Chinese economic statecraft and implications for Norwegian security

The purpose of this report is to shed light on how China may use economic instruments to pursue strategic, foreign policy goals (economic statecraft) and to discuss the implications for Norwegian security. We seek to answer this by starting the construction of a data set, based on open sources, which provides information on China's use of economic instruments, and analyze key characteristics and patterns that emerge from cases in the data set. Combined with information about China's economy and interaction with Norway, the dataset provides a good foundation for discussing how China can use economic statecraft against Norway. In the period 2000–2021, China appears to have used economic statecraft in several different ways. Overall, we distinguish between potential attempts at exercising power and accumulating power. The latter enables economic – or other types of – use of force in the future. We find that China predominantly seems to have exercised power – mainly pressure – by implementing various forms of import restrictions and reductions in tourism. We assess that China has also tried to accumulate power through economic statecraft by strengthening Chinese military capabilities (e.g. through technology transfers) and by shaping vested interests and perceptions in other countries. However, there are several types of cases we are unable to detect through open source search. This could imply that actions with the greatest potential to constitute a threat to Norway’s, and other countries’, security – such as facilitating future sabotage of infrastructure – are difficult to detect, understand and assess based on empirical data. What are the implications for Norway? Although China is one of Norway's most important trading partners, the Norwegian economy is less dependent on economic interaction with China than several other advanced economies. This means that China may exercise power against Norway by implementing import restrictions and similar measures, but that those actions may not pose a threat to Norwegian security. However, some investments that grant Chinese actors control over critical functions and infrastructure in Norway may constitute a security threat. Some important functions in Norway may also depend on Chinese resources and expertise. Withdrawal of these may threaten Norwegian security. If China continues to grow and increase its importance in global value chains, this challenge may be aggravated. Furthermore, it is equally important to understand how China can exploit economic activity in Norway to accumulate power. This can take place as attempts at shaping vested interests and perceptions of Norwegian businesses, politicians, elites and the population, conducting intelligence activities on Norwegian territory, facilitating future sabotage, or strengthening China's military capabilities through access to technology, knowledge and resources. We assess that Norwegian businesses and society should be prepared for such attempts by China to accumulate power, and that these actions, in principle, could pose a threat to Norwegian security. Going forward, it will be important to strengthen institutional and legal mechanisms to identify and protect against potentially security threatening use of economic statecraft. It will also be important to strengthen Norway’s ability to coordinate and build knowledge across public authorities, businesses, society, and between Norway and like-minded countries, for example through EEA/EU and NATO.