Taiwanese government officials announced on Wednesday that Taipei would establish a $200 million fund to invest in Lithuania and promote trade between the island quasi-nation and the Eastern European country, following its high-profile fallout with China.

The fund is primarily slated to be used for technology development within Lithuania, including lasers, biotechnology, basic research, and, most significantly, semiconductor manufacturing, an industry in which the island’s Taiwan Semiconductor Manufacturing Company (TSMC) is regarded as the best in the world.

Eric Huang, the director of the Taiwan Representative Office in Vilnius, announced the fund’s creation at a press conference, indicating that a team of Taiwanese semiconductor developers would arrive in Vilnius soon to examine the feasibility of Lithuania’s entry into the semiconductor industry.

The $200 million to be invested will be underwritten by Taiwan’s National Development Fund. The precise details, which will be established between Lithuania’s Economy Ministry and Taiwan’s National Development Council, have not yet been finalized.

Since November, Lithuania and China have traded blows in an ongoing diplomatic feud over Lithuania’s decision to host a “Taiwan Representative Office” in Vilnius. Although Taiwan operates similar offices throughout Europe, helping to manage its commercial relations in Europe and providing services to Taiwanese nationals, its other offices are usually named for “Taipei” instead of “Taiwan”—a sufficiently ambiguous term that Beijing has not objected to their operation. Lithuania’s use of the word “Taiwan,” however, led the Chinese government to accuse it of violating the “one China” principle, which precludes independent diplomatic relations with the island.

The dispute ultimately led to the Chinese ambassador’s departure from Lithuania and the closure of Lithuania’s embassy in Beijing. Lithuania was also delisted from the Chinese customs agency’s country of origin database, leading to an effective embargo on Lithuanian imports.

During its period of tensions with Beijing, Lithuania has been supported by Taiwan, which has sought to expand its commercial ties with Vilnius. Earlier in the week, the Taiwanese state-run liquor manufacturer announced that it had purchased a shipment of 20,000 bottles of Lithuanian rum that Chinese customs officials had refused to import.

In addition to the alcohol, Huang indicated on Wednesday that at least 120 shipping containers destined for mainland China had been redirected to Taiwan, and pledged to take “as much as possible” more.

Vilnius has also received rhetorical support from the United States and other European nations. Secretary of State Antony Blinken and German Foreign Minister Annalena Baerbock each referred to Chinese pressure on Lithuania as “intimidation,” claiming that they had “immediate concern about the government of China’s attempts to bully Lithuania.”

Mainland China has the world’s second-largest economy, and has used access to its markets as a political tool. However, Taiwan’s economy is also one of the world’s twenty-five largest, giving it considerable resources for conducting economic diplomacy.

Trevor Filseth is a current and foreign affairs writer for the National Interest.

Image: Reuters