Despite its enthusiasm, China’s efforts to become a key voice in Arctic affairs have been met with skepticism, even alarm by Arctic states, and few of its investment initiatives have borne fruit. Are China’s fortunes turning with strategic partner Russia assuming the role of chair of the Arctic Council, a two-year rotating position? For China, an observer in the organization since 2013, Russia’s new status as of May 20, 2021 provides opportunities as well as risks.
While Russian Foreign Minister Sergei Lavrov has called China his country’s priority partner in the Arctic, he was quick to clarify that he meant the Russian Arctic, not the Arctic Council where Russia intends to focus on engaging Arctic states. China also has garnered praise from Russia’s ambassador-at-large for Arctic cooperation, Nikolay Korchunov, for its “restraint” compared to the Western countries, which Korchunov accused of militarizing the Arctic. It remains to be seen, however, whether Russia’s chairmanship of the Arctic Council will lead to China’s in-depth participation in Arctic governance and greater Sino-Russian economic integration and development in the Arctic, as Tianjin scholar Liu Feng and National Marine Information Center (Ministry of Natural Resources) researcher Liu Rui have predicted.
China-Russia relations have been deepening since the 2008 global financial crisis, a trend that has accelerated since the United States and the EU imposed sanctions on Russia after its takeover of Crimea in 2014. For China, Russia’s reduced options for investment and technology for its Arctic LNG projects had a silver lining – Chinese companies have been able to purchase stakes in the two Yamal LNG projects and cooperate with Russia on several other related projects.
In 2013, China’s National Petroleum Corporation (CNPC) acquired a 20 percent stake in the first Yamal LNG project, one of China’s first major upstream energy investments in Russia. China’s Silk Road Fund then purchased a 9.9 percent stake in 2016 and provided a $813 million loan. The Export-Import Bank of China and China Development Bank also lent Russia another $11 billion in loans. CNPC and China National Offshore Oil Corporation (CNOOC) each bought a 10 percent stake in the Yamal Arctic LNG 2 project in April 2019. With Western technology difficult to access under the sanctions regime, several Chinese firms are among the subcontractors providing equipment for Arctic LNG2.
In a January 26, 2018 white paper, China defined its Arctic policy as an effort “to understand, protect, develop and participate in the governance of the Arctic, so as to safeguard the common interests of all countries and the international community in the Arctic, and promote sustainable development of the Arctic.” While many countries claim to be Arctic stakeholders due to their interest in the region’s shipping opportunities and resources, China has chosen to declare itself a “near-Arctic state” due to the environmental impact of Arctic climate change, connections between Chinese and Arctic flora and fauna, a historical record of scientific and economic activity in the region, which Chinese officials date back to 1925, and current investments.
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Many states, including the United States, reject China’s characterization of itself as “near-Arctic.” More surprising was the statement by Nikolay Korchunov that “it is impossible to disagree with U.S. Secretary of State Michael Pompeo’s statement made in May 2019 that there are two groups of countries – Arctic and non-Arctic… He said so in relation to China, which positioned itself as a near-Arctic state. We disagree with this.”
Unlike most other world regions, the Arctic is very much an insiders’ club and China has had to rely on other partners to advance its interests – Russia in particular. China’s participation in the Yamal LNG projects has proven crucial to its claim to have an economic presence in the Arctic, as many of its other Arctic investments thus far have not panned out – from the more fanciful (a golf course in northern Iceland) to the strategic (a rare earth mine in Greenland).
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In recent years Russia and China have expanded their collaboration in the Arctic. The two countries have been hosting regular dialogues, between their foreign ministries (the China-Russia Dialogue on Arctic Affairs since 2015) and on the expert level (the China-Russia Arctic Forum, co-hosted since 2012 by St. Petersburg State University and Ocean University of China). In 2015 the Russian Ministry for Development of the Russian Far East and the Arctic and China’s National Development and Reform Commission (NDRC) signed an agreement on cooperation in the Northern Sea Route (NSR) and in 2017 pledged to work together in what they termed the “Ice Silk Road.” With China’s elaboration of what is more commonly called the Polar Silk Road in the 2018 white paper, as a spinoff of the Belt and Road Initiative (BRI) spanning from northern Chinese ports across the Northern Sea route and the Northeast passage to western Europe, cooperation with Russia in the Arctic also has given a boost to their otherwise lagging joint activities in the BRI and a largely unfulfilled agenda for regional projects between northeastern China and the Russian Far East. In 2019, Russia and China agreed to form a Sino-Russian Arctic research center, filling another gap in their Arctic cooperation, which Russia has long had with many countries, including the United States.
