Ukens analyse, 06. juli 2018

China’s Arctic Policy – what now?


In this week's analysis, Research Fellow at the Fridtjof Nansen Institute, Iselin Stensdal, writes about China's policy and interests in the Arctic. Enjoy the reading!

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Having been a rumored document for years, in January 2018, China’s State Council (the Cabinet) finally released a white paper on China’s Arctic Policy. Before the official policy, observers and commentators interpreted China’s interests for the Arctic as a ‘huge play’ or as part of a ‘grab for Greenland’. With an official policy however, some of the speculations can be put aside for more certainty regarding China’s Arctic intentions, although an official policy document does not necessarily reveal all interests and intentions. The policy shows an assertive, yet realistic China willing to responsibly engage in Arctic affairs. What does the policy say specifically? And what does this mean for the Arctic states?

 

East Coast of Greenland (Photo: NASA Goddard Space Flight Centre, Flickr CC BY).

China has four stated goals in the policy: to understand the Arctic, to protect the Arctic, to develop the Arctic and to participate in the governance of the Arctic. The four goals will be realized through the four principles respect, cooperation, win-win results, and sustainability. Rather than a ‘huge play’, the policy shows an attitude of knowledge-pursuit and law-abidance:

When participating in Arctic affairs, China prioritizes scientific research, underscores the importance of environmental protection, rational utilization, law-based governance and international cooperation, and commits itself to maintaining a peaceful, secure and stable Arctic order.

The first two goals, understanding and protecting the Arctic relates to continued scientific efforts to better comprehend the climatic and environmental changes occurring in the Arctic, as well as their consequences for other parts of the world. As most scientific research and knowledge building is international by nature, the published results will likely benefit more countries than China. Dealing with a China that understands the Arctic rather than one ignorant of the region, should also be preferable for the Arctic countries. Furthermore, pollution travels across borders, and the Arctic countries cannot fully safeguard the Arctic environment alone. Having China as a supportive partner for Arctic environmental protection makes for more promising future cooperation than without such stated backing. As such, China’s two first goals are positive for the Arctic countries.

Regarding Arctic governance the policy states that ‘China is committed to improving and complementing the Arctic governance regime.’ The Arctic is not a governance void however, so the question is where there is room for Chinese involvement. First and foremost, the Arctic is governed by the eight Arctic countries, Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the USA. This is acknowledged in the policy, where the Arctic states’ sovereignty and sovereign rights are mentioned as an explanation for the guiding principle respect.  China seeks practical cooperation in all fields bilaterally and multilaterally. The Arctic Council, an international soft power forum, is the main mechanism for coordination among the Arctic states.  It has created three internationally binding agreements, covering maritime search and rescue, marine oil pollution preparedness and response, and enhanced scientific cooperation. In addition to the eight members, there are six Permanent Participants, indigenous groups. China was accepted as an Observer on a permanent basis in 2013, together with India, Italy, Japan, South Korea and Singapore. As an observer China is invited to attend Arctic Council meetings. Its input and involvement are mainly expected to be channeled through the Arctic Council’s Working Groups’ meetings and work. The Working Groups cover different environment, pollution, and emergency response issues. This work fits well with the Arctic Policy’s own stated aims of enhancing the scientific comprehension of the Arctic environment and climate. The policy underscores that China ‘fully supports the work of the Council, and dispatches experts to participate in the work of the Council including its Working Groups and Task Forces.’ China’s intentions are thus in line with what the Arctic states and the Arctic Council prescribe from accepted observers.

 

Gao Feng, China’s Arctic Ambassador (Photo: Arctic Circle, Flickr CC BY).

Furthermore, different aspects of the Arctic are governed by a variety of international laws and conventions, such as the UN Convention on the Law of the Sea (UNCLOS), the International Maritime Organization’s (IMO) Polar Code and the UN Framework Convention on climate change (UNFCCC). China has in the past few years become more active and assertive internationally, also in issue areas that concern the Arctic. This is also reflected in the policy which states that ‘At the global level, China actively participates in the formulation of rules concerning the global environment, climate change, international maritime issues, and high seas fisheries management.’ A China more actively internationally involved than in preceding decades should not come as a surprise for the Arctic countries, and with the recognition of this situation, the Arctic countries may also engage China on those international arenas they see as important.

