The ongoing row between the Baltic country Lithuania and China has taken an ugly turn when China asked multinational companies to cut ties with Lithuania or face being shut out of the Chinese market, thus dragging companies into a dispute between Baltic state and Beijing.

China has already removed Lithuania from its customs system, meaning exporters can't complete trade documentation. It also covers goods coming from  China, so all trade appears to be on hold as the disputes over Taiwan further aggravates, reports Reuters.

After many companies complained of being “wiped” from the Chinese customs portal, with many unable to select “Lithuania” as a country of origin, the European Union (EU) has decided to fight for its member country and plans to raise the situation with a lawsuit at the World Trade Organisation (WTO). 

“We are in close contact with the Lithuanian government and are gathering information via the EU delegation in Beijing in a timely manner. We are also reaching out to the Chinese authorities to rapidly clarify the situation,” EU trade chief Valdis Dombrovskis told the South China Morning Post.

China snubs EU efforts to mediate in Lithuania row, as trade embargo worsens

Tensions between China and Lithuania have been escalating since Taiwan opened a representative office in the Baltic nation’s capital last month, something Beijing deems disrespectful to its sovereignty. China recalled its ambassador and downgraded ties with Lithuania. The Prime Minister  Ingrid Simonyte asked the European Commission, the bloc’s executive arm, to intervene earlier this week.

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Lithuania’s vice-minister for foreign affairs Mantas Adomenas said that "We will not bend to this pressure, what we decide to do, by calling Taiwan Taiwan, is up to Lithuania, not Beijing."

In response, China’s foreign ministry spokesman Wang Wenbin criticised Lithuania for its stance on Taiwan.

“It has created the false impression of Taiwan being separate from China, gravely harmed China’s sovereignty and territorial integrity, and started an egregious precedent among the international community,” Wang Wenbin told Reuters.

There is a war of words between the leaders of China and Lithuania. China wants Lithuania to immediately end its ties with Taiwan but it is not ready to back down.

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Last week, Matas Maldeikis, one of the Lithuanian parliamentarians, hit back on China.

“Xi is sending his clowns to attack us. We should call China ‘The People's Republic of Comedy”, he said.

China wants Lithuania to follow Nicaragua which severed its diplomatic relations with Taiwan on Thursday.  China’s state-run Global Times crowed that the resumption of ties between Beijing and Nicaragua was a “slap in the face to the US and Taiwan secessionists who tried to create (the) illusion the island has the support of international society like Lithuania”.

Taiwan currently only has formal diplomatic recognition from 15 nations – most of which are small and poor countries in Africa and Latin America.

While governments like the US and Japan have fostered extensive commercial ties with Taiwan, they uphold official diplomatic ties with China and recognise its One China policy.