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Focus

Two sides of Sino-Swedish relations

While Sweden’s trade with China continue to increase, the political relations have become tense over the past couple of years.

TEXT: Jan Hökerberg
6 NOVEMBER, 2019

In May 1950, Sweden became the first Western country to establish diplomatic relations with the People’s Republic of China.

Torsten Hammarström was Sweden’s first ambassador to China. When he handed over his letter of credentials in June 1950, he was received by chairman Mao Zedong personally, which was quite unusual, and a sign that China attached great importance to this diplomatic breakthrough.

Mikael Lindström, a former Swedish ambassador to China, explains how important it is in China to maintain relationships with old friends: “The fact that Sweden was first among Western countries to establish diplomatic relations was for many years even mentioned in Chinese secondary school books.”

Since the establishment of diplomatic ties, and especially since China’s launch in the late 1970s of its “reform and opening up” policy, the economic and trade relations between Sweden and China has grown substantially.

“Before 1979, Sweden’s total trade with China amounted to around US$100 million annually. Within 15 years of ‘opening up’, our bilateral trade had grown 10-fold to US$1 billion per year in 1994. And today, it’s around US$15 billion,” says David Hallgren, trade commissioner for China at the Swedish trade and invest council Business Sweden.

“Over the years, Sweden and China have had a constructive and surprisingly open relationship,” says Thomas Lagerqvist, chairman of the Sweden-China Trade Council (SCTC), the oldest and largest China organisation in Sweden, founded in 1980.

“China has become aware that Sweden has much to offer, for example in terms of innovation. A good example is that Sweden is the only country in the world that has signed a bilateral corporate social responsibility (CSR) agreement with China,” he says.

In the spring of 2010 when the two countries celebrated their 60th anniversary of diplomatic relations, then Vice-President Xi Jinping visited Sweden.

“Sending someone of this high level to Sweden was a strong signal from China, expressing its support for good relations between the two countries. Three years earlier, president Hu Jintao visited Sweden – the first Chinese head of state to visit a Nordic country. The relationship between Sweden and China was really blossoming 10-15 years ago,” says Lindström, who was Sweden’s ambassador to China from 2006 to 2010.

US$15 billion

Sweden’s total bilateral trade with China has grown from around US$100 million in the late 1970s to around US$15 billion today.

However, over the past couple of years there have been a number of disruptions in diplomatic ties between the two countries.

The case of naturalised Swedish citizen and bookseller Gui Minhai, who went missing in Thailand in 2015 and has been detained in mainland China since then, is one of the issues. Others are a row over a family of Chinese tourists being turned away from a Stockholm hotel and a satirical Swedish television show about Chinese tourists.

China’s representation in Stockholm has reacted sharply to these, and other, issues. In a report, released in June and titled “China’s propaganda campaign in Sweden, 2018-19”, the Swedish Institute of International Affairs (UI) said that the Chinese embassy in Stockholm has issued 57 statements since the start of 2018 accusing media, police and others in Sweden of misrepresenting China.

The embassy started ramping up its criticism in the summer of 2018 and it peaked in September, when 11 statements were issued.

The Chinese embassy demanded an apology for “instigating racial hatred” and the foreign ministry issued a travel warning for Sweden soon after the broadcast.

“It seems that we are currently having a two-dimensional relation with China. One at a bilateral level which continues to see business relations develop as constructively as before. And a second dimension, less constructive and positive, with China’s official representation in Sweden,” says Lagerqvist.

“According to the recent report by UI, one might think that China’s representation is currently using Sweden as a ‘test lab’ for a campaign to influence the Swedish government, media and the public. So far, however, and sadly, according to a global survey, that has only added to increased negative Chinese sentiment,” he adds.

In September 2019, the survey by Pew Research Center showed that 70 per cent of Swedes have an unfavourable opinion about China. Of the 32 countries surveyed, only Japan exceeded that figure and scored 85 per cent. Canada came third with 67 per cent.

According to the same survey, only 25 per cent of Swedes have a favourable opinion about China, down 17 percentage points since the 2018 survey. Only Japan has a lower ranking than Sweden.

focus_David

Today, China is a key market for Swedish companies.”

David Hallgren, Business Sweden

When China’s foreign ministry in September 2018 issued a travel advisory warning for Sweden, it did not affect Chinese tourism in Sweden that much. The warning was lifted in June 2019.

