ABSTRACT
This chapter examines Iceland's distinct relationship with China as a small state. It focuses on the growing economic relationship between the two countries, including in areas of free trade, energy and resources, and Beijing's growing interest in the economy of Arctic region and Iceland's role. Iceland was viewed as an ideal choice for one of Beijing's first forays into free trade negotiations with a Western economy, due to its small size and limited number of economic sectors, as well as its distinct position outside EU but as a member of EU Single Market through membership in European Economic Area (EEA) since 1994. The Sino-Icelandic free trade agreement (FTA) and expanded bilateral trade will continue to dominate the overall bilateral relationship. China has been seeking to develop and expand its free trade partnerships with industrialized states and members of OSCE, 'starting small' with FTAs with New Zealand and then Iceland, before moving to larger economies like those of Australia and Switzerland.
