China and the Arctic in the frame of the BRI

Regards géopolitiques v8n3, 2022

Olga Alexeeva

Frédéric Lasserre

Après avoir étudié et enseigné à Bordeaux, Paris, Tianjin, Pékin, Taipei et Québec, Olga V. Alexeeva a rejoint le département d’histoire de l’Université du Québec à Montréal (UQÀM) en 2012. Son projet de recherche actuel, soutenu par le Conseil de recherches en sciences humaines du Canada (CRSH), explore les particularités de la modernité chinoise au 20e siècle. Senior Fellow au sein de China Institute, University of Alberta, elle est l’auteure de plusieurs articles scientifiques et grand public sur les différents aspects de la géopolitique et des relations internationales de la Chine. Ses dernières publications portent sur la stratégie de la Chine en Arctique et sur la coopération sino-russe dans le cadre du projet chinois Belt and Road Initiative (https://professeurs.uqam.ca/professeur/alexeeva.olga/).

Courriel : alexeeva.olga@uqam.ca

Frédéric Lasserre, professeur au département de Géographie de l’UIniversité Laval, est Directeur du CQEG et coordonne plusieurs projets de recherche sur l’Arctique, les Nouvelles routes de la soie et la géopolitique.

Courriel : frederic.lasserre@ggr.ulaval.ca

Abstract

China’s interest for the Arctic has elicited much debate over the past decade, some analysts underlining the potential threat China could constitute for Arctic States, others stressing the economic nature of China’s Arctic strategy. Indeed, China’s recent Arctic policy underlines its economic interests in the Arctic and desires to be included in the development of the region. But for a few mining ventures in Canada and in Greenland, China’s major investments are concentrated in the Russian Arctic. Over the past decade, the Sino-Russian cooperation in this region has emerged as one of the major topics of the bilateral negotiations between Beijing and Moscow on how to expand their comprehensive strategic partnership. Despite many joined statements on deepening of the Sino-Russian in the development of the Arctic energy resources, the concrete results of these ambitious plans are few.  In 2017, China has expanded its “Belt and Road Initiative” (BRI) to the Arctic thus deepening the close cooperation with Russia and other Arctic states to promote the development of Arctic infrastructure and resources.   Based on data from different Western and Chinese sources, this article will analyze the current Chinese investment patterns in the Arctic since 2012.

Keywords: Belt and Road, Arctic, China, Russia, cooperation.

Résumé

L’intérêt de la Chine pour l’Arctique a suscité de nombreux débats au cours de la dernière décennie, certains analystes soulignant la menace potentielle que la Chine pourrait constituer pour les États arctiques, d’autres insistant sur la nature économique de la stratégie arctique de la Chine. En effet, la récente politique arctique de la Chine souligne ses intérêts économiques dans l’Arctique et son désir d’être incluse dans le développement de la région. À l’exception de quelques entreprises minières au Canada et au Groenland, les principaux investissements de la Chine sont concentrés dans l’Arctique russe. Au cours de la dernière décennie, la coopération sino-russe dans cette région est devenue l’un des principaux sujets des négociations bilatérales entre Pékin et Moscou sur la manière d’étendre leur partenariat stratégique. Malgré de nombreuses déclarations conjointes sur l’approfondissement de la coopération sino-russe dans le développement des ressources énergétiques de l’Arctique, les résultats concrets de ces plans ambitieux sont peu nombreux. En 2017, la Chine a étendu son initiative « Belt and Road » (BRI) à l’Arctique, approfondissant ainsi la coopération étroite avec la Russie et d’autres États arctiques pour promouvoir le développement des infrastructures et des ressources arctiques. Sur la base de données provenant de différentes sources occidentales et chinoises, cet article analysera les modèles d’investissement chinois actuels dans l’Arctique depuis 2012.

Mots-clés : Belt and Road, Arctique, Chine, Russie, coopération.

In January 2018, China released its first Arctic White Paper (中国的北极政策) that presents the major axes of Beijing’s Arctic strategy. The document has attracted a lot of media attention both in the West and in Asia, and renewed concerns raised by some academic experts and many media commentators about a Chinese takeover of the Arctic. The Paper does not provide any detailed policy guidelines, mostly confirming the well-known Chinese interest for the economic development of various Arctic resources. Yet, one theme stands out in this otherwise very generic presentation – China’s ambition to tie the Arctic to its Belt and Road initiative (BRI) by using a “Polar Silk Road” to connect China to Europe through the Arctic Ocean (State Council Information Office of the PRC 2018).

The idea to extend the BRI to the Arctic reflects not only China’s recent shift to a more confident approach in pursuing its economic and geopolitical interests worldwide, but also Beijing’s desire to further strengthen and promote the bilateral economic ties with different Arctic states. Although Russia is currently the only BRI partner among the eight Arctic States and the largest recipient of Chinese Arctic investment, other States have also shown a certain interest in Beijing’s initiative. Even if the official joining of Canada and Scandinavian countries to the BRI seems unlikely in current geopolitical reality, the possibility of major Chinese investments for the development of new Arctic infrastructure and supply lines on their respective national territories was discussed since at least 2013. Indeed, initially, the extension of the BRI towards the polar region seemed to offer great local benefits, as many isolated areas and vulnerable Arctic communities could receive funding and logistical help, improve their outdated infrastructure and profit from the new economic opportunities thus created. But, at the same time, the geopolitical ramifications of the BRI, real or perceived, raised the question of the political implications of the Chinese investment in the Arctic that pushed the governments of the Arctic States to adopt a very cautious approach to the Chinese initiatives in the region.

Beijing’s growing enthusiasm for the use of the Northern Sea Route (NSR) and of the Northwest Passage (NWP) became apparent long before the publication of the Chinese Arctic White Paper. Shipping via shorter Arctic routes could give the Chinese cargo ships an opportunity to deliver goods to European and American consumption centers much faster without having to worry about sailing conditions in the Indian Ocean or problems related to passing through the Suez and Panama canals or Malacca Strait. Therefore, for the past decade, the Chinese were not only actively testing the feasibility of the Arctic shipping routes by sending commercial ships along the NSR and conducting scientific expeditions into the Russian and the Canadian Arctic, but also working on the design and the construction of ice-classed vessels, capable of operating in the Arctic waters. Unsurprisingly, perhaps, when the BRI started to gain momentum worldwide, Beijing decided to add the Arctic shipping routes to the global network of transport corridors and ports the Chinese are trying to develop (Alexeeva and Lasserre 2018, 279; Brady 2017, 3).

