Ben Chu: China buy up Iceland? They wish...

Poor Iceland. Its boom was spectacular. Its bust was traumatic. And now, apparently, colonisation looms. A Chinese tycoon, Huang Nubo, wants to buy 300sqkm of land on the north-east of the island for £5.4bn to open a luxury hotel and an ecological tourist resort.

The Icelandic reputation for cool blood evaporated when its banks started buying up half the British high street. And the hysteria lingers. There is now talk of how this deal will allow China to acquire a strategic foothold in the north Atlantic.

Mr Huang's former job in the Chinese propaganda ministry has been cited as evidence of some sort of conspiracy. The Icelandic interior minister, Ogmundur Jonasson, has expressed worries about China's "buying up land around the world".

But what precisely is the danger here? Would China convert the holiday resort into a commercial harbour? Would Mr Huang's hotel transform itself at the push of a button into a military complex, a bit like Tracy Island?

Acquiring land does not give foreign nationals a right to do what they want with it. It is when they start lobbying for changes to domestic law that Icelanders should start to worry. Meanwhile, Iceland should recall its own recent history: it's often the investor, not the recipient of cash, that stands to lose most when an ambitious deal is signed.