One Country, Two Faces — How Beijing Betrayed the Baltics

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The policy of the three Baltic States towards communist China has undergone a radical change in a decade. Initial hopes for mutually beneficial economic cooperation eventually gave way to great disappointment, compounded by escalating disputes over relations with Taiwan and Russia.

The Baltics now look at China and see “one country, two faces.” Beijing’s grand promises have produced poor results and exposed the risks of interdependence.

Baltic: China Dream Ended in Disappointment

Following the restoration of their independence, the primary strategic goal of the Baltic States was to obtain and secure membership of the EU and NATO, China scholar Una Aleksandra Berzina-Cerenkova noted. This prevented them from pursuing targeted foreign policy objectives in other parts of the world. Given their limited resources, Baltic foreign policy initially focused firmly on ensuring European and transatlantic partnerships. China was seen as a distant country, often viewed through a purely cultural lens.

Things changed in the early 2010s, when China invited the Baltic States to join the 17+1 cooperation format with Central and Eastern European countries. All three Baltic countries invested a significant amount of political capital in the partnership. However, their enthusiasm waned as China began to be seen as a growing challenge in the West. The failure to deliver on economic promises after several years of cooperation eventually ended up disappointing even the most ardent proponents of engagement with China.

China’s growing authoritarianism and deepening relations with particularly Russia and Belarus made the Baltic countries gradually more wary of Beijing. China’s support for Moscow after Russia’s full-scale invasion of Ukraine in February 2022 marked a turning point. The Baltic States withdrew from the China-led 17+1 group. At the same time, NATO designated China as a security threat for the first time in its 2022 strategic concept.

According to research fellow Frank Jüris, China’s 17+1 initiative was not a platform for multilateral cooperation but a framework for bilateral relations between China and individual countries. It resembled a “beauty contest” where countries vied for China’s empty promises. China seems to struggle in managing multilateral relations. At the same time, structural problems in the Chinese economy, including its mounting debt and lack of transparency, have diminished the appeal of cooperation with Chinese business.

With the withdrawal of the Baltic States from the 17+1 group, all three countries are now back on the same wavelength in relation to China. However, nuances still remain in their individual approaches. Lithuania has opted for a high-profile policy, which has garnered a lot of international attention but has also provoked stronger Chinese countermeasures. Latvia and Estonia have taken a more moderate stance, emphasizing their readiness to continue cooperation with China on both bilateral and EU levels.

Estonia: National Economy vs. National Security

Estonia’s foreign policy has been straightforward: Russia is Estonia’s overarching security problem, and democracies are its natural allies. However, China poses a clear dilemma. Its enormous economy provides seemingly endless opportunities, but its autocratic political system stands in stark contrast to Estonia’s values. Should Estonia prioritize economic interests and cultivate close ties with China, or should it lean on its values?

Estonia’s relationship with China has always been influenced above all by the broader dynamics of US-China and EU-China relations. International relations scholar Anniki Mikelsaar has identified four distinct periods in the relationship: An initial period of stabilization from 1991 to 2011, the so-called Dalai Lama effect from 2011 to 2014, a relaunch of relations from 2014 to 2019, and a chill in ties from 2019 onwards.

The early years of Estonia’s relations with China in 1991-1999 were shadowed by the dark legacy of the Cold War. Having just freed itself from communist occupation, Estonia was initially suspicious of the People’s Republic of China. Estonia’s leadership saw China as a state of mass oppression like the Soviet Union, a communist prison of peoples. Estonian expressions of support for Taiwan and Tibet further strained relations with Beijing.

At the same time, Estonia was optimistic about China’s meteoric economic growth. In the middle of the 1990s, Estonia’s long-time president, Lennart Meri, adopted an “open-door policy” towards the then rapidly rising China. The aim of Tallinn’s new “China doctrine” was to avoid simultaneous confrontation with both Russia and China. Estonia saw China as a possible counterweight to the resurgence of Russia’s neo-imperialist ambitions.

China’s attractiveness as a trading partner increased after the global financial crisis of 2008, which impacted China much less than other major economies. However, despite optimism in Estonia about improving trade ties with China, the importance of the economic engagement with China for the Estonian economy did not increase significantly. Initial optimism about trade with China started to fade in the latter half of 2011.

The visit of the spiritual leader of Tibet, the Dalai Lama, to Estonia in 2011 angered China, which froze diplomatic relations and restricted imports of Estonian food products. However, relations had returned to normal by 2014 after Estonia expressed regret over the incident, which Beijing chose to interpret as an apology. Estonia opened an embassy in Beijing, joined China’s Belt and Road Initiative, and signed new trade deals.

