Exploring the Significance of China’s Membership on the Arctic Council

The recent decision of the Arctic Council to admit China and several other Asian states to observer status there represents an epochal decision for both Arctic and Asian affairs. China, Japan, India, South Korea, Singapore, and Italy all won observer status–the inclusion of so many observers from Asia highlighting the importance of these markets. This decision also means that Asian voices will be heard for the first time in decisions regulating Arctic use and commercial exploitation as that ocean becomes more accessible due to climate change. Indeed, a Chinese shipping company is planning China’s first commercial voyage through the Arctic later in 2013 (South China Morning Post, May 16).

China’s growing interest in the Arctic has long since been a matter of record [1]. In 2012, the Chinese icebreaker Xue Long (Snow Dragon) became the first Chinese vessel to navigate the Northern Sea Route into the Barents Sea going from Iceland to the Bering Strait via the North Pole. This trip encouraged Chinese officials to think seriously about commercial exploitation of the Arctic in the belief that, by 2020, 5–15 percent of China’s international trade—mainly container traffic—would use the route, amounting to anywhere between 125,000 to 375,000 tons (Reuters, March 12).

China, however, is not alone in seeking to maximize the economic, trade and commercial benefits it stands to gain by being in the council. Even Singapore’s “Arctic diplomacy” is driven primarily by an ambition to exploit an emerging market niche in which it sees itself as a technological and expertise leader (Straits Times, May 21). For the other Asian states now on the council, that commercial and trade also clearly means access to energy riches. China is again not alone it its ambitions. In January this year, Indian Foreign Minister Salman Khurshid stated that India’s energy requirements were growing at a “terrifying pace.”

“He further observed that if India continued to grow at its current rate of 8–9 percent, its energy import dependence would also increase dramatically. Khurshid projected that India would be importing up to 57 percent of its coal, 94 percent of its oil, ad 57 percent of its gas within the next two decades, compared to 15 percent for coal, 80 percent for oil, and 15–18 percent for gas currently. India now imports 70 [percent of its oil and 80 percent of its liquefied natural gas (LNG) from the Middle East. But given recent instability in that region, there is a sense of urgency in India abut pursuing more diverse sourcing options.  This will include supplies from the Russian Arctic and Far East and the Pacific coast of North America as well as fields in the South China Sea itself. All of these sources will depend on freedom of navigation on the high seas. To secure that freedom, India will require greater coordination with Japan as well as some kind of understanding with China” (World Politics Review, February 11).

Consequently, India is discussing a potential $5 billion investment by an Indian consortium of hydrocarbon companies in the northern Alberta oil sands deposit being developed by Conoco Phillips as well as other Arctic and North American locations and the acquisition of a stake in Russia’s Trebs and Titov fields in northwest Russia as part of the Pechora region’s fields and also possibly deposits on the Arctic Yamal peninsula (Financial Express Online [India], December 18, 2010). India also is a potential destination for Liquefied Natural Gas (LNG) shipped from Canadian liquefaction terminals in British Columbia. Indeed, India’s government recently announced that it refuses to lay down a quota for importing oil (and presumably gas) from any country, including Iran. India will buy oil (and again presumably gas) from wherever “it gets the best deal” (The Economic Times [India], April 10).         

India’s interest in the Arctic and North Pacific is not just an outgrowth of its energy partnerships with Russia on Sakhalin. Indian media commentary states that if India is to be seen as a viable contender for membership in the UN Security Council it must become much more active diplomatically in regard to the “behind the scenes exercises to shape the future of the Arctic.” A second reason for upgrading its diplomacy concerning the Arctic is to check China’s interest in grabbing access to energy holdings lest India be left out. of this race (Daily News and Analysis Online [India], November 11, 2012). Other commentators have given additional reasons for India’s need to expand its energy perspectives into the North Pacific and the Arctic. They decried India’s frosty relations with Denmark—one of Arctic Council member states—and also warned that if India does not develop an Arctic policy and try to restrain China , it is “heading for near diplomatic disaster” (Daily News and Analysis Online, November 11, 2012). Thus, apart from purely commercial considerations of trade and access to energy sources, classic geopolitical strategic rivalries and identity politics also play no small role in driving the policies of states interested in the Arctic [2].         

