Polar Silk Road

As an area rich in unexplored resources, the North Pole is fulfilling an increasingly important role in the relations among the great powers. Mostly thanks to this, new trade routes have emerged in the region, which saves energy and time as a considerable security and geopolitical aspect. China has been working on building its regional ambitions for several years and released china’s Arctic Policy in early 2018, according to which the country would like to integrate this region into the New Silk Road Project, too. As China has a far weaker power position in the region than America or Russia, it will need cooperation and economic investment to enforce its interests.

The North Pole

The developing economy of the countries in the North Pole is mainly based on the infrastructure. The Arctic is particularly rich in natural resources, over 20 per cent of the reserves on the Earth can be found here. Furthermore, the Arctic Ocean is a connection point among Asia, Europe and North America, and these continents are responsible for 90 per cent of international trade. Efficient transport on the Arctic Ocean is only possible if significant infrastructure investment is realized for the development and establishment of routes, which can mainly be beneficial to the countries of the region.[i]

According to the U.S. Geological Survey (USGS), the Arctic, comprising about 6 per cent of the mainland, hides the largest unexplored oil and gas reserves in the world. It is assumed that 90 billion barrels of petroleum, 1669 thousand million cubic feet of natural gas and 44 billion barrels of liquefied natural gas can be found on the North Pole. This amounts to 13 per cent of the unexplored oil sources, 30 per cent of natural gases and 20 per cent of liquefied natural gas in the world. Besides, a considerable amount of precious metal like gold, platina, iron, uranium, lead, zinc and rare earth elements can be found here. The melting of the polar ice makes it more probable that these energy sources and precious metals will be available in the near future if the infrastructure and technological background will be ensured for their exploitation. The use of the Northern Sea Route would reduce the transportation from Asia to Europe through the Suez Canal by 10 days, and the transportation on the Panama Canal by 4 days. According to the estimations, the Transpolar Sea Route is expected to be suitable for transportation only in 2020, and only in the summer months for about 8 weeks.

Source: Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Strategic Studies Institute, 2017. p. 9.

In 1996 the Arctic Council was established for the relevant countries in the region, in order to provide a platform for the dialogue between the members. At present it has 8 full members: Canada, Denmark (including Greenland and the Faroe Islands), Finland, Iceland, Norway, Sweden, Russia and the United States of America, plus 6 participants representing the Arctic indigenous peoples. It primarily focuses on the environment, science and economic cooperation; however, it never fulfils security tasks.[ii]

Chinese ambitions

As a result of the global warming, new territories that used to be covered with ice have opened to navigation at the North Pole. Since shipping is the cheapest form of transportation, 90 per cent of world trade is still realized by water.[iii] These newly opening routes can not only play an important role in global trade but are also very rich in natural resources. Therefore, China aims to take part in the affairs of the region and have the lead role in making the rules concerning the region, because in this way it has an opportunity to get involved as a new great power, and not only the former rule-making great powers can form these affairs.[iv]

European and American experts have defined China’s regional purposes as follows: to have an access to the local precious metals, fishing goods and energy sources; new trade routes, which both shorten the transportation time and offer a new alternative against the Malacca Strait; to understand what climate change means to the region; a scientific interest (BeiDou Navigation Satellite System, space research, weather forecast); to participate in the governance related to the North Pole; to maintain the right of access to the region for countries other than the Arctic countries, so that they cannot be subjected by the Arctic countries. Chinese experts highlight the considerable strategic significance of the region as it can be an alternative in security political terms. China feels that the US presence is most threatening because the USA or its allies are even ready to block China’s way to the essential energy sources coming from the Persian Gulf through the Malacca Strait. Others emphasize that the Eurasian and North American continents meet here, and the US has such rockets in Alaska[v] that would be able to reach China.[vi]

