Russia clears the path for China in the Arctic
Beijing is slowly but surely expanding its Arctic footprint, largely through cooperation with Moscow.
In a nutshell
- China is strengthening its Arctic presence through research and shipping
- A Sino-Russian partnership aims to develop a profitable Arctic shipping route
- Beijing will proceed cautiously, wary of angering the U.S. and Europe
China was a latecomer to Arctic exploration. While European nations started traveling to the area as early as the 16th century, it was not until the late 20th century that China began to engage significantly in the region. Despite this slow start, Beijing is now determined to position itself as a key player in the Arctic.
Arctic ambitions driven by mercantilism
Since joining the World Trade Organization in 2001, China’s manufacturing sector has expanded dramatically. The decade that followed was mutually beneficial: Affluent nations provided technology and capital while China supplied affordable products. Beijing remains optimistic that Europe and North America will continue to be reliable consumers of Chinese products.
As global warming intensifies, Beijing’s interest in the Arctic grows, particularly if melting polar ice caps allow access through the Northern Sea Route in coming decades. This path is expected to offer a more cost-effective alternative to the Suez Canal, reducing transit times by nine days.
The region’s current shipping lanes are not ideal for China. The Northwest Passage is less economical and subject to Canadian navigation rules, while the conditions for shipping via the Arctic Central Passage are not yet favorable due to environmental and technical challenges.
Meteorological forecasts indicate that the Arctic is warming faster than the rest of the world, leading to a significant reduction in the area and thickness of the Arctic sea ice since satellite monitoring began in 1978. Predictions suggest that by 2030, the Arctic Ocean may witness its first nearly ice-free summer. By 2050, the Northern Sea Route is expected to be one of the most efficient shipping paths between Asia and Europe.
Moreover, the Arctic holds abundant natural resources, including oil, gas, minerals and fish, with its untapped oil and gas reserves estimated to comprise about 25 percent of the world’s undiscovered resources.
After over a decade of dedicated efforts, China has achieved significant milestones in the Arctic. To date, China operates several scientific research stations in the region and has added two icebreakers to its fleet, which are capable of clearing paths for merchant ships in northern latitudes. China also secured observer status in the Arctic Council in 2013 and has established several agreements with Arctic nations for joint research and commercial endeavors in the Arctic Ocean.
Facts & figures
Arctic shipping routes
In July 2023, a regular Sino-Russian shipping corridor along the Arctic sea lanes was officially launched, markedly reducing the distance and time required for cargo transport from Russia’s northern ports to China. In 2023, 80 voyages, comprising cargo ships, cruise ships and oil tankers, reached Chinese ports via the Arctic waterway. With these developments, China has nearly solidified its self-proclaimed status as a “near-Arctic country.”
Expanding Chinese interests in the Arctic
China’s 2018 white paper on its Arctic policy makes the case that non-Arctic countries, including China, have rights in the region. China has actively pursued the right to scientific research, navigation, overflight, fishing, laying of submarine cables and pipelines, as well resource exploration and exploitation.
Beijing is well aware of the challenges and high costs associated with Arctic development and research. Some 80 percent of Arctic resource research and development is already under the exclusive control of the circumpolar states, presenting further obstacles for new entrants like China.
Historically, the Arctic represented a model of cooperation among the eight circumpolar nations. However, on March 3, 2022, Canada, Denmark, Finland, Iceland, Norway, Sweden and the United States issued a joint statement announcing the suspension of their cooperation with Russia within the Arctic Council, leaving Moscow in need of new partners to develop the region.
Since the onset of Russia’s full-scale invasion of Ukraine in 2022, Russia has been making unprecedented concessions to China when it comes to Arctic affairs. In March 2023, the two countries agreed to establish a joint working group to advance the Northern Sea Route project. The following month, they signed a Memorandum of Understanding to enhance cooperation in maritime law. In May, within the “Arctic Thinking – Global Thinking” project framework, BRICS country representatives convened to formulate a unified Arctic agenda.
China’s covert support for Russia’s Arctic LNG 2 project
The Arctic is poised to become a vital energy hub for Russia. The Arctic LNG 2 project, the second major onshore gas initiative on the Gydan Peninsula, is being developed with international collaboration. Russian media predict that by 2050, these operations could contribute to 9 percent of global production of liquified natural gas (LNG). To attract foreign investors, the Russian government has introduced substantial tax breaks and subsidies.
