China signed accords on energy cooperation and the Arctic in Iceland on Friday as Premier Wen Jiabao started a tour of northern Europe that will focus on Chinese investment in a continent eager for funds and to trade with the rising world power.
Centrepiece of the trip will be a visit to Germany, where Wen and Chancellor Angela Merkel will on Sunday and Monday burnish industrial ties that have done much for both economies.
That the prime minister of the world's most populous nation should stop first, however, on a remote island of just 320,000 has raised hopes for an injection of Chinese cash into an economy ravaged by the bursting of a financial bubble in 2008 - but also suspicion of Beijing's hunger for natural resources.
A Chinese developer is fighting a government decision last year to bar him from buying a vast tract of land which some had suggested might be a cover for a possible future naval base and part of a wider strategy to gain a foothold in the region.
But by starting with a full-scale visit to Iceland, Wen has fuelled European concern that China might be trying to exploit the country's economic troubles to gain a strategic foothold in the North Atlantic and Arctic region.
The area has big reserves of oil, gas, gold, diamonds, zinc and iron. And with global warming melting polar ice, it may offer world powers new shipping routes - and naval interests - for the trade between Asia, Europe and America's east coast.
"When it comes to the Arctic, we always have China on our mind," said one European diplomat from the Nordic region, who spoke to Reuters this week on condition of anonymity.
ARCTIC FOOTHOLD?
Last year, Iceland's government rejected a plan by multi-millionaire Chinese developer Huang Nubo to build a sprawling tourist resort in the northeast corner of the chilly island, saying it did not meet legal requirements on foreign ownership.
A livid Huang, who went to university with Icelanders, said the decision revealed Western "hypocrisy" and that foreigners wrongly assumed Chinese firms had ties to China's military.
Huang is still pursuing the project and is in the midst of negotiating a new plan with Icelandic municipalities in which he would instead lease the property. People close to him say he may get a green light in weeks.
But conspiracy theories over why such an Asian giant would be interested in such a small nation abound.
"Given China's investment pattern around the globe, people have asked questions. Why are doing this? Is there some ulterior motive?" said Embla Eir Oddsdottir at the Stefansson Arctic Institute.
"For next decade they are going to be battling some sort of suspicion as to their motive, because people have a tendency to link them to some type of regime."
About a dozen protesters gathered outside the building in Reykjavik where the Chinese and Icelanders held their talks. When the then Chinese President Jiang Zemin visited a decade ago, several hundred Falun Gong and human rights activists staged protests.
Many had expected China to raise the issue of gaining observer status in the Arctic Council, which comprises Canada, Finland, Iceland, Norway, Russia, Sweden, the United States and Denmark, all of them nations with territory inside the Arctic Circle.
With ice receding faster than many had expected, some estimates suggest the polar ice cap might disappear completely during the summer season as soon as 2040, perhaps much earlier.
That could slash the journey time from Europe and the east coast of North America to Chinese and Japanese ports by well over a week, possibly taking traffic from the southern Suez Canal route.
"These are pretty big stakes," Oddsdottir of the Stefansson Institute in Iceland said. "I wonder if under the surface the race is already there, to gain a foothold in the Arctic."
