China’s Ready to Cash In on a Melting Arctic

Put simply, “the damn thing melted,” Navy Secretary Richard Spencer explained in recent testimony, referring to Arctic ice melt as the trigger for the new U.S. Navy Arctic Strategy that is to be released this summer. What the Navy planned as a 16-year road map is in need of updates after only four years, in part due to receding polar ice caps, which are “opening new trade routes, exposing new resources, and redrawing continental maps,” but also in part due to the rise of China as an “Arctic stakeholder” and increasing important player in the region.

China’s new Arctic policy white paper, released three months before the Navy’s decision to reassess its arctic strategy, envisions a “Polar Silk Road,” using the omnipresent jargon of President Xi Jinping’s Belt and Road Initiative that has come to dominate Chinese foreign policy. That means a new route through the unfrozen Arctic, dominated by Chinese trade and tied into Beijing’s global ambitions.

China is already an Arctic Council observer and “near Arctic” state with growing Arctic ambitions. However, this Arctic Policy is an effort to move China from a “near Arctic” state to an “Arctic stakeholder” — a title it already self-identifies as — with increased rights and responsibilities in the region, a shift that will impact future U.S. strategy there.

China has large ambitions throughout the Arctic, including creating trade routes via the Polar Silk Road, expanding foreign direct investment in Arctic states, and strategically deploying scientific research. China recognizes that the impacts of climate change on the Arctic will become domestic problems in the near future. As one researcher has noted, “China’s coastlines will flood in the next century due to the melting of Arctic ice, which will force the relocation of up to 20 million people, not to mention reduce agricultural production.” This plays into Beijing’s desire to position itself as a responsible global power, shouldering a mantle of climate leadership the current U.S. administration has discarded.

China’s imagined Polar Silk Road will initially utilize the Northern Sea Route, hugging the Russian coastline, which Russia envisions as a maritime toll road through the Arctic. Shipping from China to Europe along the Northern Sea Route, which, as the ice melts, will presumably be available for several months each year, could cut up to 15 days off the current route via the Suez Canal and the Strait of Malacca — and avoid the U.S. naval presence along those routes.

In the long term, China foresees using the even shorter Transpolar Sea Route across the very top of the Arctic when that opens in several decades due to melting sea ice. This route, which again may be available for several months each year, could not only save China shipping time and fuel costs but also free it from depending on Russia-controlled waters. As Li Zhenfu, director of Dalian Maritime University’s research center for polar maritime studies, noted, “Whoever has control over the Arctic route will control the new passage of world economics and international strategies.” As China sets itself up to be an economic power in the region — both through direct presence and indirect influence over other Arctic stakeholders in which it invests — the United States will need to increase its role if it aims to not lose out on this new passage.

China is deepening its Arctic presence through resource-oriented investments and the development of ports. Right now, China depends heavily on oil and gas imports from the Persian Gulf and Africa that transit through maritime choke points overseen by the U.S. Navy. But China is in the process of diversifying its energy resources by investing in Russia’s Yamal liquid natural gas complex, and in Norwegian oil and gas fields. This not only provides China with an alternative supply of oil and gas but also helps China gain experience in developing Arctic infrastructure and technology that will eventually allow it to control the routes through which its imports travel. For similar reasons, China is now seeking to make oil and gas investments in Alaska, Canada, and potentially Norway, as well as investments in the mineral industries and ports of many Northern European Arctic states.

Among China’s possible partners in the region are the five Northern European members of the Arctic Council: Iceland, Denmark, Norway, Sweden, and Finland, which are especially eager for financial backing for their own Arctic ambitions. Iceland and Greenland have become particular targets for Chinese foreign direct investment. Iceland has had a mixed response to the Chinese presence, welcoming investments in geothermal technology and discussing opportunities for Chinese support of a deep-sea port, but declining tourism-related land purchases. As Greenland melts, China is investing in potential ports and the rare earth minerals it needs to feed its vast manufacturing economy. Finland and China have recently inked a deal to create a data Silk Road that will link Arctic communications to the Asian market.

The final piece of China’s Arctic ambition is its strategic deployment of science. China has dozens of scientists in Svalbard, Norway’s Arctic archipelago — an international demilitarized zone where all nations are permitted to station research scientists — and many more across the Arctic. It has conducted more than 30 polar expeditions since 1984, and in order to achieve its long-term Arctic ambitions in research and shipping, China is currently constructing its next icebreaker. The Xuelong 2 will be ready in 2019, well before the United States even begins working on its next heavy icebreaker, which it plans to start building in 2020. China has also deployed an impressive number of satellites to monitor the region’s climate and weather, including the FY-3D in 2017, which was launched three days before the United States’ Joint Polar Satellite System-1. As China continues to utilize science diplomacy in the region, the United States is in the process of combining the National Oceanic and Atmospheric Administration’s polar satellite program with its Polar Follow On program and cutting its budget by 20 percent.

China’s web in the Arctic is threaded together by ambitious economic goals and science diplomacy. The Polar Research Institute of China estimates that 5 to 15 percent of the country’s trade value could traverse the Arctic by 2020, and this will only continue to grow as the country forms more partnerships with Arctic stakeholders to take advantage of their resource access in the region. China will continue to both pursue a balance of science diplomacy through increased research and emphasize resource extraction, a presence that will become critical when the recently reached fishery moratorium is revisited in 15 years.

This mirrors China’s increasing presence along the rest of the Belt and Road Initiative, which bases itself similarly on bilateral agreements and subnational diplomacy, taps into the resources available in partner countries, often outsources the environmental impacts of China’s growth, and ensures that Chinese companies and their technology are directly benefiting from involvement. As China’s Arctic plans thread together more countries, resources, and trade routes, working together to advance Beijing’s interests in the region, the United States needs to adapt to the changing geopolitics of the region, not only updating the U.S. Navy’s and other agencies’ Arctic strategies, but also ensuring adequate scientific, human resource, and commercial investments in the region. The Arctic can be the next innovation frontier for the United States, combining its deep bench of scientific and technological capability with the opportunity to connect the vast region via telecommunications and shipping in a sustainable future, while ensuring America is a key partner with Arctic allies.