Geopolitics

China As Goliath: How Little Lithuania Defies Beijing

No other European state strikes a more confident tone toward China than Lithuania. Vilnius is resisting all the usual means of pressure — and has a clear demand that Europe and Germany defend their values.

China As Goliath: How Little Lithuania Defies Beijing

A military parade in celebration of the 70th founding anniversary of the People's Republic of China in Beijing, China

Maximilian Kalkhof

VILNIUS — With its small population and modest economy, Lithuania has a reputation of being a minor actor on the European political stage. But under Deputy Foreign Minister Mantas Adomenas, it's breaking from the pack in a very notable way: attempting to strong arm China as the People's Republic vies for increasing global dominance.

While this might seem like a diplomatic and economic suicide mission, Adomenas sees few risks in promoting Lithuania's vision of democracy.This isn't a recent policy change: A member of the center-right Homeland Union, Adomenas says his party's China position had been maturing for a long time. When the Homeland Union was elected to government, Lithuania's relationship with China was essentially fixed along this hard line. It just had to be brought to life.

A trained classical philologist, educated at the universities of Vilnius and Cambridge, Adomenas has a doctorate in Plato and the pre-Socratic philosophers and speaks British English well. But the days of Adomenas making his living with fine intellectual theories are long gone.

Today he is dealing with very practical problems. Since becoming deputy foreign minister, his everyday life has been dominated by troubles with authoritarian regimes (Russia) and nefarious dictators (Alexander Lukashenko) of Belarus.

Lithuania shows that a more robust China policy is possible.

Not surprisingly, affairs with China are now causing trouble. The relationship between Lithuania and Beijing currently resembles the Old Testament confrontation between David and Goliath. No other European state is adopting a more self-confident tone toward the billion-strong empire than the country of three million people.

Indeed, Lithuania shows that a more robust China policy is possible. This is also thanks to Adomenas. In an interview with WELT, he speaks with pride about the foreign policy of his Baltic homeland. Those who listen to him quickly notice how important independence — which the country only regained from the Soviet Union in 1990 — is to him.

In May, the Lithuanian parliament declared the oppression of China's Uyghur Muslim minority to be a genocide. Shortly thereafter, Vilnius withdrew from "17+1," a Beijing-initiated cooperation between China ("1") and Central and Eastern European countries ("17"). Beijing claims the initiative brings economic benefits and is not bound by political conditions. Lithuania responds that the cooperation is dividing Europe.

But that's not all. First, in June, Lithuania donated 20,000 doses of AstraZeneca to Taiwan. Then, in July, it was announced that Taiwan would open a representative office in Vilnius — with the name "Taiwan" in the title. What sounds trivial is a diplomatic coup. Taiwan's de facto embassy in Berlin, for instance, is called "Taipei Representation." Beijing fumed. The People's Republic considers the democratic island state part of its territory.

Adomenas says that these decisions were not made out of a gut feeling, but were well thought out. After all, he says, there were a few antecedents in Lithuanian-Chinese relations that drastically changed Beijing's perception of the Baltic country.


Lithuanian deputy foreign minister Mantas Adomėnas speaks in Kruonis, Lithuania — Official Facebook Page for Mantas Adoménas

For example, in the summer of 2019, demonstrators in Hong Kong protested against the central government in Beijing. In Vilnius, sympathizers then staged a demonstration to express support for the protest in the former British crown colony. But the Chinese ambassador to Lithuania rounded up Chinese for a counter-demonstration. The Lithuanian public was alarmed.

A few months later, a full-blown scandal ensued. A Chinese woman dismantled a monument that had been erected on the Hill of Crosses for the Hong Kong demonstrators. The Hill of Crosses is not only a Catholic pilgrimage site, but also a symbol of resistance to Soviet rule. The incident even drew the attention of the then foreign minister, Linas Linkevicius. On Twitter, Linkevicius spoke of "vandalism" — which could and would no longer be tolerated.

Then came considerations of a fundamental nature, says Adomenas. On the one hand, his government understood that Beijing was prepared to use economic interdependence as a means of exerting pressure. For this reason, Vilnius decided to reduce its dependence on China and to diversify its foreign trade.

Lithuania has also begun to integrate Taiwan more closely into the international community. All of this, he says, stems from a mixture of conviction, pragmatism and self-preservation instincts. "We are resisting Beijing's violation of law and democracy because Lithuania is a small country whose existence is based on respect for law and democracy," he says.

He says the price for this policy has so far been limited. Beijing has excluded the country from a few trade fairs, but nothing more. In fact, there is not much room for the People's Republic to attack: Chinese investments in the Baltic country are minimal.

The irony of just one small European Union country taking on heavyweight China is keeping experts busy.

The Central and Eastern European Center for Asian Studies, a think tank, estimates the total value of all China-related projects for 2020 at just 82 million euros — only about 0.18 percent of Lithuania's gross domestic product. But Adomenas says China is facing a fundamental dilemma: If it punishes Lithuania, it only makes clear that Chinese initiatives like "17+1" are very much tied to political conditions.

The irony of just one small European Union country taking on heavyweight China is now keeping experts between Helsinki and Athens busy. Since Lithuania dropped out of "17+1," it has been pushing for what Vilnius calls: "27+1": a common China policy for al 27 EU member states. But these hopes are likely to remain unfulfilled.

For one thing, Lithuania's China policy is already reaching its limits in the Baltic states. Una Berzina-Cerenkova, who heads the China Studies Center at Stradins University in Riga, says that Vilnius' approach is being followed with great interest in Latvia and Estonia. But it will not set a precedent. The political scientist assumes that Latvia and Estonia will also scale down their involvement in "17+1." But more likely in a quiet manner.

On the other hand, there are EU states, such as Germany, far more economically intertwined with China, that categorically reject a tougher stance toward Beijing. What Adomenas wants from the new German government after Angela Merkel's departure in September is: "European leadership." This is diplomatically thinly veiled criticism of the chancellor's China policy, which is geared to the interests of the German auto industry.

What does he mean by that? "A leadership that is not out to be at the head of the line," he says. "But one that uses its economic power to defend Europe's fundamental values."

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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