The European Commission has rolled out a €130mn scheme to support Lithuanian businesses it claims are suffering from discriminatory Chinese trade practices.

Under the programme, which the EU says will run until the close of 2027 or until Beijing eases restrictions, affected companies will be able to apply for working capital loans of up to €5mn from the bloc.

The EU’s funding comes in the wake of an ongoing stand-off between the EU’s seventh-smallest member state and China, the world’s most populous nation, which first began in November when Taiwan opened a de-facto embassy in the Lithuanian capital Vilnius under its own name, rather than the Beijing-approved ‘Taipei’.

Beijing was quick to condemn the opening, labelling it as “egregious precedent” and downgrading its diplomatic relations with Lithuania to the chargé d’affaires level.

Since then, the EU says it has collated numerous instances of Chinese restrictions on trade with Lithuania.

In a complaint filed at the WTO in late January, the EU cites “error messages on the IT systems used to input data necessary to secure customs clearance from the Chinese customs authorities, containers being blocked in Chinese ports pending customs clearance, and failures on the part of the Chinese customs authorities to process requests for customs clearance in due time or at all”.

Lithuanian companies will need to use financing from the new programme to source new inputs, such as raw materials or goods; expanding into new markets; or business activities related to these two goals.

Loans will need to be repaid within two years, with funding set to be provided by Invega, a state-backed institution that offers financial services and support to small and medium-sized enterprises (SMEs) in Lithuania, GTR understands.

The scheme will be open to companies from all sectors, except for finance, agriculture and forestry, and fisheries and aquaculture, with the scheme designed in such a way that it is acceptable under EU state aid rules.

Such regulations work to ensure funding provided by member states does not offer producers of certain goods an unnecessary advantage, which would in turn distort or threat to distort competition within the European bloc.

Having assessed the latest scheme under these rules, the European Commission found the scheme is “necessary, appropriate and proportionate” to help affected companies reorient their business strategies given the “exceptional circumstances” of the restrictions.