All these motives—enhanced commercial opportunity, access to energy sources in the Arctic, increased international status as a member of the council, etc.—pertain to China. Given the extent of China’s preexisting interest and claims in the Arctic, Beijing gains perhaps even more form inclusion as an observer to the Arctic Council. An article in Beijing Review claimed that other actors were trying to exclude China but by dint of enormous exertions and large expenditures of funds to finance energy infrastructure in Russia and Canada as well as its own scientific program of Arctic research “China has ultimately managed to reshuffle the Arctic balance of power in record time.” More crassly, one might suggest China paid dearly for its newfound status. Nevertheless China will not only gain real access to state of the art Icelandic clean energy technologies, it also will gain leverage and influence in Iceland itself and that influence, once Iceland joins the Council, will redound again to China’s benefit (Beijing Review, May 17).

Beyond these considerations China gains even more legitimate access to the Arctic beyond bilateral deals with individual states like Russia (China Daily, May 23). Even before the Council decision, Rosneft and Gazprom were competing to offer China access to the Arctic. Moreover, during the recent visit by Xia Jinping, new deals between Rosneft and China to explore the Arctic were signed (Barents Observer, March 25). Similarly, even before the Council decision, China’s commercial perspective on the Arctic was already growing and this decision will only allow it to consolidate those gains. Recent Taiwanese reports suggest by 2020 China is expected to be shipping 15 percent of its exports through this route using Chinese rather than Russian icebreakers, further reducing Russia’s alleged advantages as an East-West transit and trade corridor between Europe and Asia. China also has sought permanent observer status on the Arctic Council as part of its commercial drive here (Central News Agency [Taiwan], May 23). China also is clearly very interested in exploring the mining riches of other states in and around the Arctic, e.g. Greenland’s copper and iron ore and in using Iceland as a future transport hub for Arctic shipping (New York Times, March 22; Caixin Online, July 12, 2011). Beijing also will gain a voice in the important Arctic fishing industry and fishing is a very big business for China.

Beyond even these considerable commercial and energy, investment and trade access gains, China also gains strategically. Beijing now has access to a body that can and will probably have to take serious decisions about climate change that already are affecting China seriously and has done so in the past (China Daily, May 23). China also will have a secure footing from which it can defend what it will claim to be its “legitimate rights” in the Arctic (Xinhua, May 16). It is quite conceivable that China will use that foothold to demand a voice in the resolution of Arctic territorial boundaries that are being negotiated. In 2009–10, Beijing had claimed that no state had sovereignty in the Arctic, a clear slap at Russian claims (China News Service, March 5). Now, to join the Council, it had to repudiate that position and state that it respected the sovereignty of all the states claiming territory in the Arctic but accept that the decision will be made in the future—a sharp contrast to its rigid insistence on its “core interests” and sovereignty in the Senkakus and the South China Sea. Indeed, given those claims, Beijing had no choice but to do so. Nonetheless, it now calls itself a “near-Arctic state” and an “Arctic stakeholder” (Beijing Review, May 17).

In this context a paper by Tang Guoquiang for the Ministry of Foreign Affairs-administered China Institute of International Studies claims that unnamed “military experts” believe “that to dominate the Arctic is to control the commanding point in the world military affairs” [3]. If that perspective accurately characterizes Chinese strategic thinking, the opportunity to participate in demarcating Arctic maritime and land boundaries is of considerable value to Beijing.

The possibility for intensified strategic rivalries in the Arctic where China will either participate in the disputes or have to participate in attempting to adjudicate or resolve them should not be taken lightly. On February 27, President Putin told an expanded session of the Ministry of Defense Collegium the following:

“We see how instability and conflict are spreading around the world today. Armed conflict continues in the Middle East and Asia, and the danger of ‘export’ of radicalism and chaos continues to grow in our neighboring regions. At the same time, we see methodical attempts to undermine the strategic balance in various ways and forms. The United States has essentially launched now the second phase in its global missile defense system. There are attempts to sound out possibilities for expanding NATO further eastward, and there is also the danger of militarization in the Arctic. All of these challenges—and they are just a few of the many we face—are of direct concern to our national interests and therefore also determine our priorities” (kremlin.ru, February 27).

Putin singled out the Arctic here presumably because of its huge mineral and energy endowment. Russia, however, has embarked on a steady course of militarization in the Arctic that has forced European and NATO counties as well as Canada and potentially the United States to follow suit. At least in Europe if not in Asia (and observers should not forget the very tense maritime disputes now roiling Asia), there is clearly a race between militarization, irrational commercial exploitation and a more considered, international approach to the use of the Arctic. China along with four other Asian states now have been invited formally into that race, and China has already been participating in it and will continue doing so with gusto. Which way will the Arctic and China’s policies go? That answer, unfortunately, remains to be seen.

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