Yamal’s possible transportation routes

Source: Novatek

According to Chinese ambitions, China started to build its policy related to the region several years ago. Some Chinese experts put China’s commitment to the North Pole as early as 1925, when China signed the Svalbard Treaty, which acknowledges that the Spitsbergen belongs to Norway. [vii] China has several research stations in this territory, including the Yellow River Station built in 2004 to be China’s first Arctic scientific research base. In his statement made in 2010, Yin Zhuo Chinese Rear Admiral highlighted that the North Pole is the property of all mankind, no state has sovereignty over it, and China, where every fifth man lives, has to be an unavoidable agent in its exploration.[viii] In 2013 China managed to become a surveillance state in the Arctic Council, which according to most Chinese officials means that China’s interest is legitimate in the region. By gaining the surveillance status, China has got access to the waters and air space of the North Pole, and it has also had the opportunity to get involved in the international governance related to the region.[ix] According to experts, the polar regions, together with the oceans, as well as the cyberspace and the outer space are strategic areas in which China has great ambitions and aims at grandiose roles.[x]

In January 2018 China released China’s Arctic Policy, which includes the strategy related to the region. A great role is devoted to the One Belt One Road, which was announced in 2013 and primarily aims to integrate the North Pole into the route of the New Silk Road and establish a Polar Silk Road. On this section of the “One Belt One Road” the primary role would imply the new routes created by the melting ice, which would serve the Chinese trade and the Beijing ambitions. This strategy, however, leads us to the conclusion that the term Near-Arctic State should be replaced by the term Stakeholder, which would increase its rights and commitments within the region. Beyond the Silk Road, China has other great ambitions in this area, too, realizing considerable capital investments in the countries of the North Pole and conducting scientific research projects with a strategic purpose.

With reference to research findings, Chinese researchers state that the melting of the ice will largely affect China, where the sea level is going to rise and, consequently, 20 million citizens will have to be relocated, let alone the agricultural issues. Accordingly, Beijing intends to fulfil the greatest role possible in the region and act as a global power in the issue of climate change, with the current US Administration backed out. China envisages the Polar Silk Road along the Polar Road with Russian cooperation. In this way shipping can be 15 days shorter from China to Europe, as soon as the ice melts and the marine section becomes navigable for a couple of months. China, however, rather thinks in the long term and prefers using the Transpolar Sea Route, which will become navigable only in a few decades’ time depending on the melting of the ice, passing through the top of the Arctic in the middle. This route will also be navigable only for a limited time of the year; however, China could save a lot of time and fuel, and it could also get around the waters controlled by Russia in this way. Therefore, if it grows into an economic power in the region, the US will have to make every effort to keep these new roads. China is increasing its presence in the region through raw material-oriented investments and the development of ports, because today the country largely depends on the oil and gas imports realized from the Persian Gulf and Africa, along the routes controlled by the US Navy. It started to diversify its energy dependence by realizing investments into Russian big company Yamal LNG as well as into the Norwegian gas and oil fields. This may not only mean an alternative for China but the country can also obtain experience on the Arctic infrastructure and technology, which can largely facilitate the control of trade routes. For similar reasons, China plans to realize investments in Alaska, Canada and Norway, as well as in mining and the ports of Northern European countries. China’s possible partners include Northern European countries that are members to the Arctic Council: Iceland, Denmark, Norway, Sweden and Finland, who mainly hope for financial support for their Arctic ambitions. Between 2000 and 2016 Finland received China’s fifth largest foreign working capital investment to the amount of 8.43 billion dollars, while in Norway this amount totaled 7 billion dollars during the same period.[xi] Iceland and Greenland became the main site of Chinese foreign capital investments.

China’s Arctic strategy is also constituted by scientific research in this field. Dozens of Chinese scholars working throughout the North Pole have conducted more than 30 polar expeditions since 1984.

At present the country has one ice-breaker. In 2017 the only Chinese icebreaking vessel Xue Long or Snowy Dragon took the route of the Northwest Passage. The 20,000-mile-long way took 83 days, which was 7 days shorter than the usual way from New York to Shanghai through the Panama Canal. This was the first Chinese ship to pass through all the three Polar routes. Navigability would be far more convenient for China both for strategic and temporal reasons, and even because of security since there are no Somalian pirates on the Arctic. While on the Malacca Strait and through the Suez Canal the road from Asia to Europe takes 35 days, the Northern Sea Route is only 22 days long. Allegedly, China is already building its second icebreaker Xue Long II, which is expected to set sail in 2019. Additionally, Chinese state-owned shipping company COSCO plans to launch 6 cargo vessels on the Northern Sea Route for commercial transportation.[xii] . China has become one of the leading Arctic shipping countries, and COSCO considers itself a leading shipping company on the Northern Sea Route.[xiii] In 2015 it took 55 days for Chinese shipping company COSCO to reach Rotterdam from the port of Dalian and get back to the port of Tianjin, China through the Northwest Passage.[xiv]

