China is the most willing to deploy the widest range of economic tools in response to a geopolitical conflict. What can the U.S. do?

A small nation in the Baltic with a GDP of $56 billion, Lithuania has provoked the ire of the People’s Republic of China (PRC) recently by allowing Taiwan to open a de facto embassy in the country. This, in addition to asking its officials to abandon Chinese-made cell phones over censorship allegations and its departure from a PRC-led regional forum, has touched on Beijing’s geopolitical redlines. Beijing has responded with punitive economic measures. 

The PRC has downgraded its ties with Lithuania, blockedLithuanian exports (though recently they were unblocked), and threatened retaliation for multinational companies that did not sever ties with the Baltic country. Is it puzzling that Beijing’s economic coercion on Vilnius seems needlessly aggressive and alienating? Well, it shouldn’t be.

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