Exclusive: Lithuania braces for China-led corporate boycott

• Lithuania in dispute with China over Taiwan
• Multinationals told to shun Baltic state, officials say
• Lithuania's manufacturing sector targeted

FRANKFURT/VILNIUS, Dec 9 (Reuters) - China has told multinationals to sever ties with Lithuania or face being shut out of the Chinese market, a senior government official and an industry body told Reuters, dragging companies into a dispute between the Baltic state and Beijing.

China downgraded its diplomatic ties with Lithuania last month, after the opening of a representative office by Taiwan in Vilnius. Lithuania's ruling coalition had agreed in November last year to support what it described as "those fighting for freedom" in Taiwan, putting its relations with China at risk.

China views self-ruled and democratically governed Taiwan as its territory and has stepped up pressure on countries to downgrade or sever their relations with the island.

China's foreign ministry spokesman Wang Wenbin said on Thursday that China followed international trade rules and again criticised Lithuania for its stance on Taiwan.

China downgraded its diplomatic ties with Lithuania last month, after the opening of a representative office by Taiwan in Vilnius. Lithuania's ruling coalition had agreed in November last year to support what it described as "those fighting for freedom" in Taiwan, putting its relations with China at risk.

"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," he said.

"China will firmly safeguard its sovereignty, territorial integrity and core interests."

Taiwan has other offices in Europe and the United States but they use the name of the city Taipei, avoiding reference to the island itself.

Lithuania's direct trade with China is modest, but its export-based economy is home to hundreds of companies that make products such as furniture, lasers, food and clothing for multinationals that sell to China.

"They (China) have been sending messages to multinationals that if they use parts and supplies from Lithuania, they will no longer be allowed to sell to the Chinese market or get supplies there," Mantas Adomenas, Lithuania's vice-minister for foreign affairs, told Reuters.

"We have seen some companies cancel contracts with Lithuanian suppliers."

He did not name any companies or suppliers affected.

THREATS THAT BECAME REALITY

The Lithuanian Confederation of Industrialists, which represents thousands of Lithuanian companies, confirmed that some multinational companies that buy goods from Lithuania suppliers were being targeted by China.

"This week was the first time we saw direct Chinese pressure on a supplier to drop Lithuanian-made goods," Vidmantas Janulevicius, the Confederation president, told Reuters. "Previously, we only had threats it could happen, now they became reality."

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