China’s commitment towards the region is receiving increasing attention. The country is also of great global significance: during his visit to the US in April 2017, Xi Jinping paid a visit to Alaska and negotiated about issues related to the North Pole, paying special attention to the trade of liquefied natural gas. According to the estimation of the Polar Research Institute of China, 5-15 per cent of the national trade will pass through the North Pole by 2020, and this proportion will only increase in the future provided that China builds partner relations with more and more countries of the North Pole.[xv] None of the five Northern European countries (Denmark, Norway, Finland, Iceland and Sweden) participate in the One Belt One Road Project, still, all five countries are founding members of the Asian Infrastructure Investment Bank, which is related to the Chinese initiative. However, China started to establish its Arctic strategy in diplomatic terms a long time ago, thanks to which relations with these countries have normalized and become tighter. The question is whether these five countries are ready to join the OBOR and thus get involved in the infrastructure investments or not.[xvi]

China’s Arctic Policy

China announced the Policy of the Arctic Strategy on 26 January 2018. The core of this white book is based on the opportunities hiding in the North Pole, mainly with respect to the navigation routes, and the section of the One Belt One Road planned on the North pole was also announced officially. China classified itself as a Near-Arctic Country and an Important Stakeholder with respect to the region owing to the New Silk Road Project as well, determining respect, cooperation, mutual benefits and sustainability as the main pillars of its regional policy.[xvii]

Basic principle	Respect	Cooperation and mutual benefit	Sustainability
Understanding the Arctic	·  Having respect for China’s right to perform scientific research on the North Pole ·  Increasing the understanding of the North Pole in China	·  Scientific cooperation, sharing various kinds of data	·  Technological development for the benefit of environmental protection
Preserving the North Pole	·  Having respect for the traditions and culture of the local people.	·  International cooperation with respect to the climate change	·  Decreasing the pollution coming from the mainland ·  Preserving the ecology of the Arctic ·  Responding to the climate change
Utilization	·  Having respect for international law ·  Having respect for local law	·  With joint investments and cooperation, exploiting the resources (mineral substances, oil) ·  Mutual distribution ·  Assessing the fish stock living in the international waters of the North Pole and preparing for the common distribution	·  Improvements for the preservation of the environment and conversion to clean energy ·  Supporting responsible tourism
Management	·  Having respect for the current Arctic mechanism	·  Polar Silk Road, regional and international governing body and equal dialogue for the Arctic and other bilateral and multilateral institutions	·  An active role in the global governing of the environment regarding the North Pole

Source: The Diplomat: https://thediplomat.com/2018/03/china-commits-to-arctic-protections-but-development-threats-loom/

Russia

Therefore, the Chinese have mostly gained ground and influence in the region through investments, and the main winner seems to be Russia, especially because Russia was the only country of the North Pole to join the Chinese One Belt One Road Initiative. The Polar Silk Road, the first project to be realized, was an investment where the Silk Road Fund assumed a 9.9 per cent share in the Russian Yamal LNG Project, which carries out activities related to transportation, infrastructure and resources in the Eurasian part of the Arctic. Consequently, Chinese firms have a 29.9 per cent share in total within the project because the state-owned China National Petroleum Corporation has 20 per cent besides Novatek (Russia, 50.1%) and French Total (France, 20%). The financial part of the project is partly funded under a 12-billion-dollar loan agreement, which is provided by the Chinese Eximbank and the Chinese Development Bank. Among others, the development includes the establishment of a railway connection with the Port of Sabetta, connecting the region into the Eurasian railway system. This investment would total approx. 3.22 billion.[xviii]

