China has threatened trade with some countries after feuds. They’re calling ‘the firm’ for help

WASHINGTON — Business is good in ‘the company’.

The eight-member State Department team is leading Washington’s efforts to soften the economic blowback to countries targeted by China.

It emerged in the struggle to help Lithuania during a row with China over Taiwan two years ago. Today, “the company” is helping more and more countries cope with what diplomats call economic coercion from Beijing.

Countries are “knocking on the door, they are calling,” Secretary of State Jose Fernandez recently told The Associated Press. “We run a consultancy that doesn’t have to advertise to clients as they come.”

Led by Melanie Hart, senior advisor to the Department of State, the group examines vulnerabilities and develops solutions for countries that have been cut off or fear losing trade with global power China. Since the group’s launch with Lithuania, more than a dozen countries have approached the Biden administration for assistance, Fernandez said.

The effort comes as Washington steps up its campaign to reduce China’s global influence and tensions between the rivals rise.

The Chinese embassy in Washington disagreed with the idea that Beijing is exerting economic pressure on other countries, calling it “completely unfounded.” It was the United States that bullied China economically by abusing export controls, treating Chinese companies unfairly, and labeling Beijing as a perpetrator of economic coercion.

Fernandez said this is a tactic China “uses over and over again. They believe that intimidation works. That is why we took action. The time had come to put an end to this matter.”

For example, when a Norwegian committee awarded the Nobel Peace Prize to a Chinese dissident in 2010, Beijing stopped buying salmon from the Scandinavian country. Two years later, China refused to import bananas from the Philippines due to a territorial dispute in the South China Sea. In 2020, Beijing responded to Australia’s call for an investigation into the origins of the COVID-19 pandemic by raising tariffs on Australian barley and wines.

Then came Lithuania. In late 2021 and early 2022, Lithuanian companies saw their freight shipments to and from China stranded, and were warned by major European companies that car parts made in Lithuania would be excluded from products for the Chinese market.

That came after Lithuania allowed the Taiwanese embassy in Vilnius to bear the name Taiwan, instead of Taipei – Taiwan’s capital – as Beijing preferred. China considers the self-governing island part of Chinese territory and protested against its use as Taiwan.

Instead of giving in, the Northern European country asked for help. The US and its allies resigned.

American diplomats sought new markets for Lithuanian goods. The Export-Import Bank in Washington provided Vilnius with $600 million in export credits, and the Pentagon signed a procurement agreement with the country.

And “the company” kept going. The State Department serves as a first line of response and can work with other U.S. agencies to reach “any tool the U.S. government has,” said a department official who asked not to be named to discuss details of the team.

While it will take years to reorient global supply chains to reduce dependence on countries like China, the team is trying to provide a faster way to alleviate a crisis, the official said, likening the team to ambulance services that ‘helping you get past that scary emergency’. time.”

For example, the U.S. could try to work with partners to help a country move agricultural products quickly to new markets, build more cold storages so products can reach further markets or improve product quality to access more markets, according to the official.

The aid is confidential, the official said, declining to discuss the tools available to the team or name the countries that have sought help.

Shay Wester, director of Asian economic affairs at the Asia Society Policy Institute, said it was “an important and much-needed initiative.”

“China’s increasing use of economic coercion to pressure countries over political disputes is a significant challenge that requires a coordinated response,” said Wester, co-author of an April report on the issue.

The responses from other countries show that the demand for this type of support is high, according to Wester.

This month Lithuania hosted a conference on resisting economic pressure, and Foreign Minister Gabrielius Landsbergis said the aim of that action “is to crush the victims by forcing a reversal and public renunciation of his policies .”

Liu Pengyu, the Chinese embassy spokesman, said the problem with Lithuania was “a political and not an economic problem. They were caused by Lithuania’s bad faith actions that harmed Chinese interests, and not by Chinese pressure on Lithuania.”

Fernandez, who attended the conference, praised Lithuania for standing up to China. “Lithuania gave us the opportunity to prove that there were alternatives to coercion,” he said.