However, the landscape shifted dramatically after Russia’s full-scale invasion of Ukraine. Major global oil companies, including BP, Statoil and ExxonMobil, pulled out of or paused their collaboration with Russia. Consequently, the Arctic LNG 2 project has been unable to proceed as originally planned. France’s Total, a key foreign investor in these Arctic ventures, also declared it would cease funding new projects.
In November 2023, the U.S. imposed sanctions on the Arctic LNG 2 project, into which over $20 billion had already been invested. In response to escalating Western measures, Russia offered a 40 percent discount on the sale of LNG. However, a year later, Russia has still not found a buyer for Arctic LNG 2.
China’s involvement in this project mirrors President Xi Jinping’s strategy: on one hand supporting Russia and aiming to prevent the downfall of the Arctic LNG 2 project, while simultaneously not wanting to jeopardize its access to Western markets.
Under pressure from the U.S. and Europe, China’s Wison New Energies officially withdrew from the Arctic LNG 2 on June 21. However, in August, a small fleet of Chinese cargo ships covertly headed to the Arctic to support the project. These ships were laden with substantial power generation equipment for the Arctic LNG 2 project, provided by Wison New Energies. During its journey within Chinese waters, one ship changed its name twice to avoid detection. Its automatic identification system listed Norway as its destination, masking its true route to Russia. This discreet operation successfully delivered Modules 1-3 to the project site in Russia. When these activities were exposed, Wison denied direct involvement and suggested that a third party was responsible.
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China did not have sufficient time to deliver the final two power modules to the Russian Arctic within the year. With the Arctic summer shipping season over, Modules 4-5 now remain at the Zhoushan shipyard. Another covert operation will likely take place next year.
Despite Washington explicitly threatening sanctions against involvement in the Arctic LNG 2 project, on June 7 of this year PetroChina Chairman Wang Yilin and Novatek Chairman Leonid Mikhelson signed a share purchase agreement in St. Petersburg. This agreement stipulated that PetroChina would acquire a 10 percent stake in Arctic LNG 2. This move was not merely a decision by PetroChina but the fulfillment of an agreement made between President Xi and President Vladimir Putin during the former’s visit to Moscow in March.
Simultaneously, Beijing continues to engage with the U.S. and Europe. For instance, on April 16, China and Iceland signed a trade rights agreement, during which leaders of both nations reaffirmed their cooperation on Arctic affairs.
Scenarios
Likely: China becomes a forefront player in Arctic development
China’s current Arctic operations focus on two main methods: Eurasian transit of bulk cargo transport through the Northeast Passage and direct shipments to ports along Russia’s Northern Sea Route. When new routes become navigable, Beijing will be perfectly positioned to expand its activities. China will even launch tourist cruises to the Arctic on a large scale in 2025.
This summer, China completed three Arctic research missions and began building several heavy icebreakers for its coast guard fleet. Furthermore, it plans to launch a manned submersible to the Arctic seabed from the polar research vessel Exploration III. Previously dependent on foreign technology, China will now be able to rely on its own capabilities.
Likely: Arctic cooperation between Russia and China intensifies
All of China’s activities in the Arctic are only possible thanks to Moscow’s facilitation. A commercially viable shipping route along Russia’s Arctic coast could soon become a reality, which would be economically beneficial for both Moscow and Beijing. A joint venture between Russia’s Rosatom and China’s Hainan Yangpu Xinxin Shipping Company is set to construct the necessary infrastructure and polar-class container ships to operate these Arctic routes year-round. This development will likely increase Russian economic dependence on China, but President Putin has few options available to break out of international isolation and secure external support while he continues to wage war against Ukraine.
Beijing seeks to ensure the Northern Sea Route remains free of Western interference through its cooperation with Russia. For example, the Chinese Coast Guard recently participated in its first Arctic patrol with Russia. It is conceivable that Russia will grant China more influence in Arctic development moving forward.
At the moment, the Arctic capabilities of the democratic circumpolar states appear to be less robust than those of China and Russia. The U.S. has only two icebreakers, and Canada does not seem urgently focused on defending the Arctic’s northern reaches.
Two developments are possible. If tensions between Russia and the West remain high due to the ongoing war in Ukraine, it is likely that Russia’s joint ventures with China in the Arctic by China will expand dramatically. However, if the Trump administration encourages Ukraine to cede land to Russia and returns confiscated Russian assets, then perhaps American and European companies will begin to engage with Russian Arctic projects again, although this will take time. Meanwhile, China will try to maintain a facade of diplomatic engagement with other Arctic states.
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