Stories of the Finnish Arctic Expertise
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China seeks to become an Arctic partner and player

In recent years, China has undertaken an effort to demonstrate its growing knowledge of, and commitment to, the Arctic region. A new study presents a multifaceted picture of China’s rise as an actor in the Arctic, and as Finland’s Arctic partner.

The Arctic region is rapidly transforming to a global theatre with an increasing number of non-Arctic stakeholders. One illustration of this transformation is the growing presence of China in the Arctic. China is not an Arctic State, since it has no sovereign areas in the Arctic, but it seeks to become an Arctic player.

Co-operation between Finland and China is growing, including modest co-operation in Arctic questions. In Finland, Chinese actors focus mainly on bio-economy, and to a degree on tourism cooperation. The authors of the study provide an overview of a broad spectrum of Chinese-Finnish interactions in different contexts, including investments in Northern Finland and co-operation within the areas of Finnish Arctic expertise and research.

The report China in the Arctic and the Opportunities and Challenges for Chinese-Finnish Arctic Co-operation was produced as a part of a project "Finland's Arctic Council chairmanship in the times of increasing uncertainty. The project is funded by the Finland's Prime Minister's Office as part of the Government’s analysis, assessment and research activities. The Arctic Centre of the University of Lapland, the Finnish Institute of International Affairs and the Marine Research Centre of the Finnish Environment Institute carried out the study jointly.

Co-operation between Finland and China received a political boost with the visit of President Xi Jinping to Finland in 2017 and the follow-up visit by Finnish President Sauli Niinistö to Beijing in January 2019. The report demonstrates that there is also modest co-operation in regards to Arctic questions, and there is a notable potential for enhancing collaboration between Chinese and Finnish actors in this respect. Finnish companies are operating in China and Chinese investments are starting to enter Finland, including in the northern regions of the country. There are possibilities for Finnish Arctic expertise to bring commercial benefits to Finland by supporting China’s expanding Arctic activities.

However, the authors of the report note that at present, there are only a few instances of realised investments (such as accommodation in Lapland) and implemented contracts. Most projects associated with Chinese actors remain at the stage of planning or initial ideas. There is modest progress regarding several Finnish infrastructure projects, which may entail some form of Chinese involvement. These include the plan to lay a marine fibre-optic cable connecting China (and Asia) and Finland (Europe). The role of Chinese actors in this project is unclear.

Many potential Chinese investments in Finnish Lapland have yet to be implemented, among them two bio-refinery and biofuels projects in Kemijärvi and Kemi, respectively, and further investments in tourist accommodation. In Lapland and northern Finland, there remains great potential for further winter tourism and sports investments, cold climate testing or data centres. However, those projects, as of now, await realisation.

There is, in principle, much potential for commercialising Finnish Arctic expertise in China. Currently, the most promising area is the design and construction of polar-class vessels and components. It is in this area that examples of implemented projects can be found, including the role of Aker Arctic in designing China’s second polar icebreaker (Xuelong II) or the construction of engines capable of operation in polar conditions by Wärtsila.

While there are no current instances of cooperation, potential also exists in Finnish clean technology, future icebreaking services and in related technologies. The approach in Finland is to maintain technological expertise and development in the country, especially when it comes to the design of polar-class vessels and installations. Consequently, Finnish decision-makers are unwilling to invite foreign direct investments into this sector.

In some business areas the ‘Arctic’ labelling of Finnish products and expertise has been a marketing advantage, but this is not necessarily the case for all sectors if Finnish technologies come to be seen in China as applicable only to the northern climate, such as construction, water engineering or air-conditioning technologies.

There are various concerns and risks related to cooperation with Chinese partners. Some fear increasing Chinese influence. There are anxieties about Chinese (and any major foreign) investors and operators gaining too strong a long-term influence on the regional economy in Lapland, and China as a whole gaining too great an influence on the Finnish national economy. This would also translate to Finland’s higher level of exposure to fluctuations in the Chinese economy.

Secondly, there are concerns related to the environmental and social performance of Chinese actors as investors or business partners. The impacts of Chinese investments on the local business landscape and labour market need to be assessed for each project. Moreover, issues related to intellectual property rights remain problematic. Local actors, who are often strongly in favour of Chinese investments, have misgivings that plans announced by Chinese investors often remain unimplemented or ephemeral.

The authors of the report suggest that Finland should consider dedicating resources towards better understanding Chinese foreign influence, the modes of operation of Chinese business actors and generally improved understanding of the Chinese society and culture, including facilitating Mandarin language skills in Finland. 

You can download the full report here

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