The exponentially growing Chinese interest in the development of the Arctic resources has been the focus of scholarly attention for quite some time, both in the West and in China. Some Western scholars examined factors that fuel Chinese ambitions in the Arctic (Jakobson 2010, 1-13; Alexeeva and Lasserre 2015, 271-292; Brady 2017), while others analyzed the bilateral cooperation between China and different Arctic states as well as its economic and geopolitical potential (Røseth 2014; Peng and Wegge 2015). Few Western experts have discussed possible impacts of the BRI on the development of the Arctic transit routes and resources extraction, often adopting an attitude of skepticism towards the potential of the BRI’s extension in the Arctic (Bennett 2014; Sørensen and Klimenko 2017; Gladkiy et al. 2020).

Chinese scholars, on the contrary, highlight the positive drivers for China’s involvement in the Arctic development and emphasize the economic and social benefits from the connexion of the polar region to the BRI project (Song and Wang 2014; Wang and al. 2015; Li and al. 2016; Liu 2016; Li et Dong 2021). In the majority of the publications, China is described as “a natural partner” for the Arctic countries as it has the ability to supply technologies and investments to back up their endeavour to develop Arctic resources and shipping routes.

In order to identify the scale of the Chinese involvement in major projects in the Arctic since 2012, we have assembled data from different Western and Chinese sources, which allows us to analyze the current Chinese investment patterns in the Arctic. Unfortunately, few details are available about the terms and conditions of the signed deals while different official statistics are often at odds with each other, so most of data is sourced from periodicals and academic publications. The comprehensive analysis of these sources revealed that Chinese participation in energy and infrastructure projects in the Arctic – their expense, scope, and anticipated value – are frequently misrepresented for many different motives, including geopolitical concerns. This paper examines how the Chinese idea to include the Arctic Ocean in the BRI first emerged and how it was perceived by different Arctic states, while assessing the first economic and political results of this initiative. This study will describe the current state of the projects realized within the framework of the BRI in the Arctic, explore various concerns expressed by different local and international actors on how this new Arctic dimension of the BRI may impact national economies and access first impacts of the war in Ukraine on China’s presence in the Arctic.  

  1. The theoretical setting: a revival for Mackinder?

Some authors (Lukin 2015; Blanchard & Flint 2017; Loy 2018; Sidaway and Woon 2018) have underlined a connection between Mackinder’s theory of the heartland (Mackinder 1904) and China’s Belt and Road Initiative. True, China’s depiction the six main corridors of the BRI (NDRC 2015) seem to underline a China-centric vision focusing on the development of corridors that radiate across Central Asia towards Europe and the Middle East, giving credence to the idea the control of the heart of the continent is essential. The articulation of land corridors with a Maritime Belt in the original project (2013) and the subsequent addition of the Polar Silk Road (2017) had other authors underline China’s strategy could be interpreted with both Mackinder’s and Spykman’s theories (Struye de Swielande 2016).

Mackinder (1904) and Spykman (1942) complementary theories are an effort to assess the role of space in the determination of State power. They reflect a very deterministic vision of geopolitics in which the control of place is paramount in itself for the development of power. This deterministic approach undermines their heuristic value and these theories have been criticized for their lack of scientific basis, but they remain widely read and debated, if only as a reflection on past geopolitical theories (Duroselle and Renouvin 1964; Frenkel 1992; Lorot 1995; Raffestin et al 1995; Heffernan 2000; Lasserre et al 2016), and at times as a way to retrospectively carry comparative analyses. The resurgence of narratives or scientific comparisons between Mackinder’s and Spykman’s theories and the Belt and Road Initiative underlines the relevance of revisiting these writings, if only for comparative analyses, especially in the frame of the rapprochement between China and Russia.

As far as Chinese initiatives in Central Asia are concerned, comparisons between the Belt and Road Initiative and Mackinder or Spykman theories are often put forth as the demonstration of a Chinese grand design for domination (Fasslabend 2015; Fallon 2015; Struye de Swielande 2016; Zhang 2017; Loy 2018). However, these theories do not explain China’s strategy: it would be very daring to assert that China’s strategy is a demonstration of the validity of Mackinder or Spykman’s proposals. This is even denied by China: Chinese Ambassador Liu noted how the OBOR/BRI initiative is being misinterpreted by some as confirming Mackinder’s heartland theory—that China is seeking to control the “pivot area” of Eurasia for geopolitical domination (Sidaway and Woon 2018:595) – and these very narratives are interesting to note and analyse.

What is more fruitful as a theoretical frame is the idea that the BRI, as a narrative, attests to a geopolitical vision (Huang 2015; Liu 2015; Astarita & Damiani 2016; Rolland 2017; Blanchard & Flint 2017; Tekdal 2018). This refers to the critical geopolitics or geographic school of geopolitics, approaches in which narratives and actions translate an actor’s representations and strategies (O’Thuatail 1996; Lasserre et al 2016).

2. A Synergy between China’s Arctic Policy and the BRI?

Over the past decades, despite being a non-Arctic state, China has become an active player in the Arctic. Since the late 1990s, Beijing has launched several polar expeditions (the first in 1999), established its own research station in the Arctic (2003) and realized many research projects in climatology, glaciology, oceanography and marine biology in partnership with several Arctic countries. Later on, the Chinese icebreaker, Xue Long (雪龙) sailed first across the NSR along the Russian coastline and, in 2017, navigated through Canadian Northwest Passage. A new icebreaker, the Xue Long 2, was launched in September 2018. In an effort to further justify the expansion of its national interests in the polar region, China introduced into the scientific and political discourse a new term to describe its geographical position towards the Artic – “a near-Arctic state” (近北极国家). The term “near-Arctic” is used to describe the areas situated in the close proximity to the Arctic Circle, for example, when studying the urban forest in the near-arctic cities of Nuuk in Greenland (240 km south of the Arctic Circle) or Reykjavik in Iceland (McBride and Douhovnikoff 2012: 115). The application of this term to China, whose territory is over 1 500 km south to the Arctic Circle, seems to be therefore geographically questionable and highly disputed.  Yet, this term has been widely promoted by Chinese scholars and media, which subsequently led to all kinds of ambiguous statements, including Xi Jinping’s referral to China as “polar great power” (极地强国) in his speech given in Hobart, Australia, in November 2014 (Brady 2017: 3).

Despite this dubious rhetoric, China has never voiced out any territorial claims in the Arctic based on this self-description as a “near” Arctic state. On the contrary, Beijing has repeatedly affirmed its respect for the sovereign rights and jurisdiction of Arctic countries. Nevertheless, by declaring itself “a near-Arctic state” in the official government publications and by effectively using scientific diplomacy, China successfully managed not only to legitimate its growing presence in the region but also to back up its desire to seek a greater role in Arctic governance. Indeed, China’s newly established and self-proclaimed scientific expertise in polar research and geographical right to be interested in the Arctic affairs allowed Beijing to support its application for the observer status at the Arctic Council in 2009. After facing years of hesitation and sometimes open opposition from other members of the Council, China’s request was finally granted in May 2013[1].