Mostly passing along the Russian coastline, the Northern Sea Route is receiving increasing attention. In 2016 the transit traffic exceeded 7 million tons, which is a 35 per cent increase as compared to the previous year. Prior to the G20 Berlin Meeting in 2017, Xi Jinping paid a visit to Russia, and the two countries signed a joint declaration,[xix] specifying the Polar Silk Road and the Northern Sea Route as the main venue of their cooperation. This part of the New Silk Road mainly builds on the navigation along this route and the exploitation of the local energy sources because it intends to diversify  China’s energy dependence. [xx] For this reason, one of Russia’s grandiose investments is the development of this route, aiming to allocate several dozens of billion dollars to vessels, vessel construction, navigation and ports along the route by 2030. [xxi] However, China can only use this route as long as the two countries maintain good relations with each other. Russia regards the Northern Sea Route as its own territory, which is entirely Russian competence according to Article 234 of the UNCLOS. Another issue about the use of the route is the entirely different environment, which makes extra demands concerning the technology and construction of the vessels, and China has no appropriate specialists. China has to build vessels and icebreakers that can be navigated in the Arctic environment, too. Therefore, it is essential to this country that they foster good relations with Russia and Finland and thus obtain the appropriate technologies.[xxii]

Due to the Western sanctions against it, Russia increasingly depends on China. Therefore, it started improvements of strategic importance at the North Pole. Vladimir Putin said that the country constitutes an important part of Russia’ national security in military, political, economic, technological and environmental aspects, too. [xxiii] Therefore,  Russia is the only Arctic country to be partner of the New Silk Road Initiative, so it is a committed member of the future Polar Silk Road Projects. [xxiv]

The United States of America

The United States of America paid less and less attention to the Arctic even during the Obama Administration, the Trump Administration mainly concentrates on the Alaskan energy sources, and in recent years this region has not been represented in the Government.[xxv] At present the country has two functioning icebreaking vessels. It was in 2014 that the US last released a report on the North Pole, which set the US’s interests and purposes until 2030. The main pillars are: to ensure the sovereignty and defense of the United States of America, to secure the Navy in case of a potential crisis, to maintain the free navigability of waters, and cooperation. [xxvi]

The melting of the ice on the North Pole has encouraged the US Navy to develop a new Arctic strategy recently. The US cannot ignore that the melting icecaps can not only open new trade routes, but they can also offer new opportunities for the exploitation of unexplored resources. Besides, China’s increasing role in the region also urges the United States of America to set up a new strategy in order to keep its interests in the region. Besides considering itself an important stakeholder of Arctic affairs and an inescapable participant of the regional affairs, China released China’s Arctic Policy three months before the US decision was passed.[xxvii]

The US Congress has often questioned the Russian military mobilization concerning the North Pole as well as the increasingly aggressive Chinese attitude and the enhanced military presence on the South China Sea. And the cooperation evolving between the two countries has been even more frightening. Therefore, China’s presence creates uncertainty on the North Pole with respect to the US.[xxviii]

Conclusion

When a Chinese vessel took the Northern Sea Route for the first time in 2013, Director General of the Polar Research Institute of China Yang Huigen said that according to optimist estimations 5-15 per cent of China’s trade will have been realized on this route by 2020. Nevertheless, Chinese ambitions might not be successful because the security dilemma caused by the Strait of Malacca is planned to be solved here, and the Bering Strait can raise similar issues. Furthermore, the survey conducted among Chinese shipping companies reveal that firms are rather interested in gaining access to the resources than in Arctic navigation, which implies high risks and costs. Unlike Russia and the US, that is the two powers of the region, China is in a relatively weak position at the North, so this country can only be an investor and a purchaser here. The main field of cooperation can be environmental protection and research, which are primarily the interest of Russia and China, while military cooperation can hardly be imagined.

