Chinese resort in Iceland

It's been almost three years since Iceland's banking system collapsed. The economy was hit especially hard by the financial crisis. But the small North Atlantic state has slowly continued its recovery from the crash.

Foreign investors have played no small role in this recovery process and they're still in high demand as the economic climate in Iceland leaves much to be desired.

One such investor is finding a slightly less-warm welcome, however. Huang Nubo wants to spend 6 million euros ($8.5 million) on a bleak stretch of the volcanic island.

Huang, a former Chinese official turned real estate tycoon, told a press conference in Beijing on Friday that he hoped to create Europe's biggest nature reserve with the 300-square-kilometer (115-square-mile) area.

Ulterior motives

Despite Huang's assertion that the investment is completely private, some have decried the project as a veiled attempt by China to secure a deepwater harbor in the North Atlantic.

"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.

In an interview with Reuters, Huang said because of these rumors, Beijing might not allow the deal to go through.

"The government may say: 'Please do not go, do not make trouble," Huang said, 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,'" he added. "Then I will just give it up."

Facing resistance

But Beijing might not be given the chance to nix the deal, as some Icelanders have also been skeptical.

The planned deal for the sale of the land, known locally as Grimsstadir a Fjoellum, would effectively sell 0.3 percent of Iceland's landmass. This would be the equivalent of Germany selling off a chunk of land a little larger than the city of Hamburg.

Some Icelanders find this unsettling. Jon Thorisson is an architect who has campaigned against foreign ownership of Icelandic resources.

"Will large-scale ownership allow them to exert political influence?" he told AP. "Is it possible that we Icelanders will end up like tenant farmers on our own land?"

The interior minister, Ogmundur Jonasson, has also raised a red flag, saying thorough studies of the impact of building a hotel and golf course on the land would have to be carried out.

Send in the tourists

But other Icelandic diplomats, as well as Prime Minister Johanna Sigurdardottir, expressed their support for the investment plan. Iceland's ambassador to China, Kristin Arnadottir, appeared at the press conference in Beijing with Huang and welcomed the deal.

"I think we are perhaps going to experience something much more positive now that Iceland is going to become a tourist destination," Arnadottir said at the conference.

Beyond the land sale, Huang said he plans to invest a further 140 million euros over the next four to five years. He said he would eventually like to see up to 10,000 guests coming to the resort annually if the deal goes through.

The last high profile Chinese attempt at foreign acquisitions that ended up canceled was in 2005 when the state-owned Chinese oil company CNOOC Ltd. withdrew a bid to buy US oil and gas producer Unocal Corp after American lawmakers raised concerns that the sale would impact national security.

Author: Stuart Tiffen (AP, Reuters, AFP)

Editor: Sean Sinico