projected capacity above 198 GWh by 2030 (Növekedés). Budapest reads Lithuania's turn back towards normalisation as evidence that symbolic stands can cost factories and jobs. Telex reports that Chinese competition could affect a quarter of Hungarian exports, but Hungary's preferred answer is accommodation, not collective defence.

The Baltic neighbours offer a quieter version of the same lesson. Estonia, Latvia and Lithuania had all left China's 16+1 cooperation format by 2022 (Reuters, Latvia MFA). Contacts continue through bilateral and EU channels. That is functional diplomacy, but without much institutional trust.

The Answer the Tool Still Owes

No single country can block the anti-coercion instrument. That was the point of designing it around qualified majority voting. But the EU still needs enough governments to agree that coercion is taking place and to accept the cost of hitting back. The real test is whether Germany, Hungary and others would support action when the pressure falls on someone else.

For Malta, this is not an abstract institutional question. Small states depend on rules because they cannot match the leverage of larger powers. Lithuania's reset shows that the EU now has a mechanism for the next coercion case. It has not yet shown that the mechanism will move before a small state is left paying alone.