The Ice Dragon Cometh: China’s Arctic Ambitions

Massive new investments from China in Lapland are a vital economic lifeline for the region - but can they find enough workers to fill all the new roles?

Northern Lights over Lapland / Credit: Lapland Material Bank

Chinese companies are investing billions of euros in Lapland projects. There’s plans for a railway linking the north of Finland with Asia routes. They’re even sponsoring a Rovaniemi football team and a professor at the University of Lapland.

And the investment is helping to turn around a Finnish region hit hard by population drift and industry closures in recent years.

The Chinese money “has come to be quite important” says Jaakko Ylinampa, Director General of Lapland ELY-Keskus, the Centre For Economic Development, Transport and the Environment.

“We have two huge projects. In Kemi the bio-diesel plant they are planning €1 billion investment, and there is another bio-pulp plant planned in Kemijärvi, another €1 billion” says Ylinampa.

“They’ve also nearly finished a hotel in Napapiiri in Rovaniemi, funding another hotel in Inari and I believe there are several other accommodation projected planned that might be financed by the Chinese” he adds.

With the new Chinese money pouring into Lapland, comes jobs for locals as well.

Construction of the Kemi bio-diesel plant will take 4000 man worker years to complete, and afterwards there will be several hundred permanent jobs at the factory and perhaps the same amount in sub-contractors associated with ongoing work at the plant.

Finnish Investment Lacking

While Chinese industry has fast become one of the leading investors in Lapland, there’s some lingering resentment that Finnish companies aren’t showing the same faith in a part of the country that local officials see is packed full of resources and potential.

“I think the Chinese kind of show the way that other people, big Finnish companies, pension companies, could also invest in Lapland, because the potential here is quite unique, lots of mineral resources, timber, and lots of superfoods like berries says ELY-keskus’s Lapland Director General Jaakko Ylinampa.

“Of course tourism is another big thing, the same with aviation. Lapland companies tried to persuade Finnair to come, but they didn’t. Then charter flights became bigger, other companies started direct flights to Europe, and only after that, Finnair came along too” he says.

Growing Trade & Train Plan

It’s not just in the Lapland region where economic links between the two countries are strong. Finnish exports of goods to China grew by 30% in the period January to July, compared with 2016, according to official statistics.

Exports of virtually all of the largest commodity sectors grew: in particular nickel, sawn timber, paper pulp and electronics.

In the last three years, China has become the number one export market for sawn Finnish timber when as recently as as 2014 it didn’t even feature in the top five export markets.

Imports from China to Finland are also growing – up 12% year on year – mainly electronics, textiles and clothing.

The back-and-forth of trade between Arctic Europe and China could be the main beneficiary of an ambitious plan to develop rail links ín the north to open up new trade routes between the two regions.

Transport Minister Anne Berner (Centre) recently confirmed a project to study the feasibility of linking Kirkenes in Norway with Rovaniemi by rail. Goods would come from China on a northern sea route to Norway, and then south by train through Rovaniemi as an entry point to the EU.

It’s part of the so-called ‘ice-Silk Road’ initiative proposed by Chinese President Xi Jinping, and Berner says the feasibility study would look at the railway link to Kirkenes from both  local, and international, perspectives.

“The demand for goods and passenger traffic will be investigated. The survey will emphasize the mining industry, foresting, wood processing, reindeer herding and tourism,” Berner says.

Lapland Jobs Boom

While nobody is complaining about a glut of new jobs coming to Lapland, they’re facing one pleasant problem – potentially not enough people to fill specialist roles that will be created at new companies.

“It’s a good thing, but on the other hand it creates problems for us because when we are looking at our demographic structure, there are coming new jobs especially in tourism, but we don’t have that amount of people” says Timo Rautajoki, CEO of the Lapland Chamber of Commerce.

“That the biggest problem we have at the moment, skilled labour, and how to get it” he adds.

During the winter, many companies from the Baltic countries and Poland are supplying workers for the Lapland tourist industry. People also come from southern Finland for seasonal work in resorts and hotels. But now the summer season is growing rapidly as well – foreign tourist numbers increased by more than 25% this summer – so jobs need to be filled all year round, with an added puzzle of where all the extra workers are going to live.

“We have to look at the cities in the south where people have been migrating from Lapland in the last 25 years. We have lost more than 20,000 people” explains Rautajoki.

“Getting some of those people back is one possibility. But it’s a really big question if they will come” he adds.

Traditional industries are also facing a potential worker shortfall, as the current workforce ages out of the job market. There’s new questions about how quickly they can be replaced.

“Something must be done” to fill the new jobs that will come with increased tourism and huge amounts of Chinese investment opening new plants in different parts of Lapland, says Timo Rautajoki.

“It was a surprise for everyone”.