In early August, China recalled its ambassador to Lithuania after the Baltic country allowed Taiwan to open a "representative office." China said that it was against "One China." Lithuania also had to recall its ambassador.

"No one should underestimate China's firm resolve and strong will to defend its national sovereignty and territorial integrity," declared an opinion writer in the Chinese media. [https://www.globaltimes.cn/page/202108/1231240.shtml]

But China was not done with recalling its ambassador or expelling Lithuania's envoy. It had to set an "example" for other countries to flout its "One China" policy. China claims that Taiwan is a breakaway territory that will unite with China one day and opposes any government recognising Taiwan as a separate country.

China has been taking a series of incremental steps against Lithuania. For instance, a few days back, the Chinese state-owned train operator China Railway Container Transport Co announced that it would suspend direct freight trains to Lithuania.  Export permits have also been halted affecting Lithuanian imports to China. But both countries will not be affected by the limits on trade as it is relatively small. [https://www.taiwannews.com.tw/en/news/4275087]

Lithuania on its part is looking unfazed. In an interview, Lithuanian President Gitanas Nauseda said his country would not back down from its dispute with Beijing. "We would like to also have relations with China based on the principle of mutual respect," Nauseda said. "Otherwise the dialogue turns into unilateral ultimatums, requirements which are not acceptable in international relations." [https://www.ft.com/content/b1c477f6-5a61-46d5-b179-91b0b96df921]

China may up the ante by asking Russia and other countries to join in boycotting the Baltic country. But European Union and the US have backed Lithuania saying that it was within its rights, and have condemned China. The EU has gone on to say that the diplomatic spat could have even have an impact on EU-China relations. But China is unfazed.

It is a matter of drawing line and letting other countries know how they will face its ire if they try to engage with Taiwan beyond a limit.

Read more:

How China went about 'punishing' Lithuania:
https://www.theguardian.com/world/2021/aug/26/chinas-trade-halt-with-lithuania-over-taiwan-ties-sends-warning-to-europe

What's behind China-Taiwan divide?
https://www.bbc.com/news/world-asia-34729538