In October 2010, the Norwegian Nobel Committee awarded the Nobel peace prize to Chinese dissident Liu Xiaobo. The Chinese government responded by freezing political and economic relations with Norway, introducing sanctions against imports of fish and other products, and limiting diplomatic interaction. Using a synthetic control approach, this paper estimates the effect of Chinese sanctions on Norwegian exports to China, and on Norwegian foreign policy. We find that the sanctions reduced direct exports of fish to China by between 125 and 176 million USD in the period 2011-13, and direct total exports from Norway to China by between 780 and 1300 million USD. By 2014, however, exports had rebounded to normal levels. Moreover, immediately following the peace prize, Norwegian agreement with Chinese voting on UN human rights resolutions increased. The results suggest that the Chinese government can effectively use economic sanctions to affect the foreign policy positions of democratic governments.

Ivar Kolstad

Associated Research Professor

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