Although China insisted on the purely scientific nature of its interest in the Arctic, Chinese activities in the region quickly expanded to other areas. Throughout the 2000s, Beijing put a lot of effort to gradually build various economic partnerships with circumpolar states and made several important Arctic-specific investments.  For example, in 2008, China Oilfield Services, a subsidiary of China’s top offshore oil and gas state-run producer, CNOOC, purchased a Norwegian drilling rig company, Awilco Offshore. This deal gave China access to the Arctic drilling technology and equipment and helped the Chinese to build up their own competence in this very specific and important area of expertise. As a result, a decade later, China has become one of the main providers of the international oil field services whose position in the high-end North Sea drilling market seems to be quickly consolidating, enabling Chinese companies to enter the Arctic drilling market (Filimonova 2017; Zheng 2018).

These new economic developments reflect China’s raising concerns about securing energy supplies and exploring new shipping routes to sustain its rapidly growing economy. They are also a natural consequence of Beijing’s official policy of “Going Out” (走出去战). Implemented at the turn of the century, this policy encouraged Chinese enterprises to acquire assets and expand business overseas (Li and Cheong 2019: 163-164). Yet, this strategy did not always work as planned. The Chinese acquisitions abroad have often been marred by inefficiencies and setbacks because of the caveat of economic and geopolitical power projection by Beijing. For example, in 2007, PetroChina had to withdraw its support for the Enbridge Alberta to British Columbia pipeline project, because of the Ottawa’s reticence to open up the Canadian market for the big Chinese investment in strategic economic sectors (Scott 2007).  This reticence was fuelled by the growing public concern over the national security’s implications of the greater involvement of the Chinese State-Owned enterprises (SOEs) in Canada, hyped in the medias as agents of the political influence of the Chinese government abroad (Grant 2012: 18; Dobson 2014: 18-19).

If, in the beginning, Chinese companies mostly focused on acquiring different natural resources assets abroad and on getting access to international management expertise and technology, with the arrival of Xi Jinping, the priorities of the “Going Out” strategy have changed.  Industrial upgrade became one of the key-points of China’s national development strategy. This would help China to transition toward a more sustainable model of economic development based on higher value manufacturing and technology.  As a result, Chinese companies are now seeking not only to invest in the energy, mining, or infrastructure sectors overseas, but also to export Chinese equipment and higher value goods and services. In addition, these activities would also showcase China’s capability to innovate and its newfound competitiveness and creativity, thus contributing to Xi’s efforts to convey an image of China as modern power and benevolent economic world leader.

At the same time, since 2013, Beijing has been promoting the Belt and Road Initiative[2], an ambitious plan to connect China to the potential markets worldwide, as well as to help the Chinese government achieve its national development goals while relieving the growing challenge of overcapacity in domestic industries. Although the BRI’s main focus was to revive the Eurasian trading networks by constructing infrastructure along the land routes through Central Asia and the Middle East, it has also included a maritime route through Southeast  and South Asia, up to East Africa and the Mediterranean. By 2018, over 70 countries had expressed their interest in the BRI, hoping to benefit from this project and improve their national economic perspectives by attracting investment in the transportation, energy, infrastructure, financial and real estate sectors. The international aspirations of the BRI do not change the fact, however, that it remains effectively a Chinese initiative, to which few foreign companies have access. As is the case of the “Going Out” Policy, the BRI champions big Chinese SOEs, such as CNOOC, CNPC or Sinopec, encouraging them to become more efficient and competitive. However, it also gives the opportunity to the private Chinese sector to participate in the international projects through dynamic public-private partnerships implemented within the BRI official framework[3]. In many ways, the “Going Out” Policy and the BRI’s strategy are following the similar patterns and are probably meant to complement each other.

The Arctic region was not included in the first drafts of the BRI. However, as the project was rapidly transforming from logistically challenging and politically risky plan into the concrete program of activities and dynamic partnerships with an extensive financial support structure, the extension of the BRI to the Arctic became a viable idea. As some Chinese scholars argue, the Arctic is an important component of Eurasia and one of the main goals of the BRI is to promote the connectivity between different parts of this continent, from this perspective, it makes the perfect sense to associate the Arctic region to the BRI (Liu 2018). This could be interpreted as a revisiting of theories set forth by Mackinder or Spykman, however this is never mentioned by Chinese scholar. As was mentioned before, the BRI general scheme is evolving over time and gradually incorporates several older projects. It largely integrates transport corridors detailed as early as 1959 in the Trans Asia Railway project; it also extends towards and within Africa. Besides, the contemporary revival of trans-Asian rail transport in 2011 was not a Chinese initiative, but a corporate German project led by DB Schenker to address industrial logistical needs of European car and computer makers that had invested in China (Huang et al 2018: 124). The BRI thus can be interpreted as a largely opportunistic initiative, in the sense that the Chinese label many projects as BRI without necessarily reflecting a theoretical geopolitical reasoning beyond the desire to foster transport corridors between China and major European markets or resource-rich regions, but with a geopolitical project: fostering China’s strategic interests through transport connectivity trough and around Eurasia.

The idea to include the Arctic shipping routes into the global network of the Eurasian trading corridors seems to be publicly voiced out for the first time in 2014, when several Chinese scholars spoke about the possibility of embedding the NSR into the BRI at the 3rd China-Russia Arctic Workshop in Qingdao (Yagia and al. 2015: 47).However, during a press meeting in Moscow in 2017, China’s Foreign Minister Wang Yi said that, “China welcomes and supports the ‘Ice Silk Road’ initiative proposed by Russia” (Embassy of the PRC in the USA 2017), so the actual authorship of the idea is unclear. Gradually, it found its way into various official Chinese documents and joint Sino-Russian communiqués in which the NSR was conveniently re-christened as “Ice Silk road” or “Silk Road on Ice” (冰上丝绸之) in order to fit better the BRI’s official vocabulary. In May 2017, the “Vision for Maritime Cooperation under the Belt and Road Initiative” published by the Chinese State Oceanic Administration declared the Arctic Ocean being a potential “blue economic passage leading to Europe” that China envisions within the framework of the BRI (Xinhua 2017).

Finally, the Arctic White Paper further officialised the extension of the BRI towards the polar region by including the Arctic shipping routes under the new appellation of a “Polar Silk Road” and the joint sustainable and social development of the Arctic among the priorities of the initiative. The use of the official BRI-related terms (“humankind’s Community of Shared Destiny” [人类命运共同体]) throughout the document further increased the impression that China obviously ties its Arctic policy into the synergy of the BRI (State Council Information Office of the PRC 2018).

