US embassy cable - 05VILNIUS1023

C O N F I D E N T I A L SECTION 01 OF 03 VILNIUS 001023 
 
SIPDIS 
 
STATE FOR EUR/NB AND INR 
 
E.O. 12958: DECL: 09/26/2015 
TAGS: PREL, CH, LH, HT8 
SUBJECT: CHINA,S RELATIONSHIP WITH LITHUANIA: FORM OVER 
SUBSTANCE - FOR NOW 
 
 
Classified By: Political/Economic Officer Alexander Titolo for reasons 
1.4 (b) and (d). 
 
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SUMMARY 
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1.  (C) China's diplomatic and economic profile in Lithuania 
is growing.   There are more visits by official Chinese, an 
expanding diplomatic presence, and a burgeoning commercial 
relationship.  GOL officials have told us that they see clear 
signs of greater Chinese interest in Lithuania.  Increased 
interaction, however, has not yet translated into a mature 
bilateral relationship or substantive bilateral agenda.  We 
do not expect changes in core GOL policies to result from the 
increase in China's attention - at least, not in the near or 
mid-term.  Beijing's increasing interest in Lithuania will 
continue to bear close watching.  END SUMMARY. 
 
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CHINA'S DIPLOMATIC APPROACH TO LITHUANIA 
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Expanding Presence 
 
2.  (C) China has a large and growing diplomatic 
representation in Lithuania.  The Chinese mission in 
Lithuania has increased from four to fourteen officials since 
2000, and is now the third largest embassy in town after 
Russia and the United States.  Chinese diplomats have told 
Embassy personnel that China is looking to build a new 
chancery in Vilnius.  The diplomatic list suggests a heavy 
emphasis on economics and trade.  At least one Chinese 
diplomat has lived in Lithuania for several years, including 
as a student, and speaks Lithuanian well (a rarity among 
non-USG diplomats accredited to Lithuania). 
 
3.  (C) MFA Undersecretary Dalius Cekuolis told the 
Ambassador that, since Lithuania's EU and NATO accession, 
Lithuania has occupied a "higher drawer of interest" for 
China.  Dainius Kamaitis, Head of the MFA's Asia and Pacific 
Division, told us that Chinese diplomats have regular but 
infrequent contact with the MFA.  A few predictable 
exceptions aside, Kamaitis said, the Chinese diplomats are at 
a loss for topics of discussion with their Lithuanian 
counterparts and do not even engage vigorously on the topics 
that should arguably matter most.  Any hint of GOL or EU 
dealings with Taipei provokes urgent requests for meetings, 
but, he noted, the Chinese demarched GOL officials only twice 
in the months leading to the EU's discussions on lifting the 
arms embargo.  Undersecretary Cekuolis, recounting his May 
trip to China, likewise told the Ambassador that, in a 
45-minute meeting, Foreign Minister Li Zhaoxing only briefly 
mentioned the EU arms embargo.  During Li's August visit to 
Lithuanian, brief discussion of the arms embargo with FM 
Antanas Valionis ended quickly when Valionis raised GOL 
concerns over an arms race in Asia. 
 
4.  (C) Kamaitis told us he is mystified by the Chinese 
embassy's lack of focus on the arms embargo issue, and by its 
insistence on dealing almost exclusively with the Foreign 
Ministry, rather than seeking to broaden its engagement 
throughout the GOL.  (For its part, Lithuania's position on 
the embargo has been consistent: Lithuania opposes lifting 
the embargo, but has little vested interest in the issue, and 
will likely not challenge EU consensus.) 
 
UN and USG focus 
 
5.  (C) Cekuolis said that Li focused particularly on UN 
reform during both the May meeting in Beijing and his August 
17-18 visit of to Vilnius.  In his meeting with FM Valionis, 
Li stressed commonality of Chinese and U.S. concerns 
regarding UN reform.  On the theme of U.S.-China relations 
overall, Li said that the countries maintain strong cultural 
ties and that Beijing and the USG have cooperated on North 
Korea.  Minister Li told his Lithuanian counterpart that 
China's main area of contention with the USG is the sale of 
advanced weapons to Taiwan. 
 
And human rights? 
 
6.  (C) Lithuania has similar trouble finding themes for 
discussion with China and MFA officials have (apparently with 
unintentional irony) chosen to address human rights. 
Valionis told Li that the GOL wants China to support its call 
for the Government of Belarus to respect its citizens' human 
and political rights.  The GOL also seeks Chinese support for 
its efforts to gain a seat on the UN Human Rights Commission. 
 The Ministers also discussed the possibility of the GOL 
offering support for China's candidacy on the International 
Maritime Organization in exchange for prior Chinese support 
for Lithuania's membership in ECOSOC. 
 
