Trans-Pacific View author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Malte Humpert – Founder and Senior Fellow of The Arctic Institute, energy consultant for the Inter-American Development Bank, and author of The Future of Arctic Shipping: A New Silk Road for China (2012) – is the 191st in ”The Trans-Pacific View Insight Series.”
Briefly explain China’s strategic interests in Arctic.
The Arctic is becoming a “new” political space in which China wants to be actively involved. As the emerging global power of the 21st century, it actively wants to participate in policymaking processes and ensure that its interests are being met. Two overarching strategic interests are the region’s previously inaccessible natural resources as well as the access to emerging shipping lanes.
The Arctic region, especially Russia’s territories and near-shore waters, hold significant oil and gas reserves. Through several large-scale investments, including financing for Novatek’s Yamal LNG and Arctic LNG 2 projects, China is actively involved in the development and exploitation of these resources. China benefits from long-term supply contracts with Novatek and its shipping partners of LNG.
As the region’s sea ice will continue to recede and turn the Arctic Ocean into seasonally navigable waters, Russia’s Northern Sea Route (NSR) represents an expedient short-cut for shipping between Asia and Europe. While the majority of today’s goods shipped on the world’s container ships will not be rerouted via the Arctic Ocean, the route nonetheless offers long-term economic opportunities. For one it is a suitable export route for Arctic natural resources, which can be delivered to China in a matter of 10-14 days from almost anywhere in the Arctic. It is also a viable shortcut to ship bulk industrial items – COSCO has shipped windmill blades and towers to the United Kingdom via the NSR – and may in the future also be used for the export of non-containerized cargo, such as motor vehicles. Lastly, once the Arctic Ocean becomes ice-free during the summer months during the coming decades, the Transpolar Sea Route, which largely lies in international waters, will become navigable. This route will offer the possibility to diversify China’s export and import routes and represents an alternative to current choke points around, for example, the Strait of Malacca and the Suez Canal.
Despite China’s observer status in the Arctic Council, is China’s concept of a Polar Silk Road a potential rival to the Arctic Council?
The Arctic Council’s and its predecessor’s work goes back more than 30 years. It has a long history of successful stewardship and work as a high-level intergovernmental forum for the Arctic. With the creation of a permanent secretariat and the acceptance of new observer states over the past few years its role and work, especially in the working groups, has expanded significantly and has led to legally binding accords, including agreements on oil spill prevention and search and rescue. China actively participates in these fora and is engaged in the working groups.
Any Arctic discussion as part of a yet-to-be-created Polar Silk Road “forum” would likely be regionally focused on countries in the Asia-Pacific region and would be much narrower in terms of thematic scope and depth. The Arctic Council’s role and importance will almost certainly expand further over the coming years. This does not mean that there won’t be additional fora to discuss Arctic matters, but they will not rival the work of the Council.
How do China’s Arctic ambitions factor into China’s Belt and Road Initiative and Made in China 2025?
China’s Arctic ambitions, especially its focus on maritime transport along the NSR – COSCO has conducted around 30 voyages so far – are complementary to the BRI. The Arctic Ocean is listed as one of three routes in the “Vision for Maritime Cooperation” under the BRI. The route offers an alternative transport corridor, which is likely to gain in importance over the coming decades as sea ice continues to melt and regular non-ice class vessels are able to routinely travel across the Arctic Ocean.
The country continues to strengthen its bilateral cooperation with Scandinavian countries, including a free trade agreement with Iceland in 2014, ongoing discussions with Norway on the same matter, or a joint Arctic research center with Finland.
In terms of “Made in China 2025,” the Arctic currently offers fewer opportunities as much of the existing economic activity in the region is of a heavy industrial nature. The region may hold promise in the realm of telecommunications – China is seeking cooperation with Finland for a laying of an undersea telecommunications cable – or for the procurement of valuable metals and rare earth elements found in Greenland, which are sought-after in high-tech manufacturing. In addition, new export routes across the High North may allow China to more expediently deliver higher value products to Europe.
The U.S. blocked a joint statement by the Arctic Council on climate change earlier this month – assess the impact of the U.S. approach on the Council’s leadership.
The current U.S. administration’s denial of climate change certainly complicates work within the Arctic Council. Much of the work of the Council is in one way or another connected to the impacts of climate change on the Arctic region. While initial disputes in these regards were able to be overcome during the 2017 ministerial meeting in Fairbanks, by the time of the Rovaniemi meeting earlier in May 2019, the administration’s policies regarding climate change represented an insurmountable hurdle to come to a joint declaration.
In the short term, work of the Council may be impacted, likely less so on the working group level, but certainly on the ministerial level. Over the long term, assuming a revision in U.S. policy with a change of administration, more collaborative efforts will certainly resume.
As U.S.-China competition intensifies, how should U.S. policymakers and energy companies navigate China’s growing presence in the Arctic?
China has a legitimate economic and political interest in the region, as do all other Arctic and non-Arctic countries. As long as China abides by international norms and rules, be it environmental regulations, labor laws, or trade rules, its economic interests and investments should be understood as opportunities, not threats.
Importance lies in the continued engagement with and binding of China into the existing international fora and dialogues. Here, its acceptance as an observer in the Arctic Council was of vital importance.
In this regard, the United States’ brash statements directed at both China and Russia ahead of the [Arctic Council] ministerial meeting in Rovaniemi may prove to have been counterproductive. The best way to ensure continued peaceful cooperation in the region will lie in the strengthening of the Arctic Council, not the antagonization of select members or observers. This could weaken the collaborative nature of the Council and may push both China and Russia out of existing frameworks and networks.