Sweden’s approach to China’s Belt and Road Initiative

27 Dec 17

By Mikael Weissmann - Senior Research Fellow, Swedish Institute of International Affairs; and Elin Rappe - Analyst and Programme Manager, Swedish Institute of International Affairs

Sweden and the Belt and Road Initiative

China is Sweden’s largest trading partner in Asia and a priority country in Sweden’s export strategy. Sweden exported to China worth SEK 46 billion in 2016 and its imports from China were worth SEK 59 billion. Bilateral exchanges between China and Sweden are now more frequent than ever. Swedish ministers are regular visitors to China and there have been several visits to Sweden by Chinese leaders of varying importance in recent years. Today, 10,000 Swedish companies are trading with China and more than 500 are established there. An increasing number of Chinese companies now invest in Sweden. Scientific and technological cooperation between the two countries has expanded to new areas such as bio-medicine, energy saving and environmental protection.

Thus, given China’s economic importance to Sweden, a large-scale initiative such as the BRI being promoted by Xi Jinping — domestically, the most powerful Chinese leader since Mao Zedong—might be expected to engender great interest among Swedish policymakers and the business community alike. Thus far, however, responses have been quiet and often cautious. Swedish stakeholders have displayed a tendency to wait and see how developments unfold before making a decision on how to react. At first, the significance of the project was unclear. At the beginning of 2015, however, the initiative took a big step forward when China devoted US$ 50 billion to the new Asian Infrastructure Investment Bank (AIIB) and allocated US$ 40 billion for a Silk Road Fund to finance investment. Sweden became a founding non-regional member of the AIIB, although it is somewhat indicative of Sweden’s cautious approach that it decided to join the bank on the last day on which it was possible to register.

The Silk Road Economic Belt, that part of the initiative most relevant to Sweden, is still in its early stages. So far, the focus has been mainly on China’s closest neighbourhood, with a particular emphasis on Central Asia. While it is clear that Chinese funding has been targeted at Central Asia, in later stages the aim is that the initiative will be more focused on Europe. China claims that the initiative has received a positive response from the 60 countries along the route as well as international organizations such as European Union (EU), the Association of South East Asian Nations (ASEAN), the Shanghai Cooperation Organization (SCO) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP).

The real impact of the BRI on Sweden has been very limited. While the BRI has received more attention in the past year or two, as of late May 2016 the Swedish Foreign Ministry was unable to identify any BRI projects in Sweden. However, the Chinese Embassy uses a broader definition of a BRI project and at the same point identified Chinese attempts to bid for the construction of a Swedish high-speed railway and two private wind power projects as BRI projects. China also emphasizes the importance of building a connection between China and Sweden—or, on a larger scale, between Asia and Europe—and that these kinds of infrastructure projects would give rise to a “win-win situation”.

There are still some uncertainties about the execution of the high-speed railway, as well as some scepticism in Sweden about the idea of Chinese companies building such a railway.  However, China sees this as its most important BRI project in Sweden. Chinese companies have already registered in Sweden and are just waiting for the decision to proceed to be taken by the Swedish Parliament. China has no experience of building high-speed railways in developed countries and Chinese companies would like to acquire this experience and a reputation for having these competences, which would open many new doors.

China’s approach in Sweden

When discussing China’s strategy for promoting the concept of the BRI in Sweden, it is important to remember that Sweden is at the very end of the Belt Road, which means that it is obviously not one of the most important countries in the BRI context. The Swedish Foreign Ministry believes that the BRI could lead to business opportunities for Swedish companies, but that these will come in China or Central Asia rather than for companies operating in Sweden.

Diplomacy and business contacts are the tools used by China to promote the BRI in Sweden. China promotes the concept by raising it in its diplomatic meetings with the Foreign Ministry, Swedish government officials and Swedish companies. The Foreign Ministry of Sweden shares this view of the strategy used to promote the BRI. The Chinese Embassy in Stockholm has supported events on the BRI in Stockholm and made presentations to Swedish companies that have shown an interest in the Silk Road Initiative.

China’s promotion of the BRI in Sweden is targeted mainly at politicians. However, most of the BRI-related contacts in Sweden have been taking place between Chinese companies and various government agencies, such as the Swedish Transport Agency on the subject of the highspeed railway. In addition to business, Ambassador Chen Yuming has also mentioned the importance of student exchanges and increased cultural exchange between China and Sweden as important aspects of the BRI. However, when asked directly what China has done to actively engage Sweden in the BRI, a representative from the Chinese Embassy responded: “Not much frankly”.

China welcomed Sweden’s decision to become a founding member of the AIIB—but the fact that Sweden announced the decision on the last day that it was possible to register did not signal strong support for the Bank. Within the AIIB, China has not prioritized Sweden because it is a small country and because of its perceived lack of serious commitment. This should be contrasted with countries such as the United Kingdom, which was eager to register to become a co-founder of the AIIB and realized early on the importance of President Xi’s initiative.

Even though Sweden is not one of the most important countries for China in the Silk Road Initiative, China still sees great potential for increased cooperation if Sweden were to decide to engage more actively in the BRI. From China’s perspective, Sweden needs to join the infrastructure projects within the AIIB. According the Embassy, Chinese companies in Sweden want to cooperate more with Swedish companies, but so far the Swedes have been overcautious. There is particular interest in deepening cooperation with Sweden on high-tech manufacturing and emerging industries.

The Swedish response to the BRI

The Swedish governmental actors working on the BRI are mainly in the Foreign Ministry, Growth Analysis and the public-private partnership Business Sweden. The Ministry for Enterprise and Innovation [Näringsdepartementet] has not been actively involved in these questions, but there are signs that this has been changing as the BRI has gained more attention in the past year or so. For instance, the former Minister for Infrastructure, Anna Johansson, participated in the “Belt and Road Forum for International Cooperation” in Beijing in May 2017. Nonetheless, besides the Swedish companies in China, the Swedish Embassy in Beijing, Growth Analysis and Business Sweden still seem to be the three musketeers working on the BRI on the ground in China. Business Sweden’s office in Istanbul monitors the Silk Road Initiative in Central Asia, as does the Eastern Europe department of the Foreign Ministry in Stockholm. Together with Growth Analysis and Business Sweden, the Swedish Embassy in Beijing has organized various seminars on the AIIB. The embassy also regularly organizes visits to Chinese infrastructure projects for Swedish companies, together with Growth Analysis.

There are no formal agreements on the BRI between the governments of Sweden and China and there is no national strategy on the BRI. In fact, as late as a year ago there was scepticism in the Foreign Ministry about whether such a strategy was needed. The BRI was seen as an issue mainly to be handled locally by the embassy in Beijing. While there have been some signs that this perception is changing, Sweden is still far behind other countries. Many other European countries have acted much more swiftly to monitor developments and investigate the possible business opportunities arising from the BRI. Poland, for example, is lobbying to change the route of the Silk Road Economic Belt to go through its territory.

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