3. Chinese Investment Patterns in the Arctic

Since 2013, China’s investment in the Arctic has been slowly gaining momentum, growing in both the size and the scope of transactions (see table 1). Overall, Chinese investment in the Arctic has a highly dynamic character, with new deals regularly announced and old agreements and contracts being cancelled or changed in scale. Rosen and Thuringer estimate that, from 2005 to 2017, China has invested over US$ 1 400 billion in the national economies of the Arctic States, however this figure is inflated by the investments in the southern areas of these States, notably Canada, Russia and the United States. The actual investments in the Arctic area are about US$ 89,2 billion over the period 2012-2017 (Rosen and Thuringer 2017), a figure closed to the “nearly US$ 90 billion” quoted by Secretary of State Mike Pompeo in 2019 for the same period (Lelyveld 2019). The increasing physical presence of the Chinese companies in the Arctic was accompanied by subtle changes of the official rhetoric regarding China’s interests in the Arctic. While still insisting on the importance of the environmental and climatic research, Beijing has also named the development of the multilevel and mutually beneficial economic cooperation with circumpolar states as one of its priorities in the Arctic (Tang 2013). After emphasising its respect for the international rules and regulations, inherent rights of the Arctic states and the indigenous people, China has also argued that all non-Arctic states have a legal right to participate in the exploration in the Arctic high seas and international sea-bed areas (Zhang 2015).

Table 1. Major Chinese Arctic Investment (over US$ 1 billion), 2013-2019

YearCountrySectorValue (bn US$)Project description
2013RussiaEnergy4China National Petroleum Company (CNPC) bought 20% of the Yamal LNG project developed by Novatek
2014RussiaTechnology1.6CNOOC secured a deal to build equipment (36 core kit modules) for the Yamal LNG project
2015CanadaEnergy1Teekay Corporation got a loan from the Export-Import Bank of China to finance the construction of LNG vessels from shipyards in China
2015RussiaNatural resources1.3China Petroleum & Chemical Corporation (Sinopec) purchased a 10% stake in Sibur, Russia’s largest integrated gas processing and petrochemicals company. Sibur has 2 LPG tankers, transporting propane and butane via the NSR
2016GreenlandNatural resources2General Nice, one of China’s top coal and iron ore importers, took control of the Isua iron ore mine project
2016RussiaFinance12.1Export–Import Bank of China and China Development Bank (CDB) provided 15-year loans to Novatek to finance Yamal LNG project
2016NorwayNatural resourcesValue not publicly reportedElkem Bluestar bought Fesil Rana Metall AS (silicone producer) and its 33% shares in Nor-Kvarts AS, engaged in the exploitation of quartz ore
2016RussiaNatural resources1.3Silk Road Fund and Sinopec bought an additional 10% stake in SIBUR
2016RussiaEnergy1.1Silk Road Fund 9.9% of the Yamal LNG project, bringing the Chinese government’s indirect ownership to a third of shares
2016RussiaEnergy1.1Beijing Gas Group purchased a 20% stake in Verkhnechonskneftegaz which has one of the largest producing fields in Eastern Siberia with developed infrastructure
2017Russia, CanadaTransport1.6A joint venture between Teekay LNG and China LNG Shipping to finance the construction of six Arc7 liquefied natural gas carrier new buildings for the Yamal LNG project
2017RussiaInfrastructure5.5A cooperation agreement between the Chinese Poly International Holding signed a memorandum for the construction of the new deep-water port outside of Archangelsk and the modernization of the Belkomur railway
2018RussiaFinance, Infrastructure9.5China Development Bank agreed to provide a loan to Russia’ Vnesheconombank (VEB) that will fund several projects in Arctic infrastructure (nature of the projects not publicly reported)
2019RussiaEnergyValue not publicly reportedCNPC and CNOOC Limited purchased 20% stake in Arctic-LNG 2
2019RussiaTechnology7.6Wison Offshore and Marine signed a deal to construct and deliver 4 giant core modules for the Arctic LNC 2

Sources: Alexeeva and Lasserre 2018, 274-275; Seaman and al. 2017, 102; Rosen and Thuringer 2017, 74-75; Ufimtcev 2017; TASS 2017; Staalesen 2018; Offshore Energy 2019; Leksyutina and Zhou 2022.

As table 1 shows, so far Russia has been the main recipient of the major Chinese Arctic investment. It must be noted, however, that in Russia’s case the real value of the deals is not always officially announced. As a result, it often becomes subject to speculation and sometimes distortion fuelled by the general trend within the media to exaggerate the scale of the Sino-Russian economic partnership. Although there are significantly fewer transactions in other Artic states, the peripheral Arctic states, such as Denmark (Greenland), Iceland and Finland, stand out as potential candidates for greater Chinese Arctic investments with whom the Chinese government has already developed numerous political and economic partnerships (Paskal 2010; Hellström 2014; Lunde 2014). Norway has more options because of its oil revenues, but for other Nordic States, being smaller Arctic States in terms of population and the size of their economy, they would be more likely to welcome a large Chinese investment in natural resources and infrastructure, than Canada or the United States, as they have very few alternative sources of funding their Arctic projects.

Nevertheless, although for Denmark, Iceland and Finland, the Chinese investments often remain the only available option for improving or developing the limited infrastructure and for creating economic opportunities in isolated and underdeveloped polar areas, their political establishment continue to be wary of the geopolitical links and social risks that sometimes come along with Chinese investment. The fear of possible creeping Chinese influence over the national infrastructure and natural resources had already led to the cancellation of the several major projects related to the Arctic development and will undoubtedly continue to influence future deals with Chinese companies. In that sense, the Chinese activities in Greenland illustrate this complicated dichotomy.  

Since 2015, Greenland, a self-ruling part of Denmark, has become an important destination for the Chinese Arctic investment, with several joint mining projects, multiple high-level contacts and serious talks about major infrastructure cooperation. Yet, these engagements were accompanied by a number of controversies and political ramifications which has significantly limited the scope of the initially planned Chinese involvement in the island’s economy. Although the Chinese companies own four mining licences on the island, only one project seems to be slowly moving towards the exploitation stage, namely the Citronen Fjord zinc and lead deposit mine. The other three Chinese-owned mining licenses, the Wegener Halvø copper site, the Kvanefjeld rare-earth and uranium project, and the Isua iron mine, remain inactive[4], despite being among Greenland’s most promising projects – the Kvanefjeld project even being shelved by the Greenlandic government in 2021 because of environmental concerns. At present, even if Chinese interest in Greenland’s natural resources and transport potential are undeniable, a major funding opportunity and logistical project, capable of powering Greenland’s economy, has failed to materialize (Sørensen 2018, 9-15; Hinshaw and Page 2019).  