“Sweden received around 347,000 guest nights from China in 2018, a drop of 4 per cent compared with 2017. There were slight fluctuations in the winter season of 2018-2019. But they were very small numbers so we can hardly tell if it was due to the impact of the travel warning,” says Lynn Li, country manager at Visit Sweden.

“Chinese guest nights in Sweden in 2019 until August showed a very positive growth of 17 per cent. And among four Nordic countries, Sweden had the strongest growth last summer,” she adds.

“Last year, right after the hotel incident, we received enormous criticism in social media. This year there is much less, but still from time to time we’ve spotted or received negative comments. We don’t believe that these voices are our target audience, however, but we still mustn’t ignore them,” says Li.

Visit Sweden continues to promote Sweden in various ways, with a focus on its lifestyle and progressive culture.

“For example, a WeChat post featuring Sweden’s refuse classification was very popular. Posts introducing Swedish nature such as the ‘idyllic countryside of Sweden’ were also very popular,” says Li.

“Our long-term strategic plan is to welcome more individual travellers who stay longer and spend more,” she says.

focus_Mikael

The relationship between Sweden and China was really blossoming 10-15 years ago.”

Mikael Lindström, former ambassador to China

In September, the Swedish government submitted a document to the parliament suggesting a new China strategy.

“Reinforced work on issues related to China requires strengthened knowledge, as well as an enhanced dialogue between the authorities, business and civil society,” the government said, stating that this commitment will require an investment in knowledge-enhancing measures.

Therefore, the government said, it will begin work on establishing a national knowledge centre for China-related issues.

“We see that as Sweden starting to prepare itself for developing the relationship with China to a higher knowledge level,” says Lagerqvist of the SCTC.

“It’s a pragmatic document for protecting Swedish interests and to handle future challenges,” says Lindström.

According to “The Business Climate Survey for Swedish companies in China 2019”, published by the Swedish embassy and consulate general, Business Sweden and SwedCham China, China remains a highly prioritised market for most Swedish companies.

For two-thirds of the surveyed companies, China is either the first, second or third most important market in terms of its contribution to group revenue.

Most of the surveyed firms view the current business climate in China in a positive light, awarding it a slightly higher rating than in 2017.

Among perceived challenges are longstanding concerns related to regulatory and legal frameworks and trade procedures – and issues of red tape persist.

focus_Thomas

It seems that we are currently having a two-dimensional relation with China.”

Thomas Lagerqvist, Sweden-China Trade Council

China is Sweden’s largest trading partner in Asia and Sweden’s eighth largest trading partner worldwide.

Despite recent tense political relations, Chinese investment in Sweden saw a threefold increase in 2018, from US$1.5 billion in 2017 to US$4.5 billion in 2018. However, much of that refers to Geely’s investment, not only in Volvo Cars, but also in AB Volvo’s trucks, buses and construction equipment.

Swedish exports to China grew modestly at 4 per cent in the first seven months of 2019, while Chinese imports to Sweden grew by 23 per cent.

Swedish industries that show a growing export trend to China are pharmaceuticals, automotive parts and trucks, while private cars and combustion engines are decreasing due to the downward trend in the car industry.

It is definitely possible for Swedish companies to do business with China while Swedish opinion leaders publicly disagreeing over political issues.

“Apart from a travel warning, China has to our knowledge not applied any significant economic pressure to Sweden,” said Björn Jerdén, an analyst at the Swedish Institute of International Affairs, in the South China Morning Post.

“Let’s remember that China values good economic relations with European states, just as European states value good economic relations with China,” he said.

Former ambassador Lindström points out that China has gone from being a supplier of cheap consumer products to becoming an advanced economy with a focus on the service sector. “This will definitely provide new opportunities for Swedish companies in the future,” he says.

Hallgren of Business Sweden says that the characteristics of bilateral trade between Sweden and China has shifted much over the years. Initially, China was a low-cost manufacturer and then Swedish companies started to sell to China.

“Lately, we’ve seen China becoming important for digitalisation and innovation. More companies establish research and development centres or regional offices in China. Today, China is a key market for Swedish companies, since China has become a much more integrated and complex puzzle piece in the international system,” says Hallgren.

focus_Lynn

Chinese guest nights in Sweden in 2019 until August showed a very positive growth of 17 per cent.”

Lynn Li, Visit Sweden