- Although China now plays an increasingly important role in the Arctic, the restrictive nature of Arctic regional governance will continue to make Beijing’s fortunes in the region conditional on the support of the Arctic littoral states.
- China’s main Arctic partner, Russia, may soon revert to its traditional stance of trying to limit Beijing’s influence in the Arctic, due to growing tensions with the United States, concerns over China’s increasingly independent Arctic diplomacy, and disappointment over a lack of concrete Chinese investment.
- In order to reach its goal of becoming a ‘polar great power’ China will need to lessen its dependence on Russian support and expand its economic and political ties with other Arctic states. This may present Arctic states with an opportunity to set limits on China’s regional influence, but the benefits of any such limitation must be measured against the importance of giving China a stake in the fight against climate change.
In the traditionally calm waters of the Arctic, China’s ‘Arctic Policy White Paper’ made much of a splash when it was first released in 2018. The paper showed, as was argued at the time by politicians and pundits, that Beijing would seek to establish itself as a new Arctic power, and in the process deprive the eight Arctic states of their control over the region’s abundant natural resources. But while it is true that China today plays an increasingly important role in Arctic affairs, especially so in its role as a major investor into Arctic economies, many of the concerns around China’s growing influence in the region have turned out to have been largely overblown.
When considering the arrival of outsider states to the Arctic, it is crucial to keep in mind that the region continues to be governed through a well-functioning, long-established – and highly exclusionary – set of political institutions. The Arctic littoral states benefit from relatively undisputed rights of sovereignty over Arctic territories and seas, as well as the military capabilities to back those rights up. The fortunes of China and other non-Arctic states within the political institutions of the Arctic are therefore likely to remain dependent on the continued goodwill, political support, and economic encouragement of the permanent members of the Arctic Council.
As a case in point, it should be highlighted that China was able to increase its influence in the Arctic mostly thanks to the support of Russia, the largest of the Arctic states in terms of both territory and population. Sino-Russian relations in the Arctic have improved, on the one hand, in step with a simultaneous and more general upswing in the global bilateral relations between Moscow and Beijing following the Russian annexation of Crimea.
But on the other hand, China has also progressively displaced Europe as the main source of funding for hydrocarbon extraction sites in the Russian Arctic, especially following the imposition of anti-Russian sanctions in 2014. Frequent mutual acknowledgements of the overall compatibility of Moscow’s oil and gas export plans with Beijing’s energy security strategy suggest that Chinese demand for Russian oil and gas is unlikely to subside in the near future. And, moreover, Beijing has expressed an interest in jointly exploring the logistical potential of the Northern Sea Route, a shipping lane along Russia’s Arctic coastline, which is expected to become navigable year-round due to the rapid melting of the Arctic ice sheet.
But Moscow’s permissive policies towards Chinese involvement in the region constitute an untypical, and fairly recent, deviation from the traditional axioms of Russian Arctic diplomacy. Prior to its present-day accommodation with Beijing, Moscow had long attempted to shelter Arctic affairs from interference by non-Arctic states, mostly in order to provide stable political background conditions for the development of Russia’s Arctic resources, but also to keep escalating tensions between Russia and Arctic NATO members from deprecating the region’s fragile trade environment.
The initial reversal of Russia’s policy towards China in the Arctic was therefore as sudden as it was unexpected. When China first requested to join the Arctic Council as a permanent observer in 2007, Russia openly lobbied against Beijing’s application. Moscow only reversed its obstructionist stance in 2013, when Russian energy executives pressured the Putin government to further facilitate cooperation with China in the energy sector, presumably to prevent Russia’s hydrocarbon exporters from developing a structural overreliance on shrinking markets in Europe.
After China’s accession to the Arctic Council in 2013, Sino-Russian energy cooperation expanded at a rapid pace, with the China National Petroleum Company acquiring a 20% stake in Russia’s Arctic Yamal LNG site, matching a prior investment by French oil giant Total. In 2014, and perhaps as a corollary of China’s subtle diplomatic backing of Russia over Ukraine, the China National Petroleum Company and Gazprom concluded negotiations over the ‘Power of Siberia’, a gas deal worth $400 billion. In 2015, China’s state-owned Silk Road Fund acquired an additional 9.9% stake in Yamal LNG. And shortly thereafter, China Import-Export Bank opened an emergency credit line to Yamal LNG’s parent company Novatek.
