Yahoo TV

China downgraded diplomatic ties with Lithuania on Sunday over the Baltic country's move to allow self-ruled Taiwan to open a de facto embassy there. Lithuania has formal relations with China and not Taiwan.

Beijing views democratically-governed Taiwan as a province, and Lithuanian officials say China has also sought to inflict pain such as cutting trade links in retaliation for its decision.

Landsbergis told Reuters in an interview in Washington that such losses would be short-lived as Lithuania was working to make its supply chains less dependent on China.

"In the short term, it is painful for any country when your contracts are cut," Landsbergis said. "But it is short term, because markets adapt. Companies adapt."

Landsbergis said China had not only cut links with Lithuanian companies, but had approached companies in third countries to press them not to do business with Lithuania.

"So much of what we produce is partially produced with, or within, China. This is why we need to find ways to create supply chains and how to make them more resilient so they can withstand this coercion, the cutting of contracts, the secondary sanctions," Landsbergis said.

He said Lithuania would provide a model for countries on how to withstand such pressure, but European nations in particular should become more involved in the Indo-Pacific to enhance their economic security.