China doesn’t accept that Taiwan opened a representative office in Lithuania. Lithuania claims it is only based on economic interests. The Baltic country’s laser technology could help Taiwan’s semiconductor producers.
On November 21, the Chinese ministry of Foreign Affairs released a statement announcing that China downgrades its diplomatic relations with Lithuania to the chargé d’affaires level.
A charge d’affaires is the lowest rank of a diplomatic representative as a head of mission, behind ambassadors and envoys who represent heads of States. A chargés d’affaires is usually conferred to ministers of Foreign Affairs.
Mainland China reacts to the opening of a “Taiwanese Representative Office” in Vilnius, Lithuania’s capital city, which ignores “China’s solemn position” regarding Taiwan.
Lithuania’s Taiwan representative office, an egregious precedent for Beijing
The recognition of Taiwan as a country is a red line for Beijing and the creation of a representative office represents an “egregious precedent in the world”, the Chinese statement further claims.
Representative offices for Taiwan are usually named after “Taipei” or “Republic of China” in countries which do not officially recognize Taiwan.
Last August, Beijing had called its ambassador of Lithuania back after the decision of the Baltic country to open a Taiwan representative office.
For the ministry of Foreign Affairs of the Republic of China (Taiwan), “the People’s Republic of China has never ruled Taiwan”. It called Beijing’s reaction arrogant, ridiculous and “not worthy of comment”.
On November 21, the ministry of Foreign Affairs of Lithuania regretted the decision of the People’s Republic of China not to return ambassadors and change the level of diplomatic relations between both countries.
Moreover, Lithuania reaffirmed its adherence to the “One China” policy and defended its position to establish “non-diplomatic representations” with Taiwan.
The representative office’s opening is “based on economic interests”, Lithuania claims.
And one of the business opportunities lies in the semiconductor business.
Lithuania’s laser industry can help Taiwan’s semiconductors
In its own statement, Taipei considered Taiwan and Lithuania had “huge potential for cooperation in various industries such as semiconductor, laser, fintech”.
It turns out that TSMC, which stands for Taiwan Semiconductor Manufacturing Company, is one of the largest producers of semiconductors in the world along with the Chinese company SMIC.
These microchips in high demand have been disrupting some of the world’s largest industries for almost a year.
On the other hand, Lithuania is a leader in the laser and optical industry. Applications of laser technology go from science, medicine, automotive, space to telecommunications.
At the moment, Lithuania’s export production turnover in laser technology is only about €20 million a year but it grows about 15% every year. As a matter of fact, laser technology will play a big part in building next generations of semiconductors.
In telecommunications, optical fiber has been known for increasing Internet bandwidth. But tech companies try to integrate photonic technology within the microprocessors themselves.
And TSMC is lagging in the race of silicon photonics.
Silicon photonics is an hybrid chip in which silicon, the traditional component of semiconductors, is married with optical technology. As such, by combining a silicon integrated circuit with laser technology, photonic integrated circuits enable faster data transfers.
One of the largest competitors of TSMC in silicon photonics is the American company Intel, much more advanced in the technology.
However, the United States has a different position from China regarding the opening of the Taiwan representative office in Lithuania.
U.S. support for Lithuania to resist Chinese economic pressure
Taiwan only accounts for less than 2% of exports of Lithuania’s laser technologies in 2020. China was the country’s top export market for the Baltic country (32%) before the United States (16%).
The expected economic retaliation of China can therefore has repercussions on one of Lithuania’s leading industries.
But Gabrielius Landsbergis, Lithuania’s minister of Foreign Affairs, will be in the United States in November 23–25.
Lithuania will discuss “Indo-Pacific issues” as well as “possibilities to expand and deepen mutually beneficial economic relations, in particular, opening of the U.S. market to Lithuanian goods in areas such as lasers, semiconductors, biotechnology and renewable energy”.
Moreover, the delegation will sign a US $600 million export credit agreement meant to help the country withstand pressure from China.
For Beijing, Lithuania renounced of “diplomatic relations with the People’s Republic of China” as the decision “interferes in China’s internal affairs”.
And China may have been investing for self-sufficiency in microchip manufacturing, its semiconductor supply chain still remains dependent on international tech.
