WITH a population of 320,000—just one tenth that of the Beijing district where it keeps its embassy to China—Iceland has recently become an object of inordinate interest to Chinese policymakers. The two nations signed a free-trade agreement on April 15th, China’s first with any European nation. But with the inherently tiny potential of Iceland’s market, and the lack of any roundabout low-tariff access to other European markets through this deal, trade alone cannot account for China’s infatuation with Iceland.
The more likely attraction for China is access to improving shipping routes through the Arctic as that region warms due to climate change. Last month, one of China’s top experts on polar policy predicted that, by 2020, as much as 15% of his country’s trade would move through the Arctic’s Northern Sea Route. Even if that estimate is exaggerated, there is no reason to doubt that continued shrinking of Arctic ice cover will enhance the area’s importance.
Like South Korea and Japan, China hopes next month to be approved for permanent observer status on the Arctic Council, an eight-member intergovernmental body that seeks to co-ordinate policy for the area. But according to Linda Jakobson, the director of the East Asia programme at Australia’s Lowy Institute for International Policy, China’s Arctic aspirations have “evoked the same kind of concern, even anxiety, that throughout history has accompanied the rise of a large power.” Those concerns, she writes, were aggravated by the “aggressive posture of China’s representative” five months ago at the council’s observers' meeting in Sweden.
An odd-looking effort by a Chinese developer to build an “eco-golf course” and luxury resort on a 300 square km tract in Iceland’s desolate north-east corner also aroused suspicions about China’s strategic intentions in the region. The logic behind the proposal to create a haven of solitude and clean air for wealthy Chinese visitors failed to convince Icelandic officials, who did not agree to waive restrictions against foreign ownership of land.
