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China hits Lithuanian sector: Businesses warn it may be just the beginning
๐Ÿ‡ฑ๐Ÿ‡น Lithuania /Economy & Trade

China hits Lithuanian sector: Businesses warn it may be just the beginning

From Delfi · () Lithuanian

Translated from Lithuanian, summarized and contextualized by DistantNews.

At a glance

News Sources not specified Context piece
  • China has restricted the purchase of key technologies from Lithuania, affecting companies like laser manufacturer Ekspla.
  • The move is seen as a response to EU sanctions against Chinese companies aiding Russia, with China signaling its leverage over dependent economies.
  • Lithuanian officials and businesses are concerned about increasing dependence on Chinese components and are seeking solutions, including EU support, to manage supply chain risks.

China's decision to restrict technology purchases from Lithuanian companies, including the prominent laser manufacturer Ekspla, has sent ripples through the nation's business sector. This action is widely interpreted as a retaliatory measure following the European Union's sanctions on Chinese firms for their alleged support of Russia.

This is not a trade war. For now, we know that such things have happened before.

โ€” Vidmantas JanuleviฤiusPresident of the Lithuanian Confederation of Industrialists, commenting on China's restrictions.

Foreign Minister Kฤ™stutis Budrys stated that China is sending a clear message: "We know you are dependent on us, and we can restrict that activity." The sanctions list includes 14 companies, with Ekspla being the sole non-defense industry firm from Lithuania. Other targeted companies are major defense manufacturers from Germany and the Czech Republic.

In this way, China sends a message: we know that you are dependent on us, and we will be able to restrict that activity.

โ€” Kฤ™stutis BudrysLithuanian Minister of Foreign Affairs explaining China's actions.

While Lithuania does not export a significant volume of lasers to China, it relies on the country for essential manufacturing components. Ekspla, for instance, sources about 8 percent of its components from China, attracted by lower costs due to state subsidies and economies of scale. This reliance highlights a growing trade imbalance, with imports from China nearing 3 billion euros last year.

The goal is to affect the supply of companies through exports and supply chains.

โ€” Kฤ™stutis BudrysLithuanian Minister of Foreign Affairs commenting on the impact of sanctions.

Lithuanian officials emphasize the need to manage this dependence in critical areas. They plan to seek assistance from Brussels in identifying reliable suppliers. Business representatives, like Vidmantas Januleviฤius, president of the Lithuanian Confederation of Industrialists, warn that this could be just the beginning. If the EU expands its sanctions, more Lithuanian companies might face similar restrictions. Some lawmakers, like ลฝygimantas Pavilionis, view this as the start of a trade war, while criticizing the current government's attempts to normalize relations with China amid global pressure.

China is characterized by lower self-cost due to state subsidies and economies of scale.

โ€” Vidmantas JanuleviฤiusExplaining the cost advantage of Chinese components.
DistantNews Editorial

Originally published by Delfi in Lithuanian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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