Chinese tycoon says controversy could kill Iceland deal

Reuters News
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Posted: Sep 02, 2011 6:18 AM
Chinese tycoon says controversy could kill Iceland deal

By Sui-Lee Wee and Huang Yan

BEIJING (Reuters) - A Chinese tycoon whose plans to buy a large patch of land in Iceland have led to suspicions he is a stalking horse for Chinese expansionism said on Friday Beijing itself may force him to halt the deal because of the furor it has caused.

Huang Nubo, a 55-year-old poetry-writing millionaire and former Chinese government official, reached a deal for 1 billion crowns ($8.8 million) to buy the 300 sq km (115 sq miles) Grimsstadir farm, where he plans to build a golf course, hotel and outdoor recreation area.

The planned project is the first major investment by a Chinese company in the North Atlantic island nation, but its strategic location has raised security concerns.

"The government may say: 'Please do not go, do not make trouble," Huang told Reuters in an interview, referring to an application from his company to the Chinese government to approve the deal.

"Maybe they will think: 'Do not arouse any unhappiness for Sino-Iceland relations.' Then I will just give it up."

Huang said Beijing can take up to six months to decide whether to approve the international deal.

But Huang, who is chairman of the Beijing Zhongkun Investment Group Co -- which was founded in 1995 and owns real estate and vacation resorts in several countries -- added: "There's no excuse for them not to approve it. Tourism is in the domain of our bilateral relationship."

The deal also needs final approval from Iceland, which may decide whether to approve his application within 10 days, Huang said later at a news conference.

Interior Minister Ogmundur Jonasson told Reuters on Wednesday that it needed to be looked at carefully, citing issues of selling such a large piece of land to a foreigner and the ownership of natural resources.

Some analysts said security aspects of the deal could not be ignored, due to Iceland's strategic location mid-Atlantic between Europe and the United States, and its proximity to the Arctic where a number of nations are competing on resource claims.

"While this project in Iceland might be a private initiative, it fits in a broader (Chinese) policy agenda to get hold of strategic assets abroad, ranging from land, over raw materials, to know-how," said Jonathan Holslag, head of research at the Institute of Contemporary China Studies in Brussels.

MISINTERPRETING CHINA

The furor over a private land deal underscores the increasing suspicion that many countries, especially those in the West, have with a rapidly rising China.

"It is the West's misinterpretation of China," said Huang. "Everything China does, no matter whether it's done by the country or any individual, they would think it is part of a 'China threat'. This is like how Japan was treated before."

In 2005, China's CNOOC Ltd abandoned a $18.5 billion offer to buy U.S. oil and gas producer Unocal Corp in the face of strident political opposition.

Some analysts said that the political reaction in the West over Chinese deals could trigger a backlash in China that could prove costly for Western businesses.

"Such cases obviously give local policymakers in China support for their story that overseas markets are not open to Chinese investment," said Thilo Hanemann, research director at New York-based Rhodium Group, an economic research firm that looks closely at China's overseas foreign direct investment.

"This creates a feedback loop on overseas firms investing in China and will have a negative impact on European firms who want to invest in China."

Listed 161st on the Forbes list of the richest Chinese in 2010, Huang worked for the Chinese Communist Party's Propaganda Department and the Ministry of Construction in the 1980s and early 1990s.

"Later I didn't want to do it anymore because it's unbearable to be a government official," he said.

This part of his resume has made some uneasy about his intentions for the land. An indignant Huang denied links to the Chinese government and said Beijing "has not given me a single cent."

"They are linking this to strategic concerns," he said. "I think the Westerners have very good imaginations. It's nonsense."

A tall and lean Huang, dressed in a light grey polo shirt, track pants and black sneakers, showed Reuters photographs of himself with Iceland's president and other high-level officials, taken on his most recent trip in July.

"They all said: 'Please come'," said Huang, who is an avid mountaineer and used the trip to trek to the North Pole.

Huang, who has been to Iceland twice and spent a total of 12 days there, called the country "the last resort paradise" in the world. He plans to invest $200 million over four to five years in the first phase of the development.

He said he decided to develop his resort project in Iceland because there were too few business opportunities elsewhere in Europe, Iceland's economy was recovering from a deep recession in 2008 and an increasing number of Chinese tourists were visiting.

Zhongkun manages 46 tourist attractions in China and abroad. It runs a resort in Nashville, Tennessee, and has a branch in Los Angeles that manages an office building and a Californian publishing firm.

Huang later announced grandiose plans linked with the deal. He told a news conference that the company plans to build a tourism chain in Scandinavia within 10 years, using Iceland as the base.

(Additional reporting by Haze Fan and Beijing Newsroom; Editing by Ken Wills and Alex Richardson)