China-Norway Bilateral Relations: Trade and Investment

The economic relationship between China and Norway economic relationship has evolved into a strong cooperation, highlighted by increased trade and investment, and a new visa-free policy.

China and Norway have developed a dynamic and evolving economic partnership over the years, marked by mutual interests in trade, investment, and technological cooperation. While their diplomatic relationship dates back to the mid-20th century, recent developments have significantly shaped their bilateral ties. Norway, with its expertise in sustainable practices and green technologies, and China, with its growing investments in these areas, have increasingly aligned their economic interests.

In recent years, the relationship between China and Norway has transformed from a period of diplomatic tension to one of renewed collaboration and growth. The reestablishment of high-level meetings and the introduction of a visa-free policy for Norwegian citizens in 2024 reflect the deepening of their ties.

This article explores the latest data on bilateral trade and investment between China and Norway, providing a comprehensive overview of their economic interactions.

China-Norway diplomatic relations

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Diplomatic relations between the People’s Republic of China and Norway officially began on October 7, 1950, with diplomatic missions established on October 5, 1954. However, the history of Norwegian diplomatic presence in China dates back to the mid-19th century, during the union of Sweden and Norway, with the first Norwegian mission established in Guangzhou in 1851. Norway continued to maintain diplomatic posts, with its first official mission as an independent country being set up after its separation from Sweden in 1905.

In the 21st century, the relationship has evolved significantly, moving beyond cultural and political exchanges to focus on economic cooperation, particularly in sectors like industry, technology, and trade. By 2009, the volume of bilateral trade had steadily grown, with Norway exporting equipment, chemicals, and seafood such as salmon to China, and China exporting ships, textiles, and electronic products to Norway.

However, diplomatic ties faced a significant setback in 2010, following the awarding of the Nobel Peace Prize to Chinese activist Liu Xiaobo. This led to China suspending high-level bilateral meetings, canceling planned exchanges, and imposing informal restrictions on Norwegian imports, particularly salmon. Diplomatic relations remained frozen for several years, affecting various industries and political dialogues between the two countries.

Normalization of relations was eventually achieved in 2016, marking a turning point that led to improved cooperation in subsequent years. This was followed by a gradual resumption of trade talks and increased bilateral exchanges. In 2023, diplomatic ties saw further strengthening with high-level meetings between Chinese and Norwegian officials, signaling a renewed focus on enhancing economic collaboration. Additionally, a new visa policy was introduced, allowing Norwegian citizens longer stays in China without the need for a visa, underscoring the improving trade and investment relationship.

Recent developments

In September 2024, China granted Norwegian citizens 15-day visa-free access, marking a significant step in deepening bilateral ties between the two countries. This move coincided with Norwegian Prime Minister Jonas Gahr Støre’s visit to Beijing, celebrating the 70th anniversary of diplomatic relations between Norway and China. The visa-free policy aims to boost business and tourism, further strengthening trade, investment, and cultural exchange between the nations.

During PM Støre’s visit, key discussions were held with President Xi Jinping and Premier Li Qiang, focusing on green transition, sustainable development, and cooperation in green technologies. Both leaders emphasized their shared commitment to addressing climate change through joint initiatives in sectors such as green shipping, hydrogen energy, and electric vehicles. These areas of collaboration align with both nations’ environmental goals, reinforcing their partnership in tackling global challenges.

Norway’s expertise in renewable energy, coupled with China’s growing investments in green technology, presents significant opportunities for future cooperation. Norwegian companies like Equinor and Höegh Autoliners are already playing a pivotal role in advancing sustainable projects in China. Additionally, Norway’s seafood exports, particularly salmon, continue to meet rising demand in the Chinese market, reflecting the expanding trade relationship.

Looking ahead, both countries will have the chance to advance these discussions at the G20 summit in Brazil later this year, further enhancing their collaboration on global issues.

Bilateral trade

China remains Norway’s most important trading partner in Asia. In 2023, Norway’s exports to mainland China reached a total value of NOK 7.5 billion (US$700.65 million) in goods, making China the 11th largest market for Norwegian exports that year.

Meanwhile, the value of services exported from Norway to mainland China amounted to NOK 8.5 billion (US$794.15 million). Although this represented a slight decline compared to 2022, it followed a significant 50 percent year-on-year increase in service exports during the previous year, highlighting the growing importance of sectors such as technology, consultancy, and shipping in Norway’s trade relationship with China.

Notably, in 2023, Norwegian exports to China saw significant shifts across key sectors. Seafood emerged as the leading export, valued at NOK 8,462 million (US$790.67 milion), accounting for 23 percent of the total goods exported to China. However, petroleum and petroleum product exports from Norway to China faced a sharp decline, with values dropping by 44 percent in 2022 and an additional 77 percent in 2023.

Despite the decrease in petroleum exports, other major categories of goods experienced robust growth. Notably, exports of non-ferrous metals surged by an impressive 170 percent in NOK value. This growth reflects Norway’s diversification in export categories, expanding beyond traditional energy-related products.

On the import side, Norway’s imports from China also shifted in 2023. Telecommunications apparatus and equipment led the imports, valued at NOK 17.22 billion (US$1.6 billion). However, all top six categories of goods imported from China, including road vehicles, office machines, apparel, and manufactured articles, experienced declines in NOK value, with some facing double-digit drops in growth. This marked a contrast to the otherwise strong bilateral trade relationship. 