One of the reasons for this situation is a good deal of controversy surrounding the Chinese takeover of the Isua mine. It was purchased in 2015 by a Chinese coal and iron producer, General Nice Group, with a significant State participation and strong ties with SOEs in the Chinese steel industry. To develop the mine, General Nice decided to bring thousands of Chinese workers, a decision which stirred violent local protests and ended up causing a political crisis that has ultimately led to the fall of a government. This controversy over the Chinese workforce, combined with the collapse of iron prices, put the Isua mine development on hold. It has also contributed, together with another controversy over the Chinese participation in the Kvanefjeld uranium project, to keeping other potential Chinese investors away from Greenland, while raising again the question of the political cost of the Chinese investment in the Arctic (Zeuthen 2017, 1-14; Lanteigne and Shi 2019).

These concerns are unlikely to disappear in the foreseeable future, especially with the BRI moving further North. The international diplomatic ramifications caused by Greenland’s efforts to attract Chinese investors and construction companies to help build three new airports on the island seems to confirm this observation. Chinese potential involvement in this infrastructure project was negatively seen by both Denmark and the United States, which have the Thule military base on the western side of the island, and immediately put it in the context of the Chinese overseas investment activities realized within the BRI (Mehta 2018). Despite Copenhagen effort to transform this issue into a national security concern, the government in Nuuk announced in May 2018, that one of the Chinese companies, China Communications Construction Company, was among the five finalists for the contract, thus setting up a scene for a potential conflict with Denmark over the limits of Greenland’s autonomy. As a result, the local authorities agreed to exclude the Chinese company from the final deal (Bennett 2018).

Another important pattern of the Chinese Arctic investment is the absence of major transactions in Canada and the United States. China participates in several projects in the Arctic areas of both countries, but the size of these investments is comparatively small. For instance, in Canada, in 2011-2013, Jilin Jien Nickel Industry invested US$ 800 million in a nickel mining project in Nunavik, while WISCO, one of the major subsidiaries of Wuhan Iron & Steel Corporation, acquired a US$ 4.6 million share in the Lac Otelnuk iron ore project in Northern Quebec (Alexeeva and Lasserre 2015, 281). The lack of more important transactions is related to the scarcity of ambitious Canadian projects in the Arctic area in which the Chinese could have been participating but it is also a result of Ottawa’s cautious approach towards high value deals with Chinese companies. Even before the Sino-Canadian relations hit rock bottom in 2018, following the arrest of Huawei executive Meng Wanzhou and subsequent arbitrary detention of Michael Kovrig and Michael Spavor by the Chinese authorities, Ottawa blocked several takeovers of the Canadian compagnies by the Chinese SOEs invoking national security concerns a (Fife and Chase 2018).

As for the United States, China has been searching for years to invest in different projects in Alaska and in November 2017, three major Chinese SOEs, Sinopec, China Investment Corporation and the Bank of China have finally succeeded in obtaining a major stake in such a project.  The Chinese have agreed to invest US$ 34 billion in the Alaska LNG Project and to buy 15 million mt/year of LNG: this would make this deal the biggest Chinese Arctic investment (Feng and Saha 2018). However, with the growing escalation of tensions in the Sino-American economic relationship, China’s interest in Alaska’s natural resources came under sever media scrutiny.  Given Washington’s concerns over the hidden strings attached to major Chinese investments in the Arctic and their long-term implication for the U.S. national security, in the context of bitter and worsening trade disputes since 2017 between the two countries, this deal seems unlikely to obtain all the required permits and approvals from the US federal government. Although in January 2019, Alaska and Chinese companies agreed to a six-month extension to continue working on the deal, the Alaska Gasline Development Corp. (AGDC) who took control over the project in 2017 has started negotiations with other potential LNG buyers in Japan and South Korea (Passut 2019). Furthermore, Sinopec, one of the main protagonists of the deal, has delisted from New York Stock Exchange in August amid growing regulatory and transparency issues, which does not bode well for the opening of the negotiations on the project.  

4. Sino-Russian cooperation in the Arctic within the BRI

At first glance, the close Sino-Russian cooperation on developing energy resources and sea routes in the Russian Arctic seems to have a great potential. The availability of energy resources and minerals in Russia, the growing consumer market of China and Beijing’s need to secure and diversify its energy supply, as well as the lengthy land border would be driving both countries to find ways to complement each other and build mutually beneficial collaboration. Nevertheless, in practical terms, Sino-Russian cooperation in the Arctic was slow to develop, because China and Russia had very different views on how exactly they could cooperate with each other in the Polar zone and what their respective roles should be in the use and exploration of the resources and shipping routes of the Russian Arctic (Alexeeva and Lasserre 2018, 279-280). The actual convergence of their interests is, in fact, a recent phenomenon accentuated by the increasingly troubled relationship between Russia and the Western countries.

Indeed, in 2014, the prospects of the deepening and broadening of the economic and political partnership between Moscow and Beijing in the Arctic have suddenly become more encouraging. On the one hand, the fall in oil prices put pressure on Russian economy, which made it more difficult for Moscow to finance new energy and infrastructure projects, especially in the Arctic where exploration needs a long-term substantial investment and does not always bring immediate returns.  Thus, Gazprom had to abandon the shelf development of the Shtokman field, located in the Barents Sea, following the major changes in the global gas markets and the collapse of the joint venture with Total and Statoil (Staalesen 2017). On the other hand, the Ukrainian crisis, followed by Western sanctions, limited Russia’s access to Western capital and deep-sea drilling technology and forced major Russian oil and gas companies to temporarily halt their offshore expansion in the Artic zone. In the light of these developments, Moscow decided to search for partners elsewhere, particularly in Asia. Chinese companies and banks were thus invited not only to invest in several Arctic projects, but also to export Chinese technology to Russia in order to explore the shelf of the Kara and Barents Seas and jointly develop the NSR infrastructure. These actions seemed to point to a real shift in Moscow’s perception of how extensive China’s involvement in the Russian Arctic could be in the future.

Since 2014, the official Russian and Chinese media have reported on many occasions that Chinese and Russian companies are discussing new promising deals, signing memorandums and agreements that would take the Sino-Russian cooperation in the Arctic at a new level. However, it soon became clear that moving beyond political declarations is very difficult. Many announced “deals of the century” on gas and oil delivery as well as on the development of the offshore Arctic projects remained on paper owing to disagreements over price and management.  The failed deal of Vankorneft is a good illustration of this phenomenon (Røseth 2017, 39).  

