VILNIUS (Reuters – Taiwan declared Wednesday that it would establish a $200m fund in Lithuania to support bilateral trade and invest in Lithuanian businesses. It is trying to fend of Chinese diplomatic pressure on the Baltic State.

In the meantime, the Lithuanian government directed the state-owned rail company to not sign a contract for a China-owned Spanish bridgebuilder. This was in reference to “national security interests”, the spokesperson of the prime minister told Baltic News Service.

China is putting pressure on Lithuania to reverse its decision to let Taiwan open an embassy in Vilnius last year under its own name.

Taiwanese representations abroad, other than the unrecognized Somaliland are named after Taipei’s capital.

China has removed its Ambassador to Lithuania, downgraded diplomatic relations and is urging companies such as Continental (German car parts giant) to cease using Lithuanian-made component. China also stopped the entry of Lithuanian cargoes to China.

After a Washington meeting, Antony Blinken, U.S. Secretary Of State, spoke out about China’s influence on Vilnius. He also held a news conference together with Annalena Bock (German Foreign Minister) and pledged to support Berlin against any “intimidation.”

Blinken indicated that Germany and the United States have agreed on transatlantic coordination regarding China, “because it presents a significant challenge for our shared values, the laws, rules, and agreements that foster stability and prosperity worldwide.”

“We are immediately concerned by the Chinese government’s efforts to bully Lithuania. China is forcing European and American businesses to cease building products made with components from Lithuania. Or risk losing access the Chinese market. All because Lithuania expanded their cooperation to Taiwan.

Lithuania has hundreds of export-oriented companies, including those that produce furniture, lasers and food for multinationals selling to China.

Eric Huang, the head of Taiwan’s representative office, stated that the strategy investment fund would come from Taiwan’s national developmental fund, and be backed by its central banking.

“We’ll establish the fund as soon possible. We hope to see some concrete results in this year.” “I can see the first priorities being semiconductor, laser and biotechnology,” he said at a press conference.

Huang explained that Taiwan has transferred 120 Lithuanian shipping containers, blocked by China from its market to Taiwan. Huang added, “as much” as is possible.

He said that Taiwan would also speed up its approval for Lithuanian milk and grain exports to Taiwan, and will seek to connect Lithuanian companies into Taiwanese supply chain chains.

Huang suggested that Taiwan could also integrate Lithuania’s Laser Industry into the manufacturing of semiconductors.

TsengHou-jen, Taiwanese Deputy Minister of Foreign Affairs called Chinese pressures against Lithuania “disproportionate.”

He stated that Taiwan is referred to by the U.S. as Taiwan and EU as Taiwan in official documents. China, however, kept silent. China seems to have taken aim at what it sees as a vulnerable country in its pursuit of political gain. However, giving up isn’t the best approach to dealing with bullies.