China Desk Newsletter - 挪中关系正常化 Political normalization
On 19 December 2016 Norway and China publicized a joint statement concerning the normalization of the bilateral relations between the two states. Since Liu Xiaobo was awarded the Nobel Peace Prize in 2010 by the Norwegian nobel committee, the relationship between the two countries had deteriorated.
The statement noted that “a level of trust that allows for resumption of normal relationship” had been reached by the two states “through meticulous and numerous conversations”. The statement also emphasized that the countries recognized that they shared “broad common interests” and had “great potential for increased cooperation in many important fields.” In particular, the statement mentioned the willingness “to promote mutually beneficial and win-win cooperation in various fields, such as trade, culture, science, education as well as polar and other issues.”
Even though it surely could have been higher absent the development, trade and investment between Norway and China have, however, increased even during the period of a strenuous relationship. For instance, in 2015 mainland goods worth NOK 23.7 billion were sent to China, which was an increase of almost 18 per cent compared to 2014 and which made China Norway’s eighth largest export market.
Similarly, about half of Norwegian imports from Asia in 2015 originated from China, with a total value of NOK 64.8 billion, which was an increase of 21.5 per cent compared to 2014 and which made China the second largest importer to Norway. In comparison, in 2000 the sum of imports from Norway to China amounted to mere NOK 9 billion.
While NOK 6,9 billion were invested from Norway to China in 2014, investment from China to Norway in the same year amounted to NOK 34, 6 billion. These investments were largely concentrated in the chemicals and energy sector. The 2011 acquisition of the silicone producer Elkem by China National Bluestar for USD 2 billion is the most notable example. But there have also been other big- and midsize transactions in which Chinese investors have acquired interests in Norwegian companies during the recent years, including the acquisition in 2016 by Golden Brick/Kunlun of the consumer business of Opera Software ASA, the software company listed on Oslo Stock Exchange, and the investment made by Reignwood Group into Voss of Norway AS, the bottling water brand.
Caused by the normalization of the bilateral relations between two countries having been announced recently, one may expect more trade and investment activities between Norway and China in the years to come.
BILATERAL TRADE AGREEMENT
Since September 2008, Norway and China have been negotiating a bilateral free trade agreement. As a result of the deteriorating relationship in 2010, the then near-complete negotiations were put on hold. Following the December 2016 statement, however, Norway has stated that the negotiations will commence immediately.
The on-going negotiations cover areas such as trade in goods and services, investments, intellectual property, nontariff barriers to trade as well as sustainable development, but it is likely that much of the negotiations must begin from scratch given that more than 8 years have passed since the negotiations started.
As a result, it is likely that the negotiations will take 2-3 years until an agreement may be concluded. The 2013 free trade agreement between China and Switzerland may be a possible benchmark for the agreement between Norway and China.
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