Lithuania President Rebukes Government Over China Trade Spat

(Bloomberg) -- Lithuania's president said the government's decision to allow Taiwan to open a representative office using the island's name was a mistake, wading into a controversy that's upended the Baltic nation's relationship with China.

The criticism by the head of state, Gitanas Nauseda, opens a rift in the country's leadership after tensions between China and Lithuania triggered a high-level trade dispute between Beijing and the European Union. Taiwan opened the office in the capital, Vilnius, in November under the name of Taiwan, a move viewed by the Chinese government as a violation of its one-China principle.

Nauseda, who oversees foreign policy and represents Lithuania at EU summits, said both Lithuania and Taiwan are free to open representative offices that hold no diplomatic status and regretted that “the name of the office has become the key factor that now affects relations with China.”

“I would think that, not the opening of the Taiwanese office, but the name of it was the mistake, something with which I wasn't consulted,” Nauseda said in the interview with radio station Ziniu Radijas on Tuesday.

Chinese Foreign Ministry spokesman Wang Wenbin said Wednesday at a regular press briefing in Beijing that recognizing the “mistake” is a step in the right direction “but it is more important to take actions to address the erroneous act.”

China responded to the opening by downgrading diplomatic ties with Lithuania, recalling its ambassador and allegedly halting clearance for Lithuanian exports, which prompted the EU to raise the dispute with the World Trade Organization. China has denied it's blocking Lithuania's exports.

Lithuania pulled out its diplomats from its embassy in Beijing in December after the Chinese Foreign Ministry demanded the return of the envoys' diplomatic identification cards.

On Tuesday, the Lithuanian Confederation Industrialists, the country's largest business association, said it's seeking assistance from the Organization for Economic Cooperation and Development in talks with China over halted shipments in ports and economic coercion.

Some 130 companies are unable to clear shipments through Chinese customs or redirect cargo, while multinational companies are pressured to end cooperation with Lithuania or risk restrictions at Chinese customs, the association said.

A Taiwanese company purchased 20,400 bottles of Lithuanian rum that China refused to allow into the country to show support for the Baltic nation, according to the South China Morning Post.