Despite growing cooperation between Estonia and China from 2014 to 2019, China’s economic footprint on Estonia remained relatively modest. While trade with China recovered somewhat, China’s share of total Estonian exports did not grow substantially. Similarly, Chinese foreign direct investment in Estonia increased slightly over the period, but it did not constitute a significant share of Estonia’s overall FDI.

Estonia’s relations with China cooled again around 2019. At the same time, the EU began to show more skepticism towards Beijing. While trade continued, Estonia’s trade deficit with China widened further. The economic benefits that Estonia hoped to gain from joining China’s 17+1 initiative failed to materialize. At the same time, security concerns began to dominate Estonia’s domestic debate on how to deal with China.

The EU and the US had a major impact on the change in Estonia’s China policy from a positive to a more cautious approach. The EU initially supported China’s BRI project, and many Central and Eastern European countries, including Estonia, saw it as a major economic opportunity. However, over time Estonia’s Western allies started to pay more attention to the economic and security challenges posed by China’s growing influence.

The US strategic pivot to Asia was perceived in Estonia as a potential dilution of the US security presence in Europe and prompted a closer alignment with the US position on specific issues related to China. This included siding with the US on 5G regulation to counter Chinese dominance in critical technology. Also, Estonia joined an international declaration condemning the egregious human rights violations against Uyghurs in China.

In 2022, Estonia followed Lithuania’s lead and withdrew from the 17+1 group of countries, citing concerns about China’s autocratic system and disappointment with the economic benefits of the cooperation format. Additionally, in line with Latvia and Lithuania, Estonia excluded Chinese technology company Huawei from its 5G networks for security reasons. Nevertheless, Estonia remains open to pragmatic cooperation with China.

The Russia factor has had a major impact on Estonia’s relationship with Beijing. Security concerns about China have grown considerably, due in particular to Beijing’s close ties with Moscow. In Tallinn, there is ever deeper disquiet about China’s de facto support for Russia during the war in Ukraine. Additionally, there are growing worries about China’s influence operations targeting Estonian public opinion, particularly through social media.

While the Estonian government has taken significant steps to counter Chinese influence, public opinion remains divided. In general, public awareness about China and what it represents is low in Estonia. Opinions on China are fragmented and unclear, and many people do not have a strong stance in any particular direction. However, Estonian-speakers are generally much more negative towards China than Russian-speakers in Estonia.

Despite the general lack of in-depth knowledge, Estonians are very skeptical about China. A large majority agree that China is guilty of systematic human rights violations. Also, roughly half the population considers democratic Taiwan to be an independent country and not part of communist-ruled China. Estonian-speakers tend to express greater concern about the security threat posed by China than Russian-speakers.

Latvia: Forlorn Faith in Golden Opportunity

Relations between Latvia and China got off to a rocky start when Taiwan opened a diplomatic mission in Riga in the early 1990s. However, the economic benefits that Taiwan offered paled in comparison with those presented by China. Latvia was initially very enthusiastic about China’s growing potential. Riga also hoped that cooperation with China could serve as a counterweight to Russian influence.

China was one of the first countries to recognize Latvian independence in September 1991. Latvia’s geographical location offered an attractive trade route for China. Latvia believed that deepening economic ties with China would bring significant economic growth. Latvia joined various cooperation formats and saw China’s 17+1 initiative as a golden opportunity.

Latvia entered the EU and NATO in 2004, strengthening the country’s security and making it an even more attractive partner for China. The 2008 financial crisis further underscored the need for Latvia to diversify its economic partnerships. As Russia’s credibility as a trading partner declined following its invasion of Georgia in 2008, China became an increasingly important factor in Latvia’s strategy to diversify economic relations.

China’s investment strategy in Latvia aimed to establish a foothold in Europe and gain leverage within NATO. Beijing sought influence above all through infrastructure projects. China’s particular interest in Latvian infrastructure was due to the country’s favorable strategic location. Latvia’s ice-free ports, railway network, and large international airport offered a gateway to Scandinavian and Western European markets.

Since 2013, China has been striving to create a land bridge to the Baltic Sea through the Belt and Road Initiative. Latvia initially competed with Lithuania in building the bridge. Latvia saw China’s cooperation initiatives as an opportunity to increase trade and investment between the two countries. In 2016, Latvia hosted a summit of the China-led 17+1 initiative, hoping to position itself as the leader of regional cooperation with China.

