China’s Need to Build the “Polar Silk Road”
Photo Credit: Xinhua
By Amrita Jash

China’s Need to Build the “Polar Silk Road”

Feb. 12, 2018  |     |  0 comments

On January 26, 2018, China released its first ever official White Paper on “China’s Arctic Policy.” Claiming itself to be an important stakeholder in the Arctic affairs, and most importantly, identifying itself to be a “Near-Arctic State”, Beijing categorically expounded that “the Silk Road Economic Belt and the 21st-century Maritime Silk Road (Belt and Road Initiative), an important cooperation initiative of China, will bring opportunities for parties concerned to jointly build a ‘Polar Silk Road,’ and facilitate connectivity and sustainable economic and social development of the Arctic,” and therefore, China will “jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative.”

The Chinese agenda is to build the “Polar Silk Road” through developing the Arctic shipping routes. What makes it an essential need is the strategic significance of the Northern Sea Route (NSR) — a potential key trading route between the eastern, western and northern hemispheres. The NSR is a maritime passage that could enable the faster expansion of the exploration and production of oil and gas in the Arctic; significantly shorten the east-west maritime trading belt between higher latitude European and Asian ports; and dramatically alter the strategic value to, and utilization of, the Arctic Ocean by the world’s established and emerging great powers.

In view of this, the White Paper suggests that China should seek to “encourage its enterprises to participate in the infrastructure construction for these routes and conduct commercial trial voyages in accordance with the law to pave the way for their commercial and regularized operation.” This very policy perspective highlights the importance China attaches to the Arctic region in its national interest, and more specifically, how it will help secure China’s foothold in the maritime domain.

In recent years, the Arctic region has increasingly become a zone of critical interest in international politics. What makes the Arctic a region of strategic importance is its high economic potential. The potential reserves of natural energy resources in the Arctic zone are estimated to contain 90 billion barrels of oil, accounting for 13 percent of undiscovered world oil reserves; 47.3 trillion m3 of natural gas, accounting for 30 percent of the world’s undiscovered gas reserves; and 44 billion barrels of gas condensate.

Among the five countries with oil and gas in the Arctic, the reserves are divided in the following proportions: Russia, 52 percent; the US, 20 percent; Norway, 12 percent; Greenland, 11 percent; and Canada, 5 percent. Currently, the region produces about one tenth of the world’s oil and a quarter of its natural gas, with the Russian Arctic being the source for about 80 percent of this oil and virtually all of the natural gas; and with Arctic Canada, Alaska, and Norway being the other leading producers.

Given this potential wealth of resources in the backdrop of the growing quest for energy security among nations in the international system, the scramble for energy resources has shifted the focus to the Arctic, which is seen as the “future abundant natural resources supply base for various pivotal countries,” especially major non-Arctic states such as China. To note, in May 2013, China became a permanent observer at the Arctic Council. (The other non-Arctic countries that are observers at the Council are France, Germany, Italy, Japan, The Netherlands, Poland, India, South Korea, Singapore, Spain, Switzerland and the United Kingdom.)

The energy factor looms large in China’s Arctic agenda given its interest to procure, secure, and diversify its energy supplies.

In August 2013, China’s general cargo vessel M/V Yong Sheng sailed via the NSR rather than via the Indian Ocean and the Suez Canal — the very first Chinese vessel to do so. In addition, China is now actively engaged in the Yamal LNG project, a joint venture between Russian Novatek (50.1  percent), French Total (20  percent), China National Petroleum Corporation (20  percent), and the Chinese Silk Road Fund (9.9 percent). This makes it the first Arctic energy project within China’s Belt and Road Initiative of which almost 30 percent of the joint venture is Chinese money.

China’s strategic interests in the Arctic are fourfold. First, the changing ecological condition in the Arctic caused by the rapid melting of the ice creates significant concerns for China. Rising global sea levels heighten environmental risks, with significant implications for China’s growth and development. The global warming factor makes it imperative for China to engage in shipping routes through the Arctic for future international trade. In addition, as China seeks to actively engage in global governance, addressing climate change in the Arctic is an important part of China’s global climate governance. This will enhance China’s say in the evolving Arctic governance regime.

Second, a new sea route along the Arctic will further enhance and expand China’s grand Belt and Road Initiative. The Arctic holds the potential to act as the central connecting link between East Asia, Europe, and North America, given the Belt and Road Initiative’s core agenda to connect Asia to Europe and Africa. This route can extend the Maritime Silk Road to the Nordic region and will also be cost effective as well as act as an efficient route for China’s maritime transportation. In addition, it will provide an alternative to the existing longer and strategically vulnerable routes. For instance, it will provide China an alternative option to secure its Sea Lanes of Communication, given that it faces challenges in the Indian Ocean, which carries 80 percent of China’s petroleum imports into the Straits of Malacca.

Third, the energy factor looms large in China’s Arctic agenda given its interest to procure, secure, and diversify its energy supplies. With its growing economy, China’s energy use has also boosted, resulting in an increase in its dependency on energy imports. Although 69 percent of China’s energy consumption comes from coal, its oil requirements remain substantial. As a result of the increasing demand, China become a net importer of crude oil in 1993 from being a net exporter. While China is the world’s sixth largest oil producer, in 2014 it surpassed the United States as the world’s largest net importer of total petroleum (crude oil and petroleum products). Current projections suggest that by 2020 imported oil will make up 66 percent of China’s total oil demand, increasing to 72 percent by 2040.

China’s new Arctic Policy, especially the “Polar Silk Road” strategy, will provide a significant boost to its Belt and Road Initiative. More notably, if it succeeds in engineering an Arctic shipping route, this will enhance China’s great power ambitions as well as further its interest in becoming an active player — despite being a non-Arctic country — both regionally as well as globally.

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