Despite these activities, there are some underlying differences between the two strategic partners where the Arctic is concerned. Russia initially opposed observer status for China and others in the Arctic Council until they agreed to respect the sovereignty of Arctic states. Indeed, sovereignty remains a sticking point. Russia presses its claims on the Arctic continental shelf and asserts the right under the U.N. Convention of the Law of the Sea Article 234 (governing ice-covered waterways) to regulate maritime traffic along the Northern Sea Route, positions that potentially restrict China’s independent activity in the Arctic, where it is an advocate for freedom of navigation. While Russia and China cooperate in shipping along the Northern Sea Route (Chinese ships, like others, must pay a fee and have a Russian icebreaker escort) some Russian experts claim that their government does not accept the “Polar Silk Road” moniker, which subsumes the Northern Sea Route, intrinsic to Russia’s Arctic identity, into a China-sponsored initiative, though Russia has not publicly criticized it.
In the long term, any improvement in Russia’s relations with Western countries will work to China’s disadvantage, as Chinese experts are well aware that their country’s technology and cooperation were not Russia’s first choice in the Arctic. China is keenly interested in any new developments in Russia-U.S. relations – the day before the meeting between Lavrov and U.S. Secretary of State Antony Blinken in Reykjavík on the sidelines of the Arctic Council meeting, Putin and Xi had a virtual meeting to celebrate the completion of four Russian-built nuclear power plants in China. Immediately after the meeting with Blinken, which Lavrov termed “constructive,” Xi’s top foreign policy advisor, Yang Jiechi, traveled to Moscow for a strategic dialogue, which presumably included Arctic issues.
Even if the many challenges on the Russia-U.S. agenda continue to stymie their cooperation in the Arctic, Russia has other partners in addition to China. Korchunov, Russia’s Arctic envoy, emphasizes that Russia hopes to work with all observer states, including China. Yang Jian, vice president of the Shanghai Institute of International Studies, hails the Polar Silk Road as fulfilling a need for Russia. but it is also partnering with other Asian Arctic Council observer states, including India, South Korea, and Japan.
St. Petersburg Arctic expert Alexander Sergunin noted at a Gorshakov Fund roundtable on June 1 that many projects with China have yet to materialize. China’s Poly Group Corporation’s proposal to invest $5.5 billion to develop the port of Archangelsk has yet to move forward, for example, while projects with South Korea and Japan have advanced despite Western sanctions. Deng Beixi, a researcher at the Polar Research Institute of China points out that, despite progress in cooperating with Russia in the Yamal LNG projects, Chinese investors are concerned about the high cost and lack of investment in the Russian Arctic and have more “destinational” interests in developing the Polar Silk Road as a shipping route to northern Europe.
Despite some new opportunities for dialogue presented by the chairmanship of the Arctic Council and the planned June 16 meeting between U.S. President Joe Biden and Putin, the list of outstanding issues between Russia and Western countries remains a long one. This has led to concern about the potential impact on the Arctic of the deepening Sino-Russian partnership and Russian support serving as a force multiplier for China’s regional ambitions. While we have not seen signs of overt Sino-Russian military cooperation in the Arctic, analysts point to the potential military applications of scientific research, such as underwater mapping and sensors.
China worked with Finland, however, not Russia, on its first domestically built icebreaker, Xue Long 2 (Snow Dragon 2), and it remains to be seen how much assistance Russia is prepared to provide China to enhance its cold-water navigation capabilities. The February 2020 arrest of Russian Arctic expert Valery Mitko on charges of allegedly providing information about Russian submarines to Chinese intelligence agents highlights the sensitivity of potential military cooperation. China has yet to invest in any Russian Arctic port and no joint naval exercises have been held in Russian Arctic waters. For now, Russia remains China’s gatekeeper until the central Arctic Ocean is navigable and ships will no longer need to traverse the Northern Sea Route, currently regulated by Russia.
How Russia manages China’s Arctic ambitions will tell us a great deal about the parameters of the Sino-Russian partnership and Russia’s priorities in the Arctic. So far Russia has shown a preference for diversifying its partners in the Arctic and using its chairmanship role to advance domestic interests, a course that potentially sets it on a collision course with China’s efforts to assert its broader regional agenda.
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This article was previously published at China Resource Risks and is republished with permission.