VILNIUS (Reuters) – Taiwan will launch a $1 billion credit programme to help fund joint projects between Lithuanian and Taiwanese companies in six business categories, a Taiwan government minister said on Tuesday.

Lithuania is under pressure from China which claims democratically ruled Taiwan as its own territory, to reverse a decision last year to allow the island to open a de-facto embassy in Vilnius under its own name.

China has downgraded diplomatic ties with Vilnius, and is pressuring companies, such as German car parts giant Continental to stop using Lithuanian-made components. It has also blocked Lithuanian cargos from entering China.Taiwan last week announced plans to set up a separate $200 million fund to invest in Lithuanian industries and boost bilateral trade as it tries to fend off China’s diplomatic pressure on the Baltic state.

“The investment and credit funds will help us strengthen the cooperation,” Taiwan’s National Development Council Minister Kung Ming-hsin told an online news conference.

The credit fund will focus on developing semiconductor talent and facilitating semiconductor development, as well as biotechnologies, satellites, finance and scientific research, said Kung.

Lithuania’s Economy and Innovations Minister Ausrine Armonaite said her country planned to open a trade representation office in Taiwan in the spring.

“Taiwanese companies are in need of laser projects, hopefully our laser companies will soon find partners in Taiwan and we will be very happy to facilitate the partnership”, she said.

Taiwanese representations in other countries, except the unrecognized Somaliland, are named after Taiwan’s capital Taipei.

U.S. diplomats have expressed strong support for Lithuania, calling China’s pressure “economic coercion”.

Lithuania’s Foreign Minister said he would discuss the Chinese pressure with his European Union counterparts on Friday.

(Reporting by Andrius Sytas, editing by by Terje Solsvik, Bernadette Baum and Tomasz Janowski)