China's Economic Influence in the Arctic Region: The Nordic and Russian cases

Authors:

  • Oscar Almén
  • Christopher Weidacher Hsiung

Publish date: 2022-06-20

Report number: FOI-R--5326--SE

Pages: 117

Written in: English

Research areas:

  • Säkerhetspolitik

Abstract

As Chinese investment and engagement in the Arctic have increased, so have the suspicions and concerns, of not only the Nordic states, but also Russia, for the security implications of larger Chinese engagement in the region. Using its economic influence for strategic purposes has become a main component in Chinese foreign policy strategy, or in what is often referred to as China's economic statecraft. This study examines Chinese economic statecraft towards the Nordic countries and Russia with a focus on the Arctic region. The study finds that Chinese actors have had many intentions and expended much effort in attempting to invest in the Arctic, but few of these plans have actually resulted in completed deals. For the Nordic countries, while trade with China and Chinese FDI (foreign direct investment) in the region keep increasing, general economic exposure to China is still limited. As for Russia, economic vulnerability is relatively higher. China is Russia's largest trading partner but Russia is far less important for China. The Russian economy is gradually becoming more linked to the Chinese market and economy, especially in the domain of energy. These trends have all been exacerbated due to the ongoing war in Ukraine. Chinese economic statecraft is not always directed against a country's economy as a whole but may target specific companies or sectors. As shown in this study, China has, with varying degrees of success, used punitive economic methods against some Nordic governments and other actors in order to attain political goals. In terms of specific investments, the study identifies a number of cases that could potentially have negative national security consequences. Policy measures, such as legislation on investment screening and excluding Chinese companies from participating in the development of 5G, has reduced the risks of Chinese economic activities in the Nordic countries.

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