On the other hand, China has denied blocking trade from Lithuania - which would violate the rules of global trading.
Why did the fund become necessary?
Last year, Lithuania fell afoul of the one-China principle that Taiwan is a part of China by allowing Taiwan to open a representative office under its own name, instead of Chinese Taipei. On January 4, the European country’s president Gitanas Nauseda said that they had made a mistake in allowing that name.
What is the history of Taiwan-China relations?
Relations between China and Taiwan started improving in the 1980s that saw a truce under which China agreed to “one country, two systems” that gave Taiwan a level of autonomy provided it accepted reunification at a later date. But, in 2000, Taiwan elected a pro-independence president Chen Shui-bian and elected him again in 2004. China was worried but the next two elections went to a more reconciliatory president. In 2016, another pro-independence president Tsai Ing-wen won and she even established an independent channel with the Trump-ruled US, even for military support. By 2018, China was aggressively asking countries and companies to recognise Taiwan as an integral part of itself, and Beijing said that any country that tried to do otherwise would get the diplomatic cold shoulder.
What has been China’s reaction to Lithuania’s move?
Almost immediately, Beijing responded, with a slightly dramatic: it will “pay for what it did”. Then, it imposed sanctions on the European country. It has banned all imports from Lithuania and recalled its ambassador. China told MNCs to cut ties with the Baltic nation or be ready to be shut out of one of the world’s biggest markets. Lithuania is export-dependent with many companies manufacturing for MNCs, which then sell the products to China. "They (China) have been sending messages to multinationals that if they use parts and supplies from Lithuania, they will no longer be allowed to sell to the Chinese market or get supplies there," Mantas Adomenas, Lithuania's vice-minister for foreign affairs, told Reuters.
What has been the rest of the world’s reaction to this conflict?