As for Arctic development, the policy explicitly states that the Chinese government encourages Chinese enterprises to engage in business activities in the following areas: oil, gas, mineral and other non-living resources such as renewable energy, fisheries and other living resources, tourism, as well as shipping route development.  The active engagement is not to be a race for resources, though. Rather, the Arctic states’ sovereignty, locals’ interests and the observance of international law are highlighted as guiding principles.

As for shipping routes, the policy states that: ‘China hopes to work with all parties to build a “Polar Silk Road” through developing the Arctic shipping routes.’ In June 2017, the Arctic region was also included in the large Belt and Road Initiative (BRI). BRI is an extensive foreign policy programme begun in 2013, which focuses on infrastructure, trade and investment, policy coordination and cultural exchange. It was originally introduced to revive the old silk road to Europe through Central Asia, and the sea route to Europe through South Asia and the Suez Canal. The inclusion of the Arctic region probably reflects the Chinese government’s expectation that climatic changes will make Arctic passages more viable shipping alternatives in the future. Maps in news articles often show the Polar Silk Road as running through the Northern Sea Route along Russia’s northern coast, but the policy also mentions the Central Ocean passage and the North West Passage through Canada’s Arctic Archipelago as well. The main funding mechanism of the BRI is the Silk Road Fund, jointly owned by Chinese state agencies and Chinese banks, and with a total capital of 40 bn USD. With the inclusion of the Arctic into the BRI’s purview, these funds are now accessible for infrastructure development in the Arctic. The Chinese government’s willingness to support shipping-related infrastructure in the Arctic was further cemented in the Arctic Policy, but implementation of such plans will depend on negotiations, especially with Russia. China is not going to give away money without getting something in return.

 

SD Rebel CSCL Arctic  Ocean, China Shipping Line (Photo: Kees Torn, Flickr CC BY).

China encourages those Chinese companies venturing into tourism to take the opportunity to secure social and environmental sustainability. Also for resource development Chinese companies are urged to respect the local residents and international laws. The policy states that China expects fish stocks to move north in the future, and therefore supports a better Arctic fisheries management mechanism. The Arctic littoral countries, Canada, Denmark, Iceland, Norway, Russia, and the USA are already involved in regional fisheries management organizations and in bilateral schemes covering parts of the Arctic. Some countries, notably Norway, have been reluctant to establish new conventions that could disturb functioning management mechanisms. But China was invited into the negotiations on a moratorium on fisheries in the Central Arctic Ocean (where there currently is no fish). China saw this as diplomatically important. It is a recognition of the country as a potentially important player in future Arctic fisheries. It is important that China approaches Arctic fisheries possibilities with an expressed interest in establishing common rules and signals that it aims to regulate its fishing fleet predictably and according to internationally agreed rules.

Thus far, there have not been many large Chinese business deals in the Arctic. Most infamous is perhaps the Isua iron ore mine project on Greenland, which was rumored to bring in as many as 3,000 Chinese workers to the island with a 56,000 population. This rumor was greatly exaggerated, however. The largest Chinese investment in an Arctic resource project is in the Russian project Yamal LNG of which the state-owned China National Petroleum Corporation (CNPC) owns 20% and the Silk Road Fund owns 9.9%.  It is common in China that many actors leap to the occasion and pursue opportunities within an issue or area given priority by the state. The Arctic Policy is by itself a momentous incentive for Chinese businesses to engage in development projects and business opportunities in the Arctic. For Arctic businesses and governments alike, the policy presents new cooperation opportunities. How and whether to proceed though, should be done with one’s own best interests in mind. It takes two to tango, and in dealings with Chinese businesses it is crucial to find the right partner to secure the best possible outcome for both Arctic and Chinese parties. As for the Chinese state, with its Arctic Policy, its cards are on the table. Now it will be interesting to see how Arctic countries respond.

 

Further Reading:

China’s State Council (2018). Full text: China’s Arctic Policy

Timo Koivurova, Embla Eir Oddsdottir, Huigen Yang, Jian Yang & Xia Zhang (2017). ‘Foreword for Special Issue: Arctic Policy and Sustainable Development,’ Advances in Polar Science.

Bent Ole Gram Mortensen, Jingjing Su & Lone Wandahl Mouyal (2017). ‘Chinese investment in Greenland,’ Advances in Polar Science.

 

Iselin Stensdal is a Research Fellow at the Fridtjof Nansen Institute, where she also serves as the Director of the Global Programme. Her main research areas are Chinese climate energy and environment politics, and Chinese interests for the Arctic.