The acquisition of the 10 % of shares in Rosneft’s subsidiary Vankorneft by China National Oil and Gas Exploration and Development (CNPC) was announced in November 2014, immediately after the inducing of the sanctions against Russia by the US and the EU. The subsidiary operates the Vankor field, a major Russia deposit discovered in 1988 in Eastern Siberia, whose recoverable reserves are estimated at 361 million tons of oil and gas condensate and 138 billion m3 of gas (Overland and Kubayeva 2017, 107-108). Although the deal was signed in presence of both Vladimir Putin and Xi Jinping, it never went through, and after long and unsuccessful negotiations with Chinese partners, the state-owned Rosneft has ceded the intended Chinese shares to India’s ONGC Videsh. . Apparently, CNPC failed to offer a fair price for the asset and asked for other conditions that Rosneft refused to accept (Financial Times 2015; Lossan 2016). While the Chinese wanted to have more seats on the board of directors of Vankorneft,actively participate in the drilling and extraction activities in the field and enjoy preferential oil tariffs, Rosneft intended to retain the full control of infrastructure of the Vankor cluster and was expecting from CNPC to be only a silent partner.

Despite many bilateral agreements signed during high-level meetings and the official commitment to work together on the Arctic projects, the cooperation between China and Russia in the Arctic is highly dynamic, with new deals regularly being formed and old ones being cancelled or suspended. This dynamic is determined by many factors. On the one hand, although the Russians became more open to the idea of a greater Chinese involvement in economic projects in the Arctic, the Chinese were prepared to participate in these projects only at a reasonable price and prove to be difficult and intractable as partners. Many deals have been cancelled because Russians and Chinese did not have the same understanding on the value of the deal and were reluctant to make mutual concessions (Alexeeva and Lasserre 2018, 274-276). 

On the other hand, the Chinese were reluctant to invest in very expensive and risky projects, unless they can secure an active, if not controlling, role in planning and management of joint projects. China was less willing to sink capital into projects where Chinese companies have no possibility to be associated with actual engineering, design and drilling activities in the Arctic. In other words, China was interested in becoming a partner in resource activity from start to finish and, thus, build its own technological expertise of operating in the Arctic and its industrial capabilities to ensure a cost-efficient extraction of oil and gas on the Arctic shelf. But Russian companies, which until recently have mostly relied on Western drilling equipment and technology for the exploration and development of Arctic gas and oil, also aspired to catch up and eliminate the technology gap and were reluctant to share their experience and know-how with the Chinese.

After the inclusion of the Russian Arctic into the BRI, these difficulties continued to plague the dynamics of the Sino-Russian cooperation in the Arctic.  So far, the Yamal LNG project seems to be the only truly successful example of the Sino-Russian collaboration in the development of the Arctic, even if China and Russia see their respective roles in its completion in a very different way.

The Yamal LNG is a liquefied natural gas plant located in the northeastern part of the Yamal peninsula in Siberia that has officially started LNG exports in 2017. The plant is supplied from the Yuzhno-Tambeyskoe natural gas field which has a production potential of 27 billion m3 of natural gas per annum (Bros and Mitrova 2016, 3). The successful implementation and profitable functioning of the project heavily depended on the construction of important infrastructure in the Russian Arctic, including the Sabetta seaport and airport, roads and railways, fuel storages, an icebreaking and LNG tanker fleet, vessel traffic management systems, navigation supports aids and marine service buildings. Although the discussions about the project started in the early 2000s, it took a long time to come to fruition, because of its technological challenges and high realization cost.

To overcome these difficulties, the main owner, Novatek, brought in 2011 the French Total into the project, while China’s CNPC has joined the consortium two years later by purchasing a 20% share in Yamal LNG (Overland and Kubayeva 2017, 106). Novatek was planning to raise more capital by borrowing from the US and EU banks but, after the introduction of the Western sanctions, had to turn to Chinese banks instead which agreed to provide two 15-year loans worth US$ 12 billion (Filimonova and Krivokhizh 2018). Later on, the Chinese Silk Road Fund has purchased a 9,9% share of the Yamal LNG thus changing the shareholder structure. Novatek has retained a majority stake with 50,1%, but China has become the second most important stakeholder with a 29,9% share, thus outlining the Sino-Russian dimension of the project and reducing the influence of the French Total within the project (Bros and Mitrova 2016, 14).  

Chinese companies were also invited to participate in the manufacturing of the key drilling equipment, which allowed Russia to overcome technological and industrial challenges that Novatek and by extension the Yamal LNG faced as a result of Western sanctions[5]. Thus, China Offshore Engineering Company manufactured 36 core modules for gas liquefaction, while CNPC Offshore Engineering Company got the contract for designing and producing of the 20 engineering packages (Core Modules 2017; CNPC 2016). Other Chinese companies supplied materials and oversaw project production and processing. As a result, China’s participation in the Yamal LNG has grown exponentially and within only a few years, it became essential to the project’s successful realization and efficient functioning. This situation was, however, pictured differently in Russia and in China.

For Russians, the Yamal LNG is as a major national flagship project with both economic and political dimensions, which has important implications not only for Moscow’s foreign policy but also for its domestic strategy. When talking about the Yamal’s objectives, Vladimir Putin is always insisting on the benefits that this project will bring to the economically depressed regions of the Russian Arctic in terms of new jobs opportunities, industrial and urban development and technological modernization (President of Russia 2017). The project is also meant to confirm Russia’s “pivot to the East” as the Yamal liquefied natural gas will be mostly shipped to Asian markets via the NSR, thus underlining once again the strategic importance of the NSR and Russia’s intention to actively develop navigation along this route. But essentially, the Yamal LNG is perceived by the public and presented by Kremlin’s propaganda as an exclusively Russian project that will help “secure Russia’s future, the future of its economy” (President of Russia 2017). The fact that the project is in reality an international endeavour and that compagnies involved in its realization enjoy substantial tax breaks[6] is conveniently left out of the official celebratory communiqués.

The Chinese, on the contrary, stress out their own contribution to the project and depict the Yamal LNG as an example of the successful Chinese strategy in the Arctic and as one of the essential pieces of China’s global infrastructure strategy, the Belt and Road Initiative. According to Chinese scholars, Chinese companies’ active participation in the project clearly demonstrates that China is able to compete with international companies not only in designing and manufacturing sophisticated drilling equipment and offshore drilling rigs but also in implementing and managing large-scale projects in the Arctic (Li et al. 2016, 17; Weidacher Hsiung 2016, 249-251; Sun and Ma 2018). The Yamal LNG thus became a showcase for China’s skills and competence in the development of the Arctic resources that, in turn, will strengthen the Chinese presence in the region.  It also provided Beijing with an opportunity to further promote the BRI and the advertised benefits of its extension to the Arctic while emphasizing China’s role in global affairs.

