The recent backlash against China in the Nordic Arctic: Prospects for future Chinese engagement in the region

Summary

• Five years ago, China expressed hopes for increased collaboration with the Nordic states in the Arctic. Chinese investments in Nordic mineral resources are still minimal, however, and none of the ambitious infrastructure projects discussed have come to fruition. The backlash against China in recent years has undoubtedly hindered its investment prospects in the region.
• Various factors have fuelled China’s Arctic backlash. First, Xi Jinping’s authoritarian leadership has heightened Nordic suspicion that Chinese companies serve the strategic interests of the Chinese Communist Party, including its military objectives. Second, China’s high-handed foreign policy, notably its “wolf warrior diplomacy”, has tarnished its soft power in the Nordic region, leading to diplomatic tensions and harming perceptions of China as an economic partner. Third, geopolitical rivalry with the US has been extended to the Arctic, where US efforts to counter Chinese influence have raised Nordic concerns about jeopardizing relations with the US.
• In addition, Chinese actors might have exaggerated their Arctic agreements with Nordic partners domestically, triggering a backlash when discrepancies emerge, such as in agreements with Greenland and Finland. These factors have intensified scrutiny of Chinese investments, prompting Chinese companies to reassess the political risks of investing in the region.
• For the foreseeable future, China’s position of “pro-Russian neutrality” in relation to Russia’s war in Ukraine, European efforts to reduce dependency on China for the supply of critical raw materials and the decisions by Finland and Sweden to join NATO are likely to place further limits on Chinese activities in the Nordic Arctic.
• While Chinese investment in infrastructure and mining is likely to be restricted, there will continue to be opportunities for China to engage in the Nordic Arctic. There appears to be a relatively strong desire among Nordic participants to keep China involved in Arctic governance, in particular environmental governance, and China is a sought-after partner in the Nordic shipping industry. This poses a challenge for the Nordic states: how to sustain and oversee cooperation while simultaneously guarding against security risks.
• In future, Nordic countries’ decisions on the feasibility and desirability of cooperation with China will be shaped not only by their own assessments of the benefits and risks associated with specific projects, but also by broader geopolitical factors, including Russia’s war in Ukraine and US-China rivalry.
• Recently implemented investment screening mechanisms in Sweden, and the anticipated tightening of such measures in Norway and Finland, will safeguard against potentially harmful Chinese investment. If properly monitored and regulated, Chinese participation in Arctic governance could mitigate environmental risks and enhance maritime safety, while potentially weakening the growing Sino-Russian alliance in the region.

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