Hi there, I'm Ed Butler. Welcome to Business Daily from the BBC. Today, China picks a surprising new trade fight with the small Baltic state of Lithuania. It's not just blocking Lithuanian imports this week. It's also allegedly demanding major multinationals to blacklist Lithuania too.

That would be seismic if it does come down to having to choose between EU and China.

Stuff like this sort of adds fuel to the fire for businesses who are dealing globally.

So what's going on here?

Can the EU fight back with its own anti-coercion measures?

Europe, in the end, is the world's largest exporter.

And for whatever damage Europe tries to do to others,

they could actually retaliate with the same means

that would actually hurt Europe more.

A high-stakes trade war.

What it means? Business Daily from the BBC.

China holds so much power, so much economic power, that whenever it has political needs, you know, it can just, you know, pull a string and basically, you know, everybody just aligns.

That's Lithuania's foreign minister, speaking this week, pondering the curious plight of this small Baltic nation. Population just

3 million, Lithuania now seems to be in the eye of a Chinese storm. Since the new Lithuanian

government came in late last year, they've sort of engaged in a number of activities that has angered

Beijing, the primary one being they permitted the opening of a Taiwanese representative office in Vilnius,

the Lithuanian capital. China says this breaches the European Union's one China policy.

All of the other Taiwanese missions across Europe are known as the Taipei representative office,

but Lithuania has called it Taiwanese, so the rest of them are called Taipei.

The words there are Finnbar Birmingham. He's the Brussels correspondent of the South China Morning Post,

and he's been paying close attention to this diplomatic spat. In naming Taiwan by the name that most people

call it, rather than Taipei, which is the name used in diplomatic agreements,

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