Chinese Policy in the Arctic: Norway
In late 2016, the long-standing freeze on diplomatic relations between Norway and the People’s Republic of China came to an abrupt end. This breakthrough, prompted by the signing of a joint statement in which Norway recognized the importance of China’s political interests, spurred an increase in an already prominent economic activity between the two countries. Nowhere is this truer than in the Norwegian Arctic regions, which, under increasing political, economic, and environmental pressures, constitute a vital stepping-stone for the future of regional governance and security. China’s presence is seen by a range of actors either through the lens of opportunities and cooperation, or rivalry and competition, and for Norway, the former appears more prominent than the latter. Nevertheless, shifting geopolitical allegiances and an increasingly pressing need to balance political and economic interests mean that a more nuanced examination into Norway’s relations with China, with a special focus on the Arctic, is in order.
The Norwegian High North and China
Norway is home to a considerable and diverse Arctic territory, industry, and population. Comprising approximately 35% of the country’s territory, the Arctic Circle is furthermore inhabited by about 9% of the population. Apart from the key industries of coal mining, tourism and research, Norway’s largest export sectors in the region are fisheries and aquaculture, and various, including sustainable sources of energy. Overall, Norway and China have enjoyed a relatively vibrant economic relationship throughout the 2000s, and even the 2010s, despite the freezing of diplomatic relations after a Chinese dissident writer was awarded a Nobel Prize. As a rapidly rising economic power on the world stage, China proved to be an attractive economic partner for many Scandinavian countries. In Norway, Chinese investment has increased steadily over the years, and has remained moderate, if substantial compared with the rest of Europe. The largest of these is in the petroleum sector, namely in the Engie E&P company, where the China Investment Corporation currently holds 49% of ownership shares, up from 30% in 2017. For Norway, such cooperation means greater economic and social development for the populations in the High North, as well as a prominent position as a potential centre for the transport of Chinese goods into Europe, and European goods into China. This is where the Arctic region, and Norway’s unique location within, hold a prominent role.
Chinese interests in the Norwegian Arctic, beyond deepening economic and political cooperation with Norway itself, and Scandinavia regionally, are for greater strategic influence more broadly. In its Arctic Policy white paper published in 2018, China highlighted the need for greater scientific research and broader domain cooperation with all member states of the Arctic Council, but also crucially underlined the desire to partake in the region’s economic development as a part of its Polar Silk Road Initiative. With the impact of climate change on the Arctic region intensifying, the potential of new Arctic transportation routes, namely the Northern Sea Route (NSR), promises to create shorter, faster, and more profitable alternatives for China’s trade with Europe. As a front-line nation, Norway is instrumental for this future potential development. Furthermore, Norway’s key export industries, namely fisheries and aquaculture hold an altogether different promise themselves. Despite the widely reported population decline that China experienced over the course of 2022, the population is not only projected to grow, but to reach a stage where the working population is not able to meet the needs of a rapidly ageing one. As a result, China’s energy and food security needs are expected to rise proportionately. With its booming energy sector, front-line maritime borders, and a strong foothold in the Arctic region, which is estimated to house 30% of the earth’s undiscovered natural resources, Norway is in a unique position to meet these varying needs.
China’s Polar Silk Road maritime links. Image Courtesy of China Dialogue Ocean
Food security - Aker BioMarine and aquaculture industry
In fact, the export value of the aquaculture industry increases each year. As a result of high production, several small innovation companies have been established, producing consumer products based on organisms like macroalgae. A popular Chinese demand in recent years has been krill fishing in particular, with the Norwegian company Aker BioMarine leading in the country. Despite describing itself as an Antarctic-based company, Aker BioMarine are also crucially involved in Arctic fishing industries. Accordingly, China has already commenced to explore business and trade opportunities with it and others alike. As a part of this effort, Aker BioMarine hosted an official Norwegian delegation in Shanghai, in November 2022. The event precipitated the signing of eighteen strategic partnership agreements with Chinese companies from the human health and nutrition, and pet food industries. One of these was Fullpet Co., one of the largest pet food manufacturers in China, with ties to the CCP. The Norwegian company’s specialty, krill, is a crucial source of omega-3 fatty acids used for nutrition supplements and as an effective ingredient in pet food.