Following these acquisitions, China became the most sizable financial player in the Russian Arctic, placing Sino-Russian relations in the Arctic on a strong economic footing. But in recent years, the enthusiasm with which Russian leaders had initially welcomed the Sino-Russian partnership in the region has noticeably waned. This is due to three separate developments, which have lastingly altered the strategic calculus underlying Russia’s initial decision to facilitate China’s entry into the Arctic.
Firstly, following the 2016 U.S. elections, legislators in Washington began to view Sino-Russian collaboration in the Arctic in a more sceptical manner, interpreting it as part of a wider balancing coalition directed against the U.S.-led ‘rules-based international order’. This has disrupted the fragile balance between Arctic littoral states, which still forms the bedrock of the Arctic’s complex institutions of security governance. American anxieties present a significant dilemma to Russian leaders: although cooperation with China on energy extraction is important to Moscow, the country’s overarching strategic ambition of sheltering the region from conflict between Arctic states can, in the longer term, be expected to override the pro-Beijing interests of Russian energy tycoons.
Secondly, following the publication of China’s ‘Arctic Strategy White Paper,’ observers in Russia began to more frequently express concerns over the growing independence of China’s own Arctic diplomacy. Russia hopes to retain its position as China’s senior partner in Arctic affairs, but the construction of two new Chinese icebreakers in 2020, which have eliminated the need for Chinese ships to be accompanied by the Russian navy in Arctic waters, may have rekindled deep-rooted fears among Russian politicians over a possible loss of influence in the region.
And thirdly, a number of infrastructure projects along the Northern Sea Route, the funding for which had been promised by Beijing in the past, have yet failed to materialise, suggesting perhaps that Chinese leaders have had a change of heart over the future viability of cargo shipping along Arctic coastlines. In spite of the ambitious rhetoric surrounding it, the concept of a ‘Polar Silk Road’ coined by Putin and Xi in 2017 has thus far not lived up to its promises.
The coming together of these three developments has rendered any further expansion of Sino-Russian Arctic cooperation less attractive from the perspective of Moscow, and resulted in an unwillingness on the part of both countries to upgrade their Arctic relations into a full-blown alliance. Should Western sanctions against Russia be lifted in the future, Moscow may, in the absence of such an alliance, revert to a more jealous variant of its policy towards China in the Arctic. In its quest to become an important Arctic stakeholder, Beijing will therefore need to progressively loosen its dependence on Russian support and diversify its links with the other Arctic states.
In many ways, this impetus has already been identified and acted upon by Chinese policymakers, who in recent years have diversified the country’s Arctic investment portfolio. In 2016, for instance, China allowed for a normalisation of diplomatic relations with Norway, giving Oslo an opportunity to negotiate a free trade agreement with Beijing. China also invested heavily into Icelandic geothermal energy production, and Chinese state-owned enterprises have financed multiple biorefinery projects in Finland. In Greenland, investments by Chinese corporations now amount to around 12% of local GDP, with cash flows directed mostly towards the island’s increasingly profitable mining sector.
Due to its progressive diversification of economic ties to the region, as well as the reduction of its structural dependence on Moscow, China may therefore now be well on its way to realising its goal of becoming an independent and influential Arctic power.
Should the Arctic littoral states want to halt or reverse this trajectory, they should attempt to do so by resorting to a set of diplomatic tools which are already now at their collective disposal. Chinese investments in underdeveloped sectors of the Russian Arctic, Greenland or Iceland could, for instance, be substituted with funds from alternative partners. If necessary, the permanent members of the Arctic Council could quickly revoke China’s permanent observer status. And the unquestionable advantages of the Arctic states in exercising military control over the region will likely continue to deter non-Arctic states from trying to alter the regional security order.
It is doubtful, however, whether an expulsion of China from the Arctic would truly be in the best interests of the Arctic states. The most pressing security threat facing the Arctic today is the environmental degradation caused by human-made climate change, and China, which is responsible for 29% of the planet’s carbon emissions, holds the key to any potential resolution of the Arctic’s environmental crisis.
While it is important that Arctic states continue to assert their sovereign prerogatives, it is equally crucial for those states to allow for a progressive expansion of the range of Arctic stakeholders in the face of a changing climate, and to permit for the global impacts of a melting Arctic to be addressed in a globally representative setting.
This article gives the views of the author, and not the position of the China Foresight Forum, LSE IDEAS, nor The London School of Economics and Political Science.