In the late 2010s, Latvia’s relationship with China started to show signs of strain. China’s human rights abuses and disruptive diplomacy began to raise concerns in Riga. The increasingly critical stance of the US towards China had an impact on Latvian policy. Latvia saw a need for an internal debate on the long-term implications of the relationship with China. As a result, the initial enthusiasm for broad economic cooperation with China faded.

The relationship with China has turned into one of the most complex challenges for Latvian foreign policy. Latvia is actively looking for ways to reduce its economic dependence on China and to find partners more aligned with its free economy and democratic values. Concerned over China’s refusal to respect international rules, Latvia has sought to rely more on the EU, NATO, and other major Western players when dealing with Beijing.

Researcher Martins Vargulis noted that external factors shaped Latvia’s perception of China as a security threat. These factors include changes in US foreign policy priorities, NATO’s new approach to the Chinese threat, China’s growing military assertiveness, and a shared Baltic understanding on China. Latvia seeks to better coordinate its China policy with allies.

There is a growing perception in Latvia that the formats of cooperation and bilateral relations that China has created may hamper the Latvian economy and national security. Riga is wary of Chinese pressure and attempts to condition relations. Also, the fear in Latvia is that cheap imports from China could harm domestic producers and that Chinese companies could take advantage of Latvia’s lax regulations.

Although the initial enthusiasm has waned and the general attitude towards China is cautious, Latvia has not completely abandoned cooperation. The two countries share a history of relatively stable relations without major diplomatic or economic disputes. Some Latvian policymakers still advocate for engagement with China. However, prospects for close cooperation seem limited as long as China maintains military ties with Russia.

That said, there is a gap between the Latvian government’s approach and public perception of China. Opinion surveys reveal a generally neutral public attitude towards China. The general perception is marked by economic pragmatism. At the same time, the Latvian public is cautious about the potential drawbacks of deeper economic relations. Also, Latvians generally acknowledge lacking in-depth knowledge about China.

Lithuania: Vilnius Betting on Values

Since the restoration of independence in 1990, Lithuania has debated how to deal with democratic Taiwan on the one hand and the communist People’s Republic of China on the other. This debate has thrust the question of values onto center stage in Lithuania’s relationship with China. The discussion reflects the deep ideological divide between Lithuania’s democratic values and China’s authoritarian regime.

According to assistant professor Vida Macikenaite, Lithuania was initially optimistic on China. The focus was on establishing diplomatic relations to secure a seat in the United Nations. Subsequently, economic considerations took priority, and Lithuania joined Chinese cooperation initiatives in the hope of promoting trade and investment. However, this initial phase was not without friction. Disagreements arose over sensitive issues such as Tibet.

Lithuania pursued closer economic cooperation with China throughout the 2010s. The 17+1 initiative was greeted with great expectations in Vilnius. Lithuania actively sought Chinese investments and positioned itself as a potential regional trade hub for China. Joining China’s Belt and Road Initiative reinforced this focus on forging closer economic ties. Lithuania expected to see major investments, especially in the Klaipeda seaport.

Lithuania’s initial optimism regarding economic cooperation with China soured in the late 2010s due to slow progress in bilateral trade and disappointment with cooperation projects. Despite numerous business meetings, trade delegations, and joint declarations, economic relations between the two countries remained stagnant. Lithuanian exports to China were a fraction of imports from China, and Chinese investments in Lithuania were limited.

Growing awareness of China’s flagrant human rights abuses and more aggressive behavior in the international arena further strained relations. Intelligence reports highlighted the growing challenges. Lithuania began to limit its dependence on Chinese technology and officially identified China as a national security threat alongside Russia and Belarus. Joint Chinese-Russian navy exercises in the Baltic Sea added to these concerns.

In 2020, a new government took office in Lithuania that aimed to reduce dependence on China and pursue a values-based foreign policy. The government concluded that trade and economic ties with China had failed to meet expectations. They determined that the cooperation was not mutually beneficial and instead served to bolster Beijing’s influence. Lithuania distanced itself from China and moved closer to Taiwan.

Lithuania’s commitment to a values-based foreign policy solidified in 2021 with a series of concrete steps. Lithuania withdrew from the China-led 17+1 group, calling for a unified EU policy towards China. The government blocked technology company Huawei’s access to Lithuania’s 5G network and allowed Taiwan to open a representative office in Vilnius. The new office was Taiwan’s first representation in a European capital in nearly two decades.

