Finland, China ready to step up partnership

Chinese President Xi Jinping (1st L) and his wife Peng Liyuan (2nd L) welcome Finnish President Sauli Niinisto and his wife ahead of the talks between the two presidents in Sanya, south China's Hainan Province, April 6, 2013. [Photo: Xinhua]

Chinese President Xi Jinping's state visit to Finland this week is expected to give a further boost to ties between the two countries, with economic cooperation, the EU and the Arctic likely on the agenda.

Xi will travel to Finland on Tuesday at the invitation of Finnish President Sauli Niinistö, becoming only the second Chinese president to visit the Nordic country that 67 years ago became one of the first Western nations to establish diplomatic ties with China.

The three-day visit comes as Finland celebrates its 100th anniversary of its independence this year, providing symbolic opportunity for stepping up bilateral relations that are already smooth and close.

"The visit is very significant. China’s President has visited Finland only once before, in 1995," says Jyrki Kallio, Senior Research Fellow at the Finnish Institute of International Affairs (FIIA) in Helsinki. "This may give a boost to further cooperation between Finland and China."

Xi will arrive in Finland with his wife Madame Peng Liyuan and a high-level delegation. The visit will be Xi's first to a Nordic country as head of state – he visited Finland in 2010 when vice-president – and his first trip to a European Union member country this year.

According to Chen Li, China’s ambassador to Finland, this shows that China pays high attention towards the traditional friendship between the two countries.

"At present, the Sino-Finland relations is at the best historical phase and on the fast track of development," Chen says.

In Helsinki, Xi will hold talks with President Niinistö and meet with Prime Minister Juha Sipilä and Speaker of Parliament Maria Lohela to discuss bilateral and international issues.

In the international arena, the Chinese president has sought to present his country as a defender of globalisation and multilateralism in the wake of the recent backlash against free trade and open borders in Europe and the United States.

"Xi is probably most interested in hearing Finnish views about the development of the EU, of Russia, and of EU-Russia relations. All these questions have great relevance to the world economy and are of interest to China. Also the EU-US relations will surely be discussed, as the views of the Finnish leaders may provide new and useful insights for Xi," says Kallio.

According to the Chinese foreign ministry, a number of cooperative deals will be signed during the visit.

"Finland and China have been negotiating on a new type of bilateral partnership, and it is possible that we shall hear an announcement regarding the state of play of such a partnership," says Kallio.

Increasing Chinese investment and tourism to Finland

Finland was the first Western nation to begin trading with China as early as in the 1950s, and strong economic ties remain the bedrock of bilateral relations today.

China is Finland’s fifth largest trading partner after Germany, Sweden, Russia, and the Netherlands, and up to 400 Finnish companies, including elevator and escalator maker Kone and paper giant Stora Enso, currently operate in China.

"Trade with China is more important for Finland than for many other European countries," says Mikael Mattlin, Senior Lecturer in International Politics at the University of Turku.

"Finnish companies have also invested considerably in China. This is now being reciprocated, as Chinese companies recently have become increasingly interested in investing in Finland on a larger scale."

While Chinese investment to Finland remains smaller than the US$11bn Finnish companies have invested in China, it has increased over the past couple of years as part of a larger global shopping spree by Chinese companies.

Chinese investors are interested in Finnish technology and know-how in areas such as energy, clean tech and digitalisation. Recent deals include Tencent’s US$8.6bn takeover of game developer Supercell, Kaidi's plans to build a billion-dollar bio refinery in Kemi and National Silicon Industry Group's US$190m takeover of chipmaker Okmetic.

Mattlin says that Finland has in general adopted a welcoming attitude towards Chinese investment. The more critical media discussion surrounding Chinese investments that has recently been seen in many Western countries, including in the UK, Germany and Australia, has largely been absent.

"Finland has then tended to focus on the economic opportunities rather than, for example, potential security threats," he says.

Expanding commercial ties with China is hoped to help boost the Finnish economy, which continues to struggle due to the decline of Nokia and traditional paper industry, EU trade sanctions against Russia, ageing population and high labour costs, among other factors.

Besides investment, China has also become a major source of tourism to Finland, thanks to direct flight connections from Helsinki to several Chinese cities.

Last October, Chinese e-commerce giant Alibaba chose Rovaniemi in northern Finland as the venue to announce the rebranding of its online travel platform – from Alitrip to Fliggy – and said it would aim to bring 50,000 Chinese tourists to Lapland this year.

China's Belt and Road initiative

Since Xi Jinping took over the Chinese presidency in 2013, Beijing has taken a more active role in global economic governance by putting forward ambitious initiatives of its own.

The Belt and Road initiative seeks to boost economic integration with infrastructure investments in countries along the ancient Silk Road from China to Europe and Africa, while the US$100bn Asian Infrastructure Investment Bank (AIIB) was set up in 2015 as an alternative source of development finance to the World Bank and the Asian Development Bank.

China's ambassador Chen Li says the two countries could expand cooperation in four areas including the Belt and Road initiative, Arctic affairs, China’s links with Northern Europe as a whole, and global governance.

"Being located in the extension line of the northwest part of the Belt and Road, Finland has remarkable advantages of geography, technology, resource and talents in the Baltic Sea region," Chen argues.

Finland was one of the AIIB's original 57 founding members but, like other Nordic and Western European countries, it has yet to officially sign up to the Belt and Road initiative, also known as the One Belt One Road initiative (OBOR).

"Finnish business actors are always looking for new business opportunities, and the OBOR and the AIIB have not passed unnoticed. Some Finnish actors are involved in related projects outside of Finland. Finland itself still seems to be outside of reach of the OBOR," says FIIA's Kallio.

Arctic cooperation

Another opportunity for increasing cooperation, according to China’s ambassador, arises in May when Finland assumes chairmanship of the Arctic Council, an intergovernmental forum for eight Arctic countries – Canada, the Nordic countries, Russia and the United States – and indigenous peoples of the Arctic.

Ambassador Chen says both China and Finland hope to work more together in areas including Arctic research, environmental protection, communication and transportation.

Although China is not a littoral Arctic country it has shown interest in the region's exploration and development and was granted observer status to the Arctic Council in 2013.

Finnish engineering company Aker Arctic Technology has designed a research vessel for the Polar Research Institute of China, the construction of which began in December and should be completed in 2019.

Meanwhile, a study by former Finnish Prime Minister Paavo Lipponen found last year that laying a new high-capacity optical fibre cable via the North-East Passage from Asia to Europe would be politically and technologically viable, with countries including Russia, China, Japan and Norway interested in the project.

The cable link would significantly speed up telecommunications between Europe and Asia and provide Finland with an opportunity to become an international data traffic hub.

Stop-over in Helsinki before meeting with Trump

After concluding his visit to Finland, Chinese President Xi Jinping will travel to the United States to meet President Donald Trump at Mar-a-Lago, Florida from Thursday to Friday.

Finnish experts say Helsinki is located half-way between Beijing and Florida and provides a perfect stop-over place for Xi on his way to the much-anticipated first meeting with Trump.

"Xi can have interesting discussions with the Finnish leadership which may be useful for his meeting with Trump," says FIIA's Jyrki Kallio. “Xi's visit to Finland this year – the centenary year of the Finnish independence – has most likely been under discussion for a long time, and now it became possible to kill two flies at once.”

Whereas Xi’s visit to Finland is likely to result in boosting bilateral ties, it remains to be seen if this will be the case with the US visit too.