Our cooperation with Beijing has resulted in a growing trade deficit with China, but also an increase in Chinese intelligence activities in Poland. It is high time for Poland to follow the path of Lithuania, leave the „17+1” format and strengthen cooperation with Taiwan – says Hanna Shen, journalist and correspondent of the Gazeta Polska Codziennie daily and Nowe Państwo monthly in Taiwan, in an interview with BiznesAlert.pl.
Lithuania is an important example when it comes to relations between Europe and China, as it decided to limit trade relations in favor of Taiwan and has not succumbed to external pressure. This decision was met with anger from Beijing and retaliatory measures, but Vilnius can count on the support of the European Commission. There are many indications that Lithuania has benefited from closer ties with Taiwan. The country opened a trade office in Taipei, and in return received many benefits in the form of investments.
It should also be mentioned that in the summer of 2022, the Baltic states left the Chinese initiative „17+1”, in which initially the countries of Central and Eastern Europe put a lot of hope for investments, but now the format has shrunk to „14+1”.
BiznesAlert.pl: What specific benefits has Lithuania reaped?
Hanna Shen: For Central and Eastern Europe cooperation with Taiwan is attractive, because of the transfer of technology. In addition to the capital commitment, Taiwan offers the possibility of a civilizational leap in this area. This is not a type of cooperation that will bring a huge increase in trade overnight or in a month. But Lithuania understands this very well; it knows that it’s investing in the future. Lithuania achieved a great success at the beginning of the year when it signed agreements that provided, among others, financial support from Taiwanese Foreign Ministry and the Bank of Taiwan to the tune of over USD 20 million for Lithuanian companies Teltonika, SoliTek and Oxipit. One of them is about the cooperation between Teltonika, a manufacturer of professional network communication equipment, and the Taiwan Industrial Technology Research Institute (ITRI). The agreement gives the Lithuanian company access to a license for the technology and equipment developed by ITRI for the production of semiconductor systems, and guarantees training for employees. Thanks to the license, Teltonika will be able to develop the semiconductor sector in Lithuania, which today is called the „new oil” for the industry.
Teltonika will use the technology transfer and financial support from the Taiwanese Foreign Ministry, to build a large technology park in Vilnius concentrated around the production of semiconductors. This project will be put into operation in stages between 2026 and 2031. It will create about 8,000 jobs and the investment is to raise the export of Teltonika to a value of approx. 10 billion euros, which would account for 5 percent of Lithuania’s GDP.
The biggest players vie for Taiwanese investments in the semi-conductor sector. The Americans and Japanese have already won some and now Germany and Italy are fighting for a big TSMC investment. Lithuania has already won a small but important piece of the cake here. The cooperation between Taiwan and Lithuania in the semiconductor sector will certainly encourage other high-tech companies to cooperate with Lithuanian companies.
Cooperation with Taiwan is also beneficial for Lithuanian startups. In 2022, the Lithuanian company Litilit, a manufacturer of femtosecond lasers, received support in the amount of 3.5 million euros as part of an investment from the Taiwan Capital fund, in which this laser technology is used primarily in the semiconductor sector, but also in the solar power industry, planar displays, or medical equipment. The Taiwanese investment has already allowed Litilit to build a robotic assembly line, which serves to expand its customer base in the US and Europe.
In addition, in January 2023, another Lithuanian start-up Oxipit received 4.4 million euros from Taiwan Capital to use artificial intelligence for medical diagnoses.
Obviously, thanks to close cooperation with Taiwan, Vilnius wants to become one of the leading players in the most advanced sectors, especially in the semiconductor industry, over the next decade, which will give Lithuania much greater geopolitical importance.
Should we be afraid of Beijing’s threats?
Not so much be afraid, but treat China as a threat, among other things, because Beijing uses economic coercion, as Lithuania has experienced. But that is precisely why the European Commission has developed an instrument that aims to stop such actions. While this tool aims to undermine pressure through dialogue and engagement, it does offer retaliation through countermeasures, such as restrictions on trade, investments and financing. And Beijing will definitely hear the latter.
During the last G7 summit, a new Coordination Platform on Economic Coercion was announced. The goal is to create appropriate instruments that the G7 countries will use to resist economic pressure from China, and countries outside this group are to be invited to it.
These are steps in the right direction. The West is beginning to work on mechanisms to combat Chinese economic coercion.
But the general rule should be this: the less dependence on China, especially in the state sector, the safer.
Cooperation with a Chinese state-owned consortium (but not only strictly state-owned because it also applies to companies such as Huawei or ZTE) means cooperation with a company that is an important element of China’s military-civil merger strategy. This strategy serves, among other things, to ensure that, through Chinese companies, the Chinese Communist Party has access to specialized knowledge and advanced technology so that it can help the Chinese People’s Liberation Army develop and adopt a more aggressive posture around the world.
In Europe, we should be wary of the actions of the Germans, who have just handed over a 24.9 percent stake in a Hamburg container terminal to a Chinese state-owned company. This is despite the fact that the terminal has been classified as critical infrastructure, i.e. deserving of special protection.
We should be wary of Macron’s theory of „strategic autonomy” for Europe, which aims to redefine the EU’s partnership with the US and with NATO. Such actions are like a fifth column supporting the Chinese strategy of military-civil fusion.
Polish-Chinese trade relations are very unbalanced. Our exports to the Middle Kingdom basically stand still, and the „16+1” initiative has not brought us significant benefits. Should Poland consider following Lithuania’s path as it pays off?
Our cooperation with Beijing has brought a growing trade deficit with China, but also an increase in Chinese intelligence activities in Poland. The case of a former Huawei executive accused of spying for China is just one example of Chinese intelligence activity in Poland.
Lithuania urged Poland to leave the initiative „17+1”, which, as mentioned, has shrunk to „14+1″. Today, we have an additional reason to leave this format – Beijing’s support for the Russian invasion of Ukraine. There are many examples of this support. For example, according to the British “The Times”, China carried out a huge cyberattack on Ukrainian military and nuclear facilities just before the Russian invasion of Ukraine. The attack was coordinated by the government in Beijing.
Beijing supports Moscow diplomatically, often voting in the UN Security Council in line with Russia’s interests.
Also, the peace plan for Ukraine presented by Beijing is a lifeline for Putin. The plan says nothing about the withdrawal of Russian troops from the occupied territories in Ukraine.
Despite a lot of talk about peace, Beijing doesn’t want Ukraine to win. China’s ambassador to the European Union recently made it clear that the West should not call for a ”complete victory” for Ukraine.
There are many other examples of China supporting Russia. Just now Chen Wenqing, a member of the CCP Politburo and Secretary of the Central Commission for Political and Legal Affairs, China’s highest security body, overseeing the police, judges and spy apparatus, is in Moscow to talk with Patrushev, Secretary of Russia’s Security Council and one of the architects of the invasion of Ukraine. The allegedly neutral China is talking in Moscow about cooperation between Russia and the PRC in the areas of law enforcement and security.
So yes, it is time for Poland to leave the „14+1” initiative.
More than a century ago, Polish engineer Jan Czochralski (1885-1953) invented a way to create huge crystals. Today, it is estimated that as much as 90 percent of semiconductor devices in the world are created precisely thanks to the Czochralski method (of course, improved overtime). Today we need the method, or rather the vision and ambition that Lithuania has, to take seriously cooperation with Taiwan in the semiconductor sector.
Already, the industry for the production of these devices determines the structure of the world economy, as well as the balance of geopolitical power, and Taiwan and its technologies and money can grow our position on the geopolitical map.
Interview by Jacek Perzyński