China reacted furiously, launching a major economic and political pressure campaign against Lithuania. Despite domestic criticism and the strain on local businesses, the Lithuanian government remained resolute in its new China policy. Strong support from the EU further strengthened Lithuania’s resolve. China’s heavy-handed tactics have damaged its image in Lithuania and reinforced the perception of China as a major security threat.

Lithuania has shifted the focus of its economic ties away from China to alternative markets. Lithuania’s economic relations with China were limited, reducing the impact of the pressure from Beijing. Although China has recently shown signs of relaxing its restrictions, the confidence gap between the two countries remains significant. The long-term implications of the dispute for the Lithuanian economy and future Chinese actions remain uncertain.

Lithuania’s pivot towards Taiwan did not receive unanimous support domestically. Concerns were raised even within the ruling coalition, and President Gitanas Nauseda called the decision to allow Taiwan to open a representation in Vilnius a “mistake.” Some members of the Lithuanian parliament still support engagement with China, while others favor closer ties with Taiwan. Growing public support and government actions suggest that relations with Taiwan will continue to intensify.

Lithuanian public opinion remains divided on China. Despite the recent tensions, most Lithuanians still see economic benefit in maintaining good relations with China. Many Lithuanians feel economically dependent on China, leading to hesitation in supporting sanctions against China or criticizing its human rights record. Also, despite the diplomatic disputes, the public remains largely supportive of cultural exchanges with China.

Baltic: Beijing’s Pressure Ruined Relations

The three decades of Baltic-China relations saw the initial optimism turn to deep disappointment, leading to a cautious recoil. Opinion surveys show that Baltic perceptions of China are neutral but uncertain. There is a desire to separate economic issues from political ones. In all three countries, large majorities believe that they should not interfere in China’s internal affairs because their country is too small to criticize China.

Beijing’s more belligerent messaging, marked by so-called wolf warrior diplomacy, has turned public opinion towards China negative or even hostile in many European countries. China’s display of increased irritation on issues related to Taiwan and Tibet and growing nervousness about restrictive measures imposed on Chinese companies reflect its more assertive approach on the global stage. Tougher talk has also led to aggressive action.

Chinese communication is often inept; Beijing does not seem to be able to adapt its messaging to resonate with different target audiences. In the end, the question is whether China cares at all. We are perhaps unable to view the world in the same manner as a representative of the Middle Kingdom does: Beijing will not adapt to our world view, but expects us to adjust our global perspective to that of the Chinese Communist Party.

China’s hardball tactics have damaged its image in the Baltics. Beijing no longer limits its pressure tactics to issues related to its so-called core interests, such as Taiwan or Tibet, but has taken similar measures in many other areas. Russia’s efforts to weaponize economic relations have made the Baltic States well aware of the risks associated with trade policy. The Baltic countries are therefore wary of becoming overly reliant on China.

China’s growing presence in the Baltic Sea region is part of Beijing’s aim to undermine the transatlantic alliance and reduce the US presence in the European continent. China has also sought ways to influence EU and NATO decision-making through the Baltic States. It has looked for lower-level partnerships by forging direct relationships with local governments and businesses to bypass national regulation and oversight.

The Baltic States do not wish to become hostages to China’s “red lines.” Dependence on Chinese imports can create a self-reinforcing spiral in which domestic actors across society begin to work in Beijing’s favor. For small countries in Russia’s immediate neighborhood, this is too big of a risk. The relatively low dependence on China has made it easier for the Baltic States to break with the EU’s often overly cautious policy towards Beijing.

The Baltic move away from China is largely due to concerns in the three Baltic capitals about the closer relations between Beijing and Moscow. China, like Russia, seeks to wrest European nations away from what it terms “US hegemony.” However, for the Baltic States, a strong transatlantic security partnership with the US is literally a matter of life and death.

It is not in the national interest of the Baltic States to sit on the fence while the two major powers challenging the rules-based world order seek to push their paramount ally and security guarantor out of Europe. Nor is it sustainable to continue deepening relations with a China that increasingly supports the only existential security threat to the Baltic States.

The Baltic States can no longer ignore China’s increasingly arrogant behavior, economic pressure, and disregard for democratic values. This has sparked a public debate in all three countries on whether the economic benefits of trade with China are worth the risks. The Baltic countries are now looking for ways to reduce their dependence on China and to find partners that are better suited to their economy and core values.

Kerkko Paananen is a senior news analyst specializing in the Baltic region. An abbreviated version of this article has been published in Finnish in the Ulkopolitist.

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