Economists talk about possible Chinese sanctions on Lithuania: that would be the most painful way we can be punished
The target is the industrial sector
V. Janulevičius said that he did not rule out the possibility that sanctions against Lithuania could be announced.
“It simply came to our notice then. All companies that have disruptions in sending goods from China to Lithuania that have already been paid for are all related to the industry. With raw materials, components, equipment to develop production capacity. It is therefore clear that the target is an industry that creates added value. “All other household goods move non-stop,” he said.
According to V. Janulevičius, Lithuania imported goods worth 1.2 billion euros from China last year. and about two-thirds of this amount is for industrial goods.
“It is likely that we are talking about 700-800 million. EUR and if this is the case, these goods turn into 3-5 billion. Eur per year because some kind of final product is being collected. In addition to certain components, it is likely that we will not produce any product. This amount could be calculated as a decrease in turnover during the year, ”he clarified.
When asked about potential losses, an industry representative estimated that they would not be as large, but it all depends on the profitability of each company.
“Of course, the number of employees will be reduced, the number of employees will decrease, the results that have been achieved in recent years,” he said.
When asked how the representative assesses the fact that foreign companies may also be banned from Chinese products containing raw materials and components from Lithuania, he said that there is a possibility differently and too elsewhere, but everything would take time.
“If diplomatic channels fail to soften our relations with the Chinese and we have a heated discussion and limited opportunities for goods of Lithuanian origin to be used in the vertical chains of Western Europe, in a short period, a year or two, we need to prepare for a bit more painful experiences. We hope that no other companies will succumb to Chinese pressure.
I do not think that the companies will leave Lithuania, but that certain development plans can be suspended, ”he said.
We can turn to the courts
Economist Alexander Izgorodin explained that despite China’s membership in the World Trade Organization (WTO), it has the right to unilaterally impose economic sanctions on Lithuania.
“The situation here is different from Lithuania, which cannot do for Belarus, because the 27 countries of the European Union have to impose sanctions. In this case, China is one and very big and there is such an opportunity, but the problem is not sanctions, but the courts and procedures within the WTO.
Theoretically, if sanctions are imposed on Lithuania, our country or the European Commission can turn to the WTO and start clarifying relations with China and work for the lifting of sanctions. But the trouble is that the legal proceedings in the WTO are extremely long and can take 3-5 years, when sanctions will be in place and economic damage will be done, “said the economist.
According to A. Izgorodin, the introduction of economic sanctions on Lithuania would be the biggest blow that China could take.
“What would be most painful would be to impose sanctions on the purchase of components from Lithuania to other EU countries. The point is that Lithuanian production, which occupies about 20 percent. our GDP is made up of components by companies in western europe and scandinavia, which make products from those components and export that end product to china, a major trading partner of the eu.
If China imposes sanctions, my forecast is that they will apply them not to Lithuania’s final exports, but through a component that Lithuania exports through another EU country, so that they can export finished products whose component is Lithuanian components. Sanctions are the strongest way China can punish us, ”he said, adding that all sectors of Lithuanian industry, with the exception of the food industry, are affected, such as the engineering industry, metal processing, vehicle furniture, textiles, wood and industry.
Exactly how this would tell the Lithuanian economy and how much income could be lost, the economist would say completely, but the losses, according to him, would be huge.
He also said that if sanctions were imposed, it was likely that Western European partners could start looking for production partners in the surrounding countries.
“China is one of the main export markets in the EU, the problem is that Lithuanian producers could be replaced by competitors,” he said.
The situation is dangerous for Lithuania
Sigismund Mauricas, an economist at Luminor Bank, said that while the Lithuanian economy was not closely linked to the Chinese economy, on the other hand, if sanctions were widely applied, the Lithuanian economy could be significant enough, especially if tactics were applied. , divide and conquer.
“In general, the entire investment environment in Lithuania is likely to deteriorate.
Businesses won’t want to risk who to attack a crossfire if there are alternatives. Accordingly, our industry may be affected, especially in terms of attracting new investment.
In that case, Lithuania may not be chosen, although it would be disappointing, because we have been making a big breakthrough lately, ”he said.
According to Ž. Maurico, such a situation is dangerous for Lithuania in general due to China.
“We are alone, although a lot depends and what the EU’s response will be. “It’s a political thing, but we’re on the front line,” he said.
May impose sanctions
On Wednesday morning, the media announced that the Chinese Communist Party’s Global Times reported this week that Beijing could impose official economic sanctions on Lithuania.
Global times writes that China could impose “US-style sanctions” on Lithuania, citing restrictions on the Chinese telecommunications company Huawei as an example, BNS reported.
“China has the right to prohibit any company from selling products with Chinese components or technologies to Lithuania, and foreign companies may also be prohibited from selling Chinese products containing raw materials and components from Lithuania,” Global Times was quoted as saying.
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