Changing Causal Narratives and Risk Perceptions on Foreign Investment: the Riskification of Chinese Investments in the Nordic Region

Abstract

This article surveys recent legislative and policy changes on foreign investments in four Nordic countries (Finland, Sweden, Denmark and Norway). Until recently, only Finland had national legislation on foreign investments, although historically the Nordic countries were forerunners in introducing foreign investment controls. A general rethink in the USA and the European Union on the links between liberal economies, investment policies and security has occurred in recent years. This has cast investments by enterprises from major authoritarian countries, foremost China, in a different light. Rather than investment numbers as such, or realised risks related to Chinese investments, a ‘causal narrative’ has emerged in the Nordic countries that draws attention to the nature of the Chinese party-state and its’ unclear relationship to Chinese companies, underlining potential strategic motivations and security risks behind Chinese investments. Rapidly changing risk perceptions have driven legislative and policy changes on foreign direct investment (FDI), e.g. investment screening. Chinese investments have thus become riskified, to use a term coined by Olaf Corry. Shifting risk perceptions have similarly preceded previous ‘formative epochs’ in Nordic FDI legislation in the early twentieth century, after the Second World War and at the end of the Cold War. Each formative epoch has been characterised by a distinctive ‘risk profile’. We postulate that these shifting risk perceptions significantly shape the reception of FDI as a key channel of cross-border connectivity.