The Sino-Russian realization of energy projects in the Arctic was accompanied by the development of commercial traffic along the NSR and by the growing Russian and Chinese enthusiasm about the use of this shipping route that connects Asian and European markets by significantly cutting the distance between Western Europe and China. China’s interest in the use of the NSR is not new, as the first Chinese cargo vessel, the multipurpose vessel Yongsheng operated by COSCO successfully navigated the NSR as early as 2013. Since the opening of the NSR for foreign vessels, China has shipped via the NSR nearly 1 million tons of cargo and according to the Chinese projections, by 2020, 1% of Chinese total freight could transit by this sea route, although how many tons it actually represents remain unknown (Erokhin 2018, 16). Recent analyses show that this estimate was not reached, as transit cargo along the NSR represented only 2 million tons in 2021 and was not merely originating from China (Lasserre, 2022).

Despite the optimistic expectations expressed by both Russian and Chinese officials, the effective use of the NSR is linked to the modernization of the infrastructure along the Russian Arctic coastline, including the construction of deep-water ports connected to major gas and oil fields in the region and national transportation hubs by a network of roads and railways; the building of ice-class vessels and icebreakers; and the creation of the operational rescue and communication systems. Aware of these challenges, Vladimir Putin and Xi Jinping identified the joint development of the NSR infrastructure as a key area of the Sino-Russian cooperation and discussed several possibilities of China’s participation in major infrastructure projects in the Russian Arctic, such as the construction of the Belkomur railway and the building of a new deep-water harbor in Arkhangelsk (Sørensen and Klimenko 2017). In this context, the embedding of the NSR into the BRI seems to be a logical and somewhat inevitable extension of the development of the Sino-Russian cooperation in the Arctic. However, the scale of China’s involvement in the use and development of the NSR is once again seen differently in Moscow and Beijing.

Russian government considers the NSR as a historically existing national transport route between the Kara Strait and the Providence Bay in the Bering Sea which has been regularly navigated by Russian ships since 1930s. Although the NSR passes not only through its internal waters but also through the open sea, Moscow believes it to be under its exclusive jurisdiction and regulates the conditions of the transit. For Russia, the NSR has a great domestic importance, from both commercial and political point of view, so connecting the BRI with shipping routes in the Russian Arctic is seen only as one of the ways to support the development of the commercial traffic along the NSR. From this standpoint, China could only be an investor financing the construction of the new infrastructure and a major user of the NSR, entitled for the economic profits, but never an effective partner sharing with Russia rights and responsibilities over the administration and control of the transportation network and facilities along the Russian Arctic coast.

Chinese media and scholars present the inclusion of the NSR into the BRI as an important part of Chinese strategy of diversifying China’s maritime trade routes. They underline not only the competitive advantages of the NSR (reduction of sailing time and transportation costs) but also its major weaknesses, that they rightly believe are too challenging for Russia to face alone (Li et al. 2016, 114-120; Liu 2016, 117). The Chinese participation in the development of the commercial traffic along the NSR is then logically presented as the only way for Russia to revive the NSR and to overcome the related technological and economic difficulties.  The implementation of the BRI in the Artic is therefore meant to enhance this trend. Chinese official discourse also reflects this vision with the introduction of a new term to define the NSR – “Silk Road on Ice” or “Polar Silk Road”. Although the concept became part of the official Chinese vocabulary in 2017, it is traced back to a sentence in a joint Sino-Russian statement at the 2015 regular meeting of Chinese and Russian heads of government, calling for cooperation in Arctic navigation (Ministry of Foreign Affairs of the PRC 2017). Despite the attempt to depict the “Polar Silk Road” as a joint, or even Russian, idea, in Russian media and political discourse, this term is only used to refer to the Chinese concept and does not replace the Russian expression “Северный морской путь” (Northern Sea Route).

So far, the extension of the BRI to the Russian Arctic had only limited results. Some joint projects announced as part of the BRI were dropped, as China and Russia could not agree on the conditions of the deal, others are progressing very slowly and have an uncertain future. Until recently, the Sino-Russian partnership in the development of the Arctic potential seemed to be a marriage of convenience where both sides try to balance their vulnerabilities on the expense of the other. The war in Ukraine might change the situation and lead to a renegotiation of the current terms of the Sino-Russian cooperation in the Arctic.

5. Scandinavia’s link to the BRI?

Although Russia is the only Arctic country who has officially embraced the idea of the BRI’s stretch into the Arctic, Scandinavian countries have also found it difficult to deny the opportunities that China’s initiative could provide for the development of their national economies. Some local planners in Finland and Norway seemed to be particularly enthralled by the idea to construct the massive infrastructure that could create local pockets of growth and yield substantial benefits for the communities (Breum 2018). There are two major Scandinavian projects which are consistent with the BRI’s aims and which might attract Chinese investment – the construction of a new harbor and terminal facilities in Kirkenes, Norway with railway connexion to Rovaniemi in Finland; and the building of an underwater railway tunnel between Helsinki and Tallinn in Estonia. If these two projects are realized, it would create another itinerary for the Polar Silk Road. Chinese goods transported by cargo ships to Kirkenes would be then loaded on the trains and travel on rail first through Finland and afterwards through the tunnel to Estonia and further south, thus reaching Central Europe and Germany in record time.

This direct rail link between the Arctic coast and the heart of Europe has a potential to greatly improve the commercial prospects of both Arctic states. By opening up their northern territories to the trade with Asia, Finland and Norway could become crucial getaways connecting China to Europe, thus assuming a new geopolitical position in the middle between Europe and Asia.

Given the high estimated cost of these projects, the governments in Oslo and Helsinki can only realize them if they manage to secure an important financial backing from foreign investors. For instance, the construction of the tunnel under the Bay of Finland would require at least 15 billion euros, while the building of the 550 km long railway line from Kirkenes to Rovaniemi would cost 3 billion euros (Breum 2018).  Helsinki, Oslo and Tallinn cannot cover such costs, but China might, after all Beijing has already demonstrated that it is capable of financing and realizing major Arctic projects, despite their staggering cost and potential risks. China’s involvement in the completion of the Yamal LNG project in the Russian Arctic stands a testimony to that capability, a fact that Beijing has been actively promoting internationally for several years.

However, not everybody in Scandinavia is on board with the idea of associating Chinese investors to these important infrastructure projects, especially given the growing concerns within the EU over the hidden agenda of the BRI and the political ramifications of China’s Silk Roads stretch into Europe (Elmer 2018; Chichery et al 2018, 52-54). The official Finnish and Norwegian documents pertaining to these projects (feasibility reports, studies of the commercial potential of the tunnel and the railway link) contain no references to China or to the BRI (Murdoch-Gibson 2018; Ministry of Transport and Communication 2019). Yet, knowing that the economic potential of the planned corridor is based on the expected increase of the commercial traffic along the NSR, it is difficult to imagine that China won’t play any role in the eventual realization of these projects or that China is not going to be the main user of the would-be transport artery Kirkenes-Rovaniemi-Helsinki-Tallinn.

