This CiCM Insight looks at Chinese maneuvers in the Arctic, and highlights China‘s Polar Silk Road (PSR) strategy. Furthermore, it illustrates the geopolitical implications and limitations of China’s PSR initiative .

  •  Global warming has led to significant melting of ice in the polar regions, especially in the Arctic, where the ice coverage has shrunk by 12.6 per cent per decade between 1981 and 2010 (Figure 1). China perceives these changes as an opportunity to expand its trade routes and expand its maritime access through the Northern Sea route. The Arctic region also offers substantial energy resources, which are crucial for China as the world's largest energy consumer. Furthermore, geopolitics is another factor that makes the Arctic region so lucrative for many countries. Apart from the eight major Arctic countries (namely, Canada, the US, Russia, Denmark, Norway, Sweden, Finland, and Iceland), there are other non-Arctic countries that are also interested in the region, with China being one of the most active non-Arctic countries Thus, it is important to analyze China’s interests in the Arctic as it can potentially have major geopolitical implications as the race for acquiring Arctic sources intensifies.

Figure 1: The size/extent of the Arctic Sea ice each September since 1979

China’s Journey in Arctic Region

  •  The first evidence of Chinese interest in the polar regions dates back to 1982– 83, when some Chinese scientists informally took part in the first International Polar Year. China’s interest in the polar region has grown significantly in recent years and has even gone to the extent of referring to itself as a "near-Arctic State" in its 2018 white paper on Arctic strategy. China’s interest in polar regions limits not only to geoeconomics but also connected with China’s energy security and geopolitical calculations. China’s official engagement in the polar region started in 1925, when the then-Republic of China ratified the Spitsbergen/Svalbard Treaty. In 1989, China established a polar region research institute known as the Polar Research Institute of China (PRIC), dedicated to polar research activities and monitoring of the poles. China has so far conducted 39 Antarctic scientific explorations and 12 Arctic expeditions since 1999. In 2004, China built its first research center in the Arctic region, known as Arctic Yellow River Station. China also received observer status at the Arctic Council in 2013.
  • Since the beginning of its domestic economic reforms in 1978, while economic motives are the primary driver, China's engagement in the region also encompasses geopolitical goals, such as reducing dependence on potential chokepoints like the Malacca Strait, Hormuz strait and Suez Canal. Diplomacy and multilateralism are also part of China's engagement, with a desire to participate in a polar region bloc and strengthen bilateral relationships with respective Arctic countries that would have been otherwise challenging without common interests. In 2018, China's polar ambitions received a significant boost with the release of its first Arctic strategy. It positioned itself as a near-Arctic state and introduced the ambitious "Polar Silk Road" initiative.

China's Polar Silk Road Strategy

  • The Polar Silk Road (PSR) initiative is an extension of China’s Belt and Road Initiative (BRI), which is a combination of overland routes analogous to the historical Silk Route and the Maritime Silk Route. The main objective of PSR, as claimed by the People’s Republic of China, is to facilitate connectivity and sustainable economic and social development of the Arctic. However, many experts believe that the primary objective of the PSR strategy is to establish China as a major stakeholder in the Arctic region, which will allow China to practice freedom of navigation, conduct scientific research, fishing, construction of pipelines and resource exploration in the region.
  • The PSR strategy is China’s long-term policy aimed at 2050, when the Arctic will be ice-free for most of the year. Therefore, China has been focusing on infrastructure development and capacity building in the region under its PSR strategy. China’s State-Owned Enterprises (SOEs) have been targeting oil and gas deposits by investing heavily in these sectors through partnerships with Arctic states. China, being a non-Arctic state, depends on Arctic states to pursue its goal of establishing strong presence in polar region through foreign direct investments via SOEs. For instance, in 2013, Iceland became the first Arctic country to sign a free trade agreement with China, and now China is Iceland’s second largest importer with a share of 8.9 per cent in 2021. Similarly, in the case of Finland, the exports of China to Finland have increased by 10.9 per cent annually, from $347 million in 1995 to $4.61 billion in 2020, making China the third largest importer of Finland with a share of 9.6 per cent. The trend is similar with almost all Nordic countries, indicating China’s strong economic relations with European Arctic countries (Figure 2). China has invested more than USD 1.4 trillion in the economies of Arctic nations between 2005 and 2017, even before the PSR strategy was launched. The importance of developing sea routes by China can be understood by the fact that the distance from Northern Europe to China and vice versa is approximately 40 per cent shorter than via the Suez Canal or 60 per cent shorter via the Cape of Good Hope.

Figure 2: China’s share in trade with Nordic countries