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A small Swedish municipality is about to let a high-profile Chinese Communist Party-linked businessman build Scandinavia’s largest port on the Atlantic coast. The case shows the importance of central-level mechanisms to control inbound Chinese investments and prevent China from exploiting legal loopholes to accumulate vital infrastructure far beyond the ‘One Belt, One Road’ project.

In late November, a consortium of Chinese companies led by Hong Kong-based Sunbase International (Holdings) approached the local authorities of Lysekil on the Swedish west coast. Sunbase offered to build Scandinavia’s largest port in this small municipality of some 14,000 people, including infrastructure such as roads, railways, and a bridge to a nearby fjord. Investments in healthcare, schools and elderly care were also promised.

The offer, however, has been surrounded with secrecy. When Swedish public radio first reported on this bid on Nov. 23, the headline described the deal as “secret Chinese investment plans” worth billions of Swedish crowns.

At an early stage, the political opposition in Lysekil also voiced concerns over environmental issues, particularly over the fact that Sunbase demanded an answer within 10 days or it would turn elsewhere with its attractive investment package.

Only this week was it made public that the municipal authority of Lysekil had decided to proceed with the project. A minor debate started with Magnus Sederholm, a medical doctor with a background in the Swedish navy who recently ended his three years as a visiting professor in Beijing, as one of the most vocal critics of the initiative.

Sunbase demanded an answer within 10 days or it would turn elsewhere with its attractive investment package.

On public radio, Sederholm warned of Chinese President Xi Jinping’s plans to control the seas commercially as well as militarily. He warned that if built, the new deepwater port could be subject to future use by the Chinese regime or even the People’s Liberation Army (PLA) Navy. He branded the entire deal as “shady,” with negotiations taking place behind closed doors and only a handful of politicians being familiar with the scale of the investment or the details.

Jan-Olof Johansson, head of the executive board of Lysekil municipality, brushed off those concerns during the same discussion on public radio. The port construction, he said, carried less risks than Chinese investments in the Swedish car companies Volvo and Saab.

In ensuing online discussions, Sederholm’s warnings were dismissed as “alarmist.” After all, it was not the Chinese government that sought to invest in Lysekil, but private entrepreneurs. Why miss out on a major opportunity with the potential of creating jobs by turning this sleepy town into a major commercial hub?

Military connections

This week, Swedish media raised the same questions the political opposition in Lysekil had been asking from the very beginning: Who is behind this investment proposal, and what relationship, if any, is there to the Chinese government? My investigation shows that the connections between the investors, the Chinese government and the PLA are even closer than is usually the case.

The owner and chairman of Sunbase is Gunter Gao Jingde. Since 1993, he has been a Hong Kong delegate to the Chinese People’s Political Consultative Conference (CPPCC), China’s top political advisory body, which holds plenary sessions together with the National People’s Congress on a yearly basis. Gao is also founding chairman of the Hong Kong chapter of the China Council for the Promotion of Peaceful Reunification of China, an organization under the United Front Work Department (UFWD). This is only one of his many positions related to the UFWD, a party agency tasked with keeping private businessmen and other important non-communist actors loyal to the party’s leadership.

Furthermore, Gao is head of the Association of Chinese Culture of Hong Kong, whose mission is to “successfully realize” the “one country, two systems” policy and “contribute to the great unification of the motherland” by spreading Chinese culture. As a past or current member of several Hong Kong election committees, Gao has also been involved in suspected voting fraud.

The connection to China’s military is arguably even more striking. Sunbase International Properties Management Limited, a subsidiary of Sunbase International (Holdings), manages all the 18 plots of military land on which China’s military operates in Hong Kong.

In his biography on the Sunbase website, Gao describe himself as a Chinese patriot. He is also proud to have “generously supported” the publication of several Chinese military books — among others The Great Rehearsal in the Taiwan Straits — with the “intent of promoting the glorious image of the People’s Liberation Army (PLA) as a civilizing and powerful force and of spreading the superior tradition and revolutionary spirit of the PLA.” One of the books, titled The PLA Garrison Troops in Hong Kong, even carries a personal written encouragement from former president Jiang Zemin.

Gao clearly will not hesitate to use his personal wealth to make political contacts. Last November, he bought a calligraphy piece by Zhang Xiaoming, then director of China’s Liaison Office in Hong Kong, for HK$18.8 million at a fundraising dinner for the pro-Beijing party Democratic Alliance for the Betterment and Progress of Hong Kong, also attended by Hong Kong’s chief executive Carrie Lam.

