China has told multinationals to sever ties with Lithuania or face being shut out of the Chinese market, a senior government official and an industry body told Reuters, dragging companies into a dispute between the Baltic state and Beijing.

On Thursday, China's foreign ministry spokesman Wang Wenbin said that China followed international trade rules and again criticised Lithuania for its stance on Taiwan.

"It has created the false impression of Taiwan being separate from China, gravely harmed China's sovereignty and territorial integrity, and started an egregious precedent among the international community," he said.

He added, "China will firmly safeguard its sovereignty, territorial integrity and core interests."

China downgraded its diplomatic ties with Lithuania last month, after the opening of a representative office by Taiwan in Vilnius. Last year in November, Lithuania's ruling coalition had agreed to support what it described as "those fighting for freedom" in Taiwan hence putting its relations with China at risk.

Taiwan has other offices in Europe and the United States but they use the name of the city Taipei, avoiding reference to the island itself.

According to Reuters, Lithuania's vice-minister for foreign affairs Mantas Adomenas said, "They (China) have been sending messages to multinationals that if they use parts and supplies from Lithuania, they will no longer be allowed to sell to the Chinese market or get supplies there.”

He said, "We have seen some companies cancel contracts with Lithuanian suppliers." However, he did not name any companies or suppliers affected.

The Lithuanian Confederation of Industrialists, which represents thousands of Lithuanian companies, confirmed that some multinational companies that buy goods from Lithuania suppliers were being targeted by China.

"This week was the first time we saw direct Chinese pressure on a supplier to drop Lithuanian-made goods," Vidmantas Janulevicius, the Confederation president, told Reuters.  He added, "Previously, we only had threats it could happen, now they became reality."

The Lithuanian government is in talks with the companies at risk of fallout from the China dispute about offering possible financial support, such as loans, the government official said. Lithuania has also appealed to the European Commission for support.

Earlier this week, in a letter sent to top officials at the Commission, Lithuanian foreign minister Gabrielius Landsbergis asked for support in rebuffing China, as per Reuters.

"A strong reaction is necessary at the EU level in order to send a signal to China that politically motivated economic pressure is unacceptable and will not be tolerated," the letter said.

The European Commission responded in a statement that the EU was ready to stand up against all types of political pressure and coercive measures applied against any member state.

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