© Reuters. The Lithuanian state emblem is seen at its embassy in Beijing, China December 15, 2021. REUTERS/Carlos Garcia Rawlins

VILNIUS (Reuters) – Lithuania is setting up a 130 million euros loan fund for businesses hit by Chinese action as the country faces economic pressure from Beijing after allowing Taiwan to open a de facto embassy in Vilnius.

Lithuanian businesses reported being unable to export or import into China after allowing self-ruled Taiwan, which China views as part of its territory, to open a representation office last year.

China has pressed multinationals to sever ties with Lithuania or face exclusion from its market, a harsh move that has dragged companies into a political dispute and placed Beijing on a collision course with the European Union.

Lithuania was promissed by European Commissioner for Competition Margrethe Vestager the state support for the businesses would be reviewed as soon as possible, the economy ministry said in a statement on Friday.

In addition to the fund, which can loan companies up to 10 million euros, Lithuania wants to allow the affected businesses to access the upcoming 200 million euros loan fund which is being set up to fight the effects of COVID-19 pandemic.

“China’s actions affect the entire EU single market, so a strong and coordinated European policy response is needed to discourage such actions”, Minister Ausrine Armonaite said in the statement.

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