China's Huang Nubo seeks Iceland land for eco-resort Published duration 30 August 2011

image caption The area is close to Iceland's Vatnajokull National Park

A Chinese business tycoon is hoping to buy a large area of north-east Iceland to build a luxury hotel and eco-resort.

Huang Nubo is reported to have offered a billion krona (£5.4m: $8.8m) for the 300sq km (155 sq mile) Grimsstadir a Fjollum region.

Critics of the plan fear it could be used by China to gain a strategic foothold in Iceland.

But Icelandic officials have welcomed the purchase and the further 20bn krona Mr Huang says he intends to invest.

Mr Huang is the chairman of the Zhongkun investment group, and is also reported to have worked as a minister in the Chinese Central Propaganda Department and Ministry of Construction.

Iceland's Foreign Ministry said Mr Huang's plans involved linking up the Vatnajokull and and Jokulsargljufur national parks, in line with his company's "emphasis on nature conservation and environmental tourism".

Mr Huang had promised to co-operate fully with the Icelandic authorities, said the ministry, and to renounce any claims to water from the Jokulsa a Fjollum river which crosses the property.

Iceland's once booming economy suffered a dramatic crash in 2008 with three of its major banks collapsing and is in urgent need of growth and foreign investment.

'Tread carefully'

While the purchase has been approved by the local landlords, officials said Mr Huang had yet to apply for an exemption from laws barring non-EU nationals from buying land.

Some in Iceland have raised concerns about the long term implications of Icelandic territory entering foreign hands, and that the land could give China future access to deep sea ports in the area.

"We face the fact that a foreign tycoon wants to buy 300sq km of Icelandic land. This has to be discussed and not swallowed without chewing," Interior Minister Ogmundur Jonasson wrote on his website.

He said China was known for its "long term thinking alongside buying up the world" and warned against Iceland accepting the purchase without full consideration.

Mr Jonasson said Iceland needed to learn its lesson from the banking crisis and listen to those people cautioning against accepting any investment offered.

"Isn't it necessary to pause and think when we offer Iceland up for sale again?"

However, Iceland's Minister for Industry, Katrin Juliusdottir, told reporters it was clear the country had to "tread carefully".

But she said there was "no reason to get hysterical just because one Chinese man wants to buy some land and invest in tourism in Iceland".