Taiwan opened a de facto embassy in Lithuania in a diplomatic breakthrough for the Chinese-claimed island, brushing aside Beijing’s strong opposition to the move. China demanded in August that the Baltic state withdraw its ambassador to Beijing and said it would recall China’s envoy in Vilnius after Taiwan announced its office in the city would be called the Taiwanese Representative Office in Lithuania. Other Taiwan offices in Europe and the United States use the name of the city Taipei, avoiding a reference to the island itself, which China claims as its own territory. Affordable loss or gamble?

China has stepped up efforts to get other countries to limit their interactions with Taiwan, or cut them off altogether. Only 15 countries have formal diplomatic ties with Taiwan. Beijing has also been angered by Lithuania’s decision to open its own representative office in Taiwan, though no firm date has been set for that yet. Taiwan’s foreign ministry said the opening of the office would “charter a new and promising course” for ties between it and Lithuania. There was huge potential for cooperation in industries including semiconductors, lasers, and fintech, it said. “Taiwan will cherish and promote this new friendship based on our shared values.”

China downgraded its diplomatic ties with Lithuania last Sunday. China views self-ruled and democratically governed Taiwan as its territory with no right to the trappings of a state and has stepped up pressure on countries to downgrade or sever their relations with the island, even non-official ones. Lithuania expressed regret over China’s move but defended its right to expand cooperation with Taiwan while respecting Beijing’s “One China” policy. Taiwan, meanwhile, reported that two Chinese nuclear-capable H-6 bombers had flown to the south of the island on Sunday, part of a pattern of what Taipei views as military harassment designed to pressure the government. China’s Foreign Ministry said in a brusque statement that Lithuania had ignored China’s “solemn stance” and the basic norms of international relations. Beijing said relations would be downgraded to the level of charge d’affaires, a rung below ambassador. The move “undermined China’s sovereignty and territorial integrity, and grossly interfered in China’s internal affairs“, creating a “bad precedent internationally“, it said.

Lithuania’s Prime Minister Ingrida Simonyte said on Sunday that the opening of the representative office, which does not have a formal diplomatic status, should not have come as a surprise to anyone. “Our government’s program says Lithuania wants a more intense economic, cultural, and scientific relationship with Taiwan“, she said. “I want to emphasize that this step does not mean any conflict or disagreement with the One-China policy“. The prime minister of Lithuania’s larger EU neighbor Poland said on Sunday that it supported the stance taken by Vilnius. The European Commission spokesperson said the EU executive “has stood by Lithuania in the face of sustained coercive measures from China” since the summer.

Taiwan has been heartened by growing international support in the face of China’s military and diplomatic pressure, especially from the United States and some of its allies. Washington rejects attempts by other countries to interfere in Lithuania’s relationship with Taiwan, U.S. Under Secretary of State Uzra Zeya told a news conference in Vilnius. Lithuania Foreign Minister Gabrielius Landsbergis will go to Washington on Tuesday where he expects to discuss the opening of the U.S. market to Lithuanian goods and developing common investment projects. Landsbergis will meet U.S. Under Secretary of State for Economic Growth, Energy, and the Environment Jose W. Fernandez “to discuss possibilities to expand and deepen mutually beneficial economic ties“. Washington has offered Vilnius support to withstand Chinese pressure and Lithuania will sign a $600 million export credit agreement with the U.S. Export-Import Bank on Wednesday.

“Lithuania will adapt to “short-term” economic pain dealt by China over its moves to enhance ties with Taiwan”, foreign minister Gabrielius Landsbergis said on Wednesday while urging Europe to brace against Beijing’s economic “coercion” by getting more involved in the Indo-Pacific. Beijing views democratically-governed Taiwan as a province, and Lithuanian officials say China has also sought to inflict pain such as cutting trade links in retaliation for its decision.

Landsbergis told Reuters that such losses would be short-lived as Lithuania was working to make its supply chains less dependent on China. “In the short term, it is painful for any country when your contracts are cut. But it is short term because markets adapt. Companies adapt“. Landsbergis said China had not only cut links with Lithuanian companies but had approached companies in third countries to press them not to do business with Lithuania. “So much of what we produce is partially produced with, or within, China. This is why we need to find ways to create supply chains and how to make them more resilient so they can withstand this coercion, the cutting of contracts, the secondary sanctions” Landsbergis said. In this vision, Lithuania would provide a model for countries on how to withstand such pressure, but European nations should become more involved in the Indo-Pacific to enhance their economic security. “We have to understand that every country now is involved in the Indo-Pacific. Some of our NATO allies are taking big responsibility in the region, offering security guarantees to countries, and that means that we also have to at least have an understanding of what’s going on, or probably play some part in this” he said.

Washington has sought to carve out more space for Taiwan in the international system, one of the main factors in increasingly sour relations with Beijing. Indo-Pacific coordinator Kurt Campbell said last week that the U.S. attempts to expand cooperation with its partners and allies in the region were causing China “heartburn.” Beijing described the moves as Cold War thinking. China’s embassy in Lithuania has temporarily suspended consular services until further notice for “technical reasons”, said a statement on the mission’s website on Thursday that was taken down shortly after publication. China views self-ruled Taiwan as its territory with no right to the trappings of a state and has stepped up pressure on countries to scale back or sever their relations with the island, even non-official ones.

“We think that economic ties with democratic states are more stable and lasting, they are grounded on the rule of law, so they meet Lithuanian interests better” Landsbergis told reporters in Vilnius on Thursday. Does it mean that Lithuania would no longer participate in a Beijing-led trade grouping with Central European countries?