A "Taiwan Rethink" Has Begun, Putting Asia in Flux

Invasion fears change global calculations

Towards the end of 2021, Lithuania, a country in the Baltics, permitted Taiwan to open a diplomatic compound, equal to an embassy, under its official name (Taiwan). This went against the “One China” principle, where China views Taiwan as part of China, and has pushed the world to adopt a similar view—and much of the world has. To punish Lithuania, China launched massive trade action against Vilnius. Within a few weeks, trade between Lithuania and China dropped 70%. By the beginning of 2022, trade flows had dropped 90%, as Beijing imported just $60,000 worth of goods from Lithuania.

China’s message was clear: follow the “One China” principle or feel China’s economic wrath. However, Lithuania’s message was also clear, albeit unheard: governments are willing to support Taiwan and go up against China.