Lobbying and lies

Alas, a small Swedish municipality is about to secretly let someone who is very close to the CCP build Scandinavia’s largest port at a strategic location on the Atlantic coast. During the debate on Swedish public radio earlier this week, Johansson denied he had signed any documents regarding the project. This, however, is an outright lie, as I have seen the papers with Johansson’s name on them.

Apart from his signature, Johansson is also not telling the truth about the scale and the location of the port. This according to Magnus Sederholm, the medical doctor, who has seen the plans of a 1,800-meter-long and 1,000-meter-wide dock in one of the most environmentally vulnerable fjords in the surrounding area. Sederholm claims this would destroy the entire composition of the archipelago, especially since parts of the fjord would have to be dynamited.

Moreover, together with other concerned individuals, Sederholm has been able to point out at least four “lobbyists” who are driving the project forward with a speed almost unheard of in Swedish local decision making. One of them is a former head of the Lysekil municipality executive board who was sacked in 2014, mainly due to fiddling with taxpayers money. At this point it has not been demonstrated that the lobbyists or the current municipality board stand to make personal gains from the Chinese investments.

Despite the to-ing and fro-ing, no laws have been broken and it is highly likely that the project will materialize. Unlike many other E.U. members, Sweden lacks a central mechanism to investigate and oversee foreign direct investment (FDI). Rather, the Swedish government has an open policy for attracting FDI, with a special target on investments from China, India and the U.S.

It is no surprise, then, that the Swedish government recently opposed a suggestion from the European Commission to establish a central mechanism at a European level to review FDI for security reasons, following growing concerns about the rapid increase in Chinese investment within the union.

‘Troy of Scandinavia’

Under Swedish law, decisions on inbound investment are made at the local level and cannot be overruled by the central government. This became obvious earlier this summer, when the small municipality of Karlshamn on the southern tip of Sweden opened up its port facilities for the stockpiling of some 52,000 pipes that will be used in the construction of a controversial 1,200-kilometer-long Russian gas pipe known as Nord Stream 2 in the Baltic Sea.

The Swedish foreign minister and the defence minister alike raised concerns about national security if Swedish ports were used by companies close to the Russian government, such as Gazprom, and recommended Karlshamn municipality scrap the deal. However, the central government could do nothing once Karlshamn decided to proceed with the project, with the result that Russian ships are already docking at the port, at a rate of almost two per day.

After the Russian debacle, the Swedish foreign minister said the government would look at possible solutions to increase the central government’s ability to oversee FDI for security reasons. She added that discussion of such laws could begin in the spring of 2018 at the earliest, which could explain the rush surrounding the Lysekil deal.

For now, discontent among the local electorate would be the only reason for Lysekil’s municipality executive board to cancel the port project. This happened in Gothenburg earlier this month, after the construction plans for a new 11,000-square-meter Chinese general consulate in the nature park Stora Torp was revealed to the public.

One Gothenburg-based newspaper recently dubbed the project a “Troy of Scandinavia,” as a Chinese port on the Swedish west coast would threaten not only Norwegian but also Finnish supply lines in the event of a conflict with Russia, since China and Russia have overlapping geopolitical interests.

A combination of environmental and political concerns created strong protests among parts of the city’s population. Thousands of signatures were collected opposing the new Chinese general consulate, while local officials were grilled by concerned residents during a rally resembling an old town hall meeting. Sensing the unpopularity of the deal, the local politicians made the Property Management Committee scrap the plans and tell the Chinese that a new location has to be found for the general consulate.

But in the small town of Lysekil there is no public outburst, especially given that the negotiations with Sunbase have taken place in secret. No assessments of national security implications or environmental damage have been carried out, and there is a general reluctance on many levels to grasp the seriousness of the situation. In Scandinavia, as in many other parts of Europe, Russia is still viewed as a much bigger threat to world peace than China.

It is in this context that the risks of a Chinese port in Lysekil should be regarded. One Gothenburg-based newspaper recently dubbed the project a “Troy of Scandinavia,” as a Chinese port on the Swedish west coast would threaten not only Norwegian but also Finnish supply lines in the event of a conflict with Russia, since China and Russia have overlapping geopolitical interests.

Compared to the Russian pipeline debacle, the silence from Sweden’s central government and national media over the Chinese port in Lysekil is deafening. Official concerns from the foreign minister or the defense minister feel worryingly distant, despite the fact that Sunbase actually plans to build new port facilities rather than use existing ones, as Gazprom has done.

Scandinavia’s largest port could soon be Chinese. According to Sederholm, Sunbase representatives visited Lysekil on Thursday to negotiate land prices with the oil refinery Preemraff, which owns parts of the archipelago.

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