Iceland blocks Chinese businessman from buying land

A Chinese billionaire who was blocked from buying a large chunk of Iceland has lashed out at what he calls Western nations’ “mistrust and fear” of China as they seek to constrain the Asian giant’s rise.

Huang Nubo planned to build a hotel featuring a golf course and hot air balloon rides on a 300-square-kilometer plot ( roughly 115 square miles) of northeastern Iceland, roughly a quarter of the size of Hong Kong. His bid sparked national security concerns in Iceland, despite widespread popular support for the $200 million investment plan in a country still reeling from its 2008 financial collapse. Then on Saturday, Icelandic Interior Minister Ogmundur Jonasson ruled that the deal did not meet legal requirements for land sales to companies outside Europe.

“There are still double standards,” complained Huang Nubo, who had planned to build a massive tourist resort on a remote stretch of frozen heath. “The Western world asks us to open the Chinese market without restrictions, but when it’s a question of their resources they close the door on us,” he said in a telephone interview.

Mr. Huang’s problems are not deterring China from seeking to snap up bargains in crisis-hit Europe, however. “Next year we will send a delegation to promote trade and investment to European countries,” Trade Minister Chen Deming told a meeting of Chinese firms with overseas interests on Monday.

“Some European countries are facing a debt crisis and hope to convert their assets into cash and would like foreign capital to acquire their enterprises,” Mr. Chen said. “We will be watching closely and pushing forward progress.”

Huang, who was ranked 161 in last year’s Forbes magazine list of the richest Chinese, accused Western governments of often wrongly assuming that the Chinese military is behind Chinese foreign investments.

Other Chinese firms have run into national security objections in their efforts to expand internationally. Most notably, Huawei, a leading telecoms network provider, has seen three deals in the US fall through in the last two years because of political pressure and claims that the company’s founder has links to the Chinese military.

Sensitive to Chinese bids for land

Other countries are especially sensitive to Chinese bids for land abroad. The Brazilian parliament, for example, is currently debating a bill that would ban Chinese investors from buying land, while allowing US or European firms to own it. Chinese agricultural companies are seeking to establish farms in Latin America, Central Asia and Africa to meet China’s growing demand for food, but Beijing does not allow foreigners to own land in China.

Chinese firms, both state-run and privately owned, are stepping up investments abroad in their bid to acquire natural resources, technology and brand names. Chinese overseas direct investment increased fourteenfold between 2003 and 2008, and has doubled again since then, according to official figures.

Such investment remains comparatively insignificant on a global scale, however. China accounts for less than 1 percent of the world’s stock of overseas direct investment, compared with America’s 22 percent share, and China invests only 2.3 percent of its GDP abroad, compared with the 27.7 percent that the average developed country devotes.

The head of China’s sovereign wealth fund, the China Investment Corporation, is holding out the prospect of more Chinese investment in the United States and Europe as one of the keys to a global economic recovery.

In an op-ed article appearing over the weekend in the Financial Times, CIC chairman Lou Jiwei argued that Western governments should follow Beijing’s example during the 2008 financial crisis and stimulate economic growth by investing in  roads, railroads, energy, water, and digital communications projects.

“Infrastructure in Europe and the US badly needs more investment… and China is keen to get involved,” Mr. Lou said. “Infrastructure represents a suitable choice for sovereign wealth funds to invest.”