As today the most navigable sea-lane passes along the Russian coasts at the North Pole, China can only achieve successes and realize its ambitions in cooperation with Russia. The North Pole is such an area of strategic importance for China where it is in a weak position against Russia and the US. Therefore, China has started to build good relations with the small powers of the region and gain influence. Before the annexation of the Crimea, Russia opposed the Chinese spreading in the region; however, after the introduction and influences of the Western sanctions it already defined China as an important partner at the North Pole Project in the fields of resources, research and technology. As long as Vladimir Putin is President of Russia and Xi Jinping is President of China, the two countries are expected to maintain good relations and be cooperative in the northern region, too. The reason for this is that Russia needs Chinese capital and investments in the energetics and infrastructure sectors, and China requires the Russian support and assistance for the navigation and possibilities at the North Pole so that they can enforce their economic interests in the region.[xxix]

Author: Alexandra Zoltai

References

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[i] Gudjonsson, Heidar – Nielsson, Egill Thor: China’s Belt and Road Enters the Arctic. In: The Diplomat, 31 March 2017

[ii] Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Stratedic Studies Institute, 2017.

[iii] International Chamber of Shipping

[iv] Zhen, Liu: China reveals ’Polar Silk Road’ ambition in Arctic policy white paper. In: South China Morning Post, 26 January 2018.

[v] Fort Greely

[vi] Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Stratedic Studies Institute, 2017.

[vii] Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Stratedic Studies Institute, 2017.

[viii] Chang, Gordon G.: China’s Artic Play. In: The Diplomat, 9 March 2010.

[ix] Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Stratedic Studies Institute, 2017.

[x] Zhou, Laura: Slowly but surely, China is carving a foorhold through the Arctic. In: South China Sea, 26 January 2018.

[xi] Feng, Ashley – Saha, Sagatom: China’s Arctic Ambitions in Alaska. 20 April 2018.

[xii] Zhou, Laura: Slowly but surely, China is carving a foorhold through the Arctic. In: South China Sea, 26 January 2018.

[xiii] Gudjonsson, Heidar – Nielsson, Egill Thor: Where Does the Arctic Angle Stand? In: The Diplomat, 2017. szeptember 22. https://thediplomat.com/2017/09/chinas-belt-and-road-where-does-the-arctic-angle-stand/ (last download: 3 May 2018)

[xiv] Lelyveld, Michael: China Eyes Arctic For Polar Silk Road. In: Radio Free Asia, 12 February 2018.

[xv] Goodman, Sherri – Freese, Elisabeth: China’s Ready to Cash In on a Melting Arctic. In: Foreign Policy, 1 May 2018.

[xvi] Gudjonsson, Heidar – Nielsson, Egill Thor: China’s Belt and Road Enters the Arctic. In: The Diplomat, 31 March 2017.

[xvii] Jiliang, Chen: China Commits to Arctic Protections But Development Threats Loom. In: The Diplomat, 3 March 2018.

[xviii] Gudjonsson, Heidar – Nielsson, Egill Thor: China’s Belt and Road Enters the Arctic. In: The Diplomat, 31 March 2017.

[xix] ’ 中俄奏响北极合作新篇章.’In: Oceanol, 11 July 2017.

[xx] Liu, Nengye: China-Russia Trouble ont he Arctic Silk Road? In: The Diplomat, 21 July 2017.

[xxi] Johnson, Keith – Standish, Reid: Putin and Xi Are Dreaming of a Polar Silk Road. In: Foreign Policy, 8 March 2018.

[xxii] Liu, Nengye: China-Russia Trouble ont he Arctic Silk Road? In: The Diplomat, 21 July 2017.

[xxiii] Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Stratedic Studies Institute, 2017.

[xxiv] Gudjonsson, Heidar – Nielsson, Egill Thor: China’s Belt and Road Enters the Arctic. In: The Diplomat, 31 March 2017.

[xxv] Johnson, Keith – Standish, Reid: Putin and Xi Are Dreaming of a Polar Silk Road. In: Foreign Policy, 8 March 2018.

[xxvi] Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Stratedic Studies Institute, 2017.

[xxvii] Goodman, Sherri – Freese, Elisabeth: China’s Ready to Cash In on a Melting Arctic. In: Foreign Policy, 1 May 2018.

[xxviii] Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Stratedic Studies Institute, 2017.

[xxix] Wishnick, Elizabeth: China’s Interests and Goals in the Arctic: Implications for the United States. Stratedic Studies Institute, 2017.