China drags German firm into Lithuania row – report

China is allegedly pressuring Continental AG to stop using components made at the German car parts manufacturer’s subsidiary in Lithuania in retaliation for the Baltic country allowing Taiwan to open a de facto embassy in its capital Vilnius, Reuters reports.

Continental AG, one of the world’s largest car parts manufacturers, makes electronic components for the international market in Lithuania. But with the request, the diplomatic spat between China and Lithuania over the latter’s recognition of Taiwan as an independent state has now crossed into the interests of another EU member state. While the company did not confirm that Beijing had asked it to cut ties with Lithuania, industry sources told Reuters that around a dozen companies in Germany have received such requests from China.

German business lobby BDI said the move would negatively impact the value chains of the EU single market. Tensions with Lithuania are also holding up Chinese exports to Germany companies in the small Baltic country. Beijing’s retaliatory move amounts to “a trade boycott that will impact the whole of the EU”, BDI added.

The strong-arming of the German multinational is the latest development in a tit-for-tat between Beijing and Vilnius. Last month China downgraded ties with the Baltic nation and asked trading partners to cut ties with Lithuanian businesses.

Source: Reuters, FT