Taiwan Tuesday substantially stepped up its financial pledges to Lithuania with a $1 billion credit fund to bolster the Baltic nation in its showdown with China.

The initiative came just days after Taipei announced a $200 million fund to invest in strategic sectors in Lithuania, which is facing a full trade embargo from Beijing. Reacting furiously to warming ties between Vilnius and Taipei, China is not only blocking Lithuanian goods but also products from other EU states that use Lithuanian-made components.

Taiwan’s companies are the largest players in the global supply chain of microchips, a sector where the EU has proved a laggard.

“Of course, the Lithuanian companies … do have very concrete business plans when it comes to chip production here in Lithuania,” Lithuanian Economy Minister Aušrinė Armonaitė said at a press conference. “We want Lithuania to participate in these very important value chains regarding chip manufacturing, that will be in huge, big demand in years to come.”

In the same press conference, Taiwan’s Minister for National Development Kung Ming-hsin said more money could flow Vilnius’ way.

“If the investment fund and the credit fund are not enough, actually, they can be stepped up further, because that will be in the interests of both sides,” Kung said.

The credit fund, according to Kung, will focus on six areas: Semiconductor talent, semiconductor development, biotechnology, satellites, finance, and scientific research.

The two ministers added that a new Lithuanian trade office will be set up in Taipei in the spring.

The latest twist has added further uncertainties to EU-China relations, with Beijing warning the EU not to breach the “one China principle.”

EU Commissioner for the Internal Market Thierry Breton told POLITICO on Monday that the bloc will continue to work with “Taiwanese companies” — shying away from the more sensitive topic of governmental interaction.

“Are we able to work with Taiwanese companies? Of course we can work with Taiwanese companies,” Breton said. “We will continue to do that.”

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