Bilateral investment

Norwegian investment in China

According to the Norwegian Business in China 2024 report, Norwegian companies continue to display a positive outlook toward the Chinese market despite some challenges. Over 60 percent of these companies have opted for the Wholly Foreign-Owned Enterprise (WFOE) legal structure, indicating a preference for full control over their operations. The industries they operate in are diverse, with maritime and shipping leading at 26.3 percent, followed by sectors like machinery, seafood, and emerging industries such as green technology and healthcare.

The report highlights that the vast majority (84 percent) of Norwegian companies hold either optimistic or neutral views about their industry’s prospects in China over the next three years. This reflects an increase in optimism from the previous year, signaling resilience and confidence in the market’s long-term potential.

Chinese investment in Norway

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China’s investment in Norway has increasingly centered on green technology, renewable energy, and maritime industries, reflecting a strategic alignment with Norway’s sustainability goals. Notable investments include collaborations in constructing environmentally friendly ships and supporting Norway’s transition to electric vehicles. China’s role in these sectors is pivotal, contributing to Norway’s ambition of becoming the first country to cease selling petrol and diesel cars by 2025.

The partnership extends to significant trade relations, with China being Norway’s largest trading partner in Asia, and recent agreements enhancing this economic bond.

As both countries address global challenges like climate change, their collaboration is expected to grow, further integrating China’s investment in Norway’s green and maritime sectors.

Trade and investment treaties

China-Norway bilateral investment agreement

In 1984, China and Norway signed a bilateral investment agreement (BIT) aimed at strengthening economic cooperation and fostering mutual investments between the two nations. The agreement promotes legal certainty and ensures protection for investors from both countries, providing a solid framework for cross-border economic activities.

Key provisions include:

• Investment protection: The agreement protects investments against expropriation, nationalization, and discriminatory measures, ensuring fair treatment and compensation for investors.
• Dispute resolution mechanisms: The BIT establishes pathways for resolving disputes, including negotiation and arbitration, and features an investor-state dispute settlement (ISDS) clause under Article 8.
• Repatriation of funds: It guarantees the right to transfer investment-related earnings, profits, and liquidation proceeds in a convertible currency, ensuring ease of financial operations for investors.

Additionally, the BIT promotes the principles of non-discrimination, ensuring that investors from each country receive treatment no less favorable than that given to those from third countries, fostering a transparent and secure environment for economic cooperation.

China-Norway double taxation avoidance agreement

China and Norway signed a new double taxation agreement (DTA) in May 2023 to prevent companies and individuals from being taxed on the same income in both countries. This agreement, which came into effect on January 1, 2024, replaces the previous income tax treaty that had been in place since 1986.

The DTA addresses income taxes imposed by both China and Norway, covering:

• Chinese individual income tax(IIT) and corporate income tax (CIT); and
• Norwegian national, county municipal, and municipal taxes on income, as well as specific taxes related to petroleum exploration and artist remuneration.

The agreement clarifies the definition of a “permanent establishment” (PE) for tax liability purposes. A PE will be established when an enterprise provides services within a contracting state through employees or engaged personnel for a cumulative period exceeding 183 days within a 12-month period.

Withholding tax rates under the DTA are as follows:

• Dividends: 5 percent if the beneficial owner holds at least 25 percent of the paying company’s capital for at least 365 days, otherwise 10 percent.
• Interest: 10 percent, with exemptions for government loans and insured loans.
• Royalties: 10 percent.

The DTA also outlines the conditions under which capital gains may be taxed by the other contracting state, including:

• Gains from the alienation of immovable property;
• Movable property forming part of a permanent establishment;
• Shares deriving more than 50 percent of their value from immovable property in the other state; and
• Shares where the alienator held at least 25 percent of the capital of a resident company in the other state within the 365 days preceding the alienation.

Both China and Norway apply the credit method for double taxation relief, allowing taxpayers to credit foreign taxes paid against their domestic tax liability. Additionally, China offers an indirect credit for underlying taxes on profits from which dividends are paid, subject to the condition that a Chinese company owns at least 10 percent of a Norwegian company’s shares.

The treaty also includes a limitation on benefits (LOB) provision, preventing treaty benefits from being claimed if a transaction’s principal purpose was to obtain such benefits in contradiction to the treaty’s objectives.

Multilateral treaties

China and Norway, both members of the WTO, are signatories to various multilateral treaties concerning trade and investment. These include:

• The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which mandates WTO members to extend intellectual property rights to owners in any member state. It incorporates a most-favored-nation (MFN) clause, ensuring equal treatment for IP rights protection across all member countries. Additionally, it provides mechanisms for dispute resolution and compensation.
• The Agreement on Trade-Related Investment Measures (TRIMs), which prohibits the implementation of investment measures that restrict trade between members. This includes measures like local content requirements, which mandate the use of locally-produced goods or services by companies operating in a market.
• The General Agreement on Trade in Services (GATS), which grants most-favored-nation status to service providers of any WTO member, excluding governmental services such as social security, public health, education, and certain services related to air transport.

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