With the gradual but constant increase in export that has been seen in previous years, krill and other nutritional resources from the Arctic region could become a vital part of the solution to China’s supply problem. As China’s population continues to increase, alternative sources of food become a vital part of the country’s food supply. Featuring chief among these has been krill and other aquaculture resources, since their overall supply has remained relatively unexploited until now. The Arctic and Antarctic regions, where such resources are normally found, are therefore also becoming a part of China’s food security. Greater cooperation with the Norwegian Arctic-based industries is thus proving to be a significant factor for the future stability of the country.
Transport, tourism, and the case of the small town of Kirkenes
The second, and perhaps more well-known story of Chinese expansion in the Norwegian Arctic region comes from the largely successful publicity efforts of the small Arctic town of Kirkenes, and more specifically its mayor. As the first non-Russian maritime port of the Arctic region (situated only 14 kilometres from the Russian border), the town branded itself the northernmost Chinatown, as well as “the most important city on the Polar Silk Road”. Due to its strategically and economically important position, the town of just over 3500 inhabitants has attracted widespread Chinese and Western publicity in recent years, with its ambitions to become a major trading hub. This is largely as a result of climate change, due to which it is predicted that the Arctic could become ice-free during the summer within the next 20 years.
The envisioned investment into Kirkenes is not only a major new port, but important transportation routes stretching far into the European continent. Projects for railway and other transportation routes to Helsinki, Estonia and further are already being planned, and executed. Prominent among these is Peter Vesterbacka’s FinEstBay Area Development (FBA), in cooperation with the China International Railway Group. Construction is said to have begun in 2020, with the first complete lines expected a few years later. Local observers point out that such projects bring vital economic stimulation and development to their town and region, not to mention countless employment opportunities for years to come. At the same time, the local indigenous populations of Norway and neighbouring Finland, the Sami, continue to protest such developments, arguing that it endangers their way of life. Furthermore, as a local expert observed: “An Arctic railway would need buy-in from the Norwegian and Finnish governments.”
This poses probably the most major problem for further Chinese investment, developments and influence in the region. Many Scandinavian countries, Norway chief among them, have taken care to pass preventative measures with regards to the ownership of national resources that could prove vital for national security. Norway’s foreign investment legislation thus requires any Chinese purchase of land or the like to be approved by the Norwegian government. To this day, Norway retains ownership of its Arctic territory, even that which boasts greater Chinese activity, and local officials, such as the mayor of Kirkenes, likewise recognize the importance of keeping ownership of any future infrastructure in Norwegian hands. Indicative is the case of an area of Svalbard, which a relatively high-profile Chinese investor, Nubo Huang, attempted to purchase in 2014. The area, he argued, would be developed and used for tourism-related purposes. The government, however, blocked his purchase, and it instead ended up under national ownership. While this does not completely obstruct further Chinese investment, it significantly limits the freedom Chinese companies may enjoy with respect to their activities.
Implications for Chinese influence and Arctic governance
Despite growing economic and Arctic cooperation between Norway and China, the latter’s involvement remains moderate. Furthermore, it is doubtful that China’s influence in the politics and security of the Norwegian Arctic will increase substantially, even as its economic activity does, mostly due to the legal ownership and foreign investment safeguards that Norway has put in place. Nevertheless, contrary to popular opinion, Chinese investment is not largely seen through the lens of suspicion in local circles. Instead, some even suggest that the presence of a third emerging power in the Arctic has the potential to stop a US-Russia rivalry from boiling over into something more significant, and perhaps more deadly. At the same time, vibrant if cautious relations between Norway and China are proving to be quite beneficial in the context of Arctic governance more broadly as well.
As a prominent member of the Arctic Council, Norway is heavily involved in a number of conservation and research initiatives on its as well as the broader Arctic territory. Among these the ‘Blue Economy in the Arctic Region’, ‘Arctic Marine Risk Assessment’ and ‘Interpretation of the Polar Code’ feature most prominently. Norway is thus considered an active and valuable “norm-maker” in Arctic governance. This is understandable given its superior position in the Arctic Council, of which it is a full member state, as compared to that of China, which currently occupies observer status, despite having self-declared as a near-Arctic state. While Norway is ambivalent about China’s growing role as a “norm-interpreter”, the emphasis remains one of cooperation, most notably in the fields of biodiversity and pollution in the region. At the same time, the stakes continue to rise as the ‘expiration date’ of the Arctic Treaty System approaches. Thus, as Bjornar Sverdrup-Thygeson of the Norwegian Institute of International Affairs observed: “China is still a work in progress.”