7.  (C) Despite the growing size of the embassy and the 
increase in high-level contacts, Kamaitis described China's 
diplomatic efforts in Lithuania as immature.  As an example, 
Kamaitis said that, after confirming FM Li's intention to 
visit Lithuania in August (only two weeks before his 
arrival), the Chinese asked the GOL what they wanted to talk 
about.  "They (the Chinese) are the ones that wanted to come 
here, and they didn't know what they want to talk about," he 
remarked.  Director of the Department for the Americas, 
Africa, Asia and Oceania Jonas Paslauskas similarly commented 
on FM Li's trip that "we are trying to figure out why they 
(were) here." 
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FETING PARLIAMENT 
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8.  (C) MP Vaclov Stankevic, a member of the China Caucus, 
said that he expects the Chinese to increase efforts to sway 
GOL policy, especially on the arms embargo, but that their 
outreach to date has been largely limited to representational 
events.  Resident Chinese Ambassador Yang Xiuping has hosted 
two receptions for the Caucus at the Chinese Embassy. 
Stankevic describes Chinese culture's exoticism as the 
events' primary attraction to Lithuanians. 
 
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MILITARY RELATIONS 
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9.  (C) Military ties between Lithuania and China are 
primarily cordial, formal, and pro forma.  Lithuania's 
Minister of Defense visited China in 2004.  GOL officials 
give sanitized presentations to Chinese Military attaches on 
topics on which they are much more expansive with their NATO 
allies.  Alvydas Kunigelis, Director of the MOD's 
International Relations Department, told us that the Chinese 
government invited Lithuania to send a representative to a 
one-month seminar in China in late 2005 that will focus on 
security policy.  (The Government of China will cover the 
cost of lodging for the Lithuanian representative.) 
Kunigelis affirmed that while the GOL is happy to take 
advantage of such opportunities, there is little likelihood 
that the GOL and China will find areas of substantive 
military cooperation or trade in armaments. 
 
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CHINA'S ECONOMIC INFLUENCE 
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Cheap goods in; jobs out 
 
10.  (U) Lithuania's commercial relationship with China 
entails some of the same costs and benefits that feature in 
our own bilateral trade relationship with China.  Consumers 
benefit from the inflow of cheap, well-made goods, but the 
imports and competition in third markets threaten jobs in 
some sectors, especially in light manufacturing.  Lithuania 
imported $294 million in Chinese goods in 2004.  The 
Lithuanian supermarket chain VP Market, with over three 
hundred outlets in the Baltic states, has relied heavily on 
imports of low-cost consumer products from China to fuel its 
growth.  Lithuanian consumers benefit from a rapidly 
expanding selection of affordable made-in-China goods in 
those and other local stores.  The lower prices also help to 
keep local inflation in check despite growing consumer demand. 
 
11.  (U) The surge of Chinese exports to other parts of 
Europe, however, plays a part in the dramatic decline in 
sales of Lithuanian products to EU countries in the last 
year.  This is most notable in Lithuania's textile industry, 
in which up to 30,000 jobs may be lost in the near future due 
to competition from China, according to the Association of 
Lithuanian Textile Enterprises. 
 
Eyes to Port 
 
12.  (SBU) The Port of Klaipeda is one of Lithuania's key 
attractions for China.  GOL officials believe that Chinese 
businesses have their sights on the port of Klaipeda as a 
possible site for a regional trade base.  Officials from the 
Klaipeda Port Authority and the Chinese port of Qindao signed 
an agreement to facilitate trade in May.  A Chinese trade 
delegation to Lithuania met with the GOL's Vice-Minister of 
Transport in June to discuss Chinese use of Klaipeda.  The 
MFA's Ginutis Voveris, Ambassador at Large for the Americas, 
Africa, Asia and Oceania, told us that the GOL is also 
considering the promotion of Klaipeda as a rail terminus from 
which goods could then be sent by sea to Northern European 
markets.  GOL officials view China as a large potential 
customer if this capacity is developed. 
 
13.  (C) Port agreements and trade missions have not yet led 
to major Chinese investments in Lithuania, nor have they 
significantly increased the importance of the Chinese market 
to Lithuanian exporters.  Valdas Monkus, Vice Chairmen of the 
American Chamber of Commerce in Lithuania and a manager for 
IBM's Baltic operations, told us that Chinese businesses are 
still mainly in a learning mode, rather than actively 
investing.  Lithuanian exports to China have grown from 
$875,000 in 1999 (.029% of total exports) to $11.65 million 
in 2004, though this still represents a tiny fraction of 
total exports (.125%). 
 
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COMMENT 
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14.  (C) The uptick in diplomatic engagement between China 
and Lithuania is more a matter of form than substance -- for 
now.  The high-level meetings and China's relatively large 
diplomatic presence have not yet translated into concerted 
Chinese efforts to sway the GOL on key issues.  Rather, with 
the increasingly active Chinese Embassy in Vilnius and 
deepening economic ties, it appears that the Chinese are 
laying the foundation for a more substantive and profitable 
future.  GOL officials acknowledge that China's growing 
economic importance here will affect Lithuania, but, for many 
here, China is too distant and exotic to cause concern. 
China is an unlikely ally for the GOL, sharing little of 
Lithuania's interest in promoting regional democracy and 
maintaining strong transatlantic ties.  We do not see 
evidence, at this time, that any of the core commitments that 
underlay the robust U.S.-Lithuania bilateral relationship are 
jeopardized by China's growing presence here. 
MULL