6. The impact of the war in Ukraine on China’s Arctic ambitions

Russia’s invasion of Ukraine in February 2022 has opened a Pandora’s box of immediate consequences and long-term implications for the Arctic region. Russia’s actions forced security issues to the forefront of the foreign policy and defense preoccupations of the Arctic states. With Finland and Sweden joining NATO, the Arctic could become a potential battlefield between Russia and the West and trigger a new arms race in the region. Indeed, while Russia has been fortifying its Soviet-era military installations in the Arctic for the last several years, the Western Artic states have only limited military infrastructure in the region, which are ill-equipped to support extended operations of the modern warfare. The US and Canada have already begun to take steps in order to enhance their military awareness in the Arctic (Weber 2022). Furthermore, the seven members of the Arctic Council suspended their cooperation with Russia, which could lead to the complete overhaul of the existing Arctic governance mechanisms. Following this geopolitical and strategic shift, all Arctic energy and infrastructure projects suddenly became not only a matter of national security of the Arctic States but also a linchpin of the collective Western security order. China’s refusal to openly condemn Russia’s actions in Ukraine was interpreted by the Western countries as a clear sign of Beijing’s support of Moscow’s ambition to challenge the existing international political and financial order, and value system. Indeed, Beijing not only reaffirmed its commitment to the strategic partnership with Moscow, but also supported Russian claims that NATO and the U.S. bear a heavy responsibility for the conflict (Hoffman and Knight 2022). The Chinese attitude forced many European governments to revaluate the dangers of their overdependence and overreliance on China. At the same time, NATO members have recently agreed that China is posing a “systemic challenge” to Euro-Atlantic security and could play a destabilizing role in European and global affairs (NATO 2022). In this context, the Chinese involvement into the realization of any Arctic energy and infrastructure project on the territory of the EU or North America would be seen as a direct threat to the national security and interests of the Arctic states.

As for the Sino-Russian cooperation in the Arctic, its future prospects also remain uncertain. Although many Chinese compagnies continue to operate in Russia, China has been largely complying with terms of the Western sanctions. For instance, Chinese firms that manufactures modules for the Arctic LNG 2, suspended their cooperation with Novatek, which compromises the completion of the project (Staalesen 2022a). At the same time, China’s state shipping giant COSCO, which has been the leading foreign company in transit shipments along the NSR, decided to stay clear from the Russian Arctic waters this year (Staalesen 2022b). With increasing militarization of the Russian Arctic seaways, their commercial use by foreign shipping compagnies seems to go against the new Russian Naval Doctrine adopted on July 31, 2022, which classifies the waters of the NSR as vital areas and highlights the Arctic as a potential area of future conflict (Tebin 2022).

Conclusion

Since 2013, while promoting the BRI, Beijing has been stressing the importance of this project for the Asian states and their national development. In this perspective, the inclusion of the Arctic into the initiative would further outline the far-reaching character of the BRI, while inevitably provoking a new wave of media predictions and political speculations about China’s expansion in the Arctic and Beijing’s imperial ambitions worldwide. China’s decision to officially link its Arctic ambitions to the BRI, despite these reservations, reflects China’s new confidence in pursuing its national interests inaugurated by Xi Jinping, which gradually led Beijing to adopt a more risk-taking approach in its diplomacy.

The gradual evolution of the geographical scope of the Belt and Road Initiative, as well as the opportunistic inclusion of several past projects, hint that the BRI may not be a clear and pre-determined strategy to get control of specific core places in Central Asia. The comparison between the BRI and Mackinder’s theory is more a testimony of the sensitivity of Western analysts to the rise of Chinese power than a useful key to the analysis of the BRI. However, the debate attests to the importance of narratives, whether Chinese, Asian and Western, in the analysis of the unfolding of the BRI geopolitical project.

Although until recently the Artic Chinese investments were relatively limited in scale and tended to be concentrated in the Russia’s backyard, the connection of the Arctic to the BRI could provide a new momentum for a greater Chinese economic involvement in the development of the Arctic by stimulating both Chinese state-owned and private companies to participate more actively in various Arctic projects. The realization of the projects under the BRI umbrella will improve their opportunities for financial support from the Silk Road Fund and other official Chinese institutions thus reducing their exposure to various risks associated with many Arctic projects. The extension of the BRI to the Arctic made this Chinese initiative truly global and much more difficult to ignore. It forces the Arctic states to reconsider their attitude towards China’s role in the future of the Artic while at the same time motivating them to formulate a more coherent and, perhaps, a more pragmatic vision of the opportunities and challenges related to the BRI’s advancing in the Arctic. The war in Ukraine has brought instability and uncertainty to China’s Arctic vision. and appears to limit. Whether these new, unforeseen, challenges would have a long-lasting fundamental impact on the success and range of expanding of the BRI to the region remains to be seen.

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[1] The decision to grant an observer states to China came after Beijing experienced two failed attempts in gaining the seat at the Arctic Council meetings. Initially, Norway, Canada and Russia were expressing some concerns over China’s request for an observer status, while Iceland and Denmark had adopted a more positive attitude. The United States remained silent on the matter, although they also had some doubts about China’s stance on the question of sovereignty. Controversial statements made by some Chinese officials and academics have further complicated the matter. After clarifying the Chinese government’s policy on these sensitive issues, Beijing put a lot of efforts in order to advance bilateral diplomacy in the Arctic region, thus slowly gaining support for its candidacy from every member of the Council.

[2] In decades before the BRI was launched, several other attempts have been made to improve transport infrastructure, lower trade barriers and deepen economic cooperation within the Eurasian space.  Thus, in 1959, the Economic and Social Commission for Asia and the Pacific (ESCAP) under the jurisdiction of the United Nations proposed to develop rail and road infrastructure connecting Europe to Asia, a scheme called the Trans Asian Railway project. Other similar programs were set up, notably the European Union-led Traceca (Transport Corridor Europe-Caucasus-Asia). Since then, many international organizations, such as the Asian Development Bank, International Monetary Fund and United Nations Development Program, tried to revive this idea and implement different projects facilitating trade, transport and intra-regional commerce and foreign direct investment in the Central Asian region.  However, none of these projects had the far-reaching scope of the Chinese initiative (Huang and Lasserre 2017; Huang and al. 2018, 122).

[3] According to the “Belt and Road Big Data Report” published by the Chinese State Information Center in 2017, among the top 50 of the most involved Chinese enterprises participating in the BRI, 42% belonged to the private sector, 56% were SOEs, and 2% were joint ventures (Yang 2017).

[4] Chinese companies entered these projects through a non-binding agreement. It envisages the Chinese partners financing two thirds of the cost of the project, but also allows them to limit the degree of their commitment. With fluctuating metal prices, the Chinese companies keep sitting on their exploitation permits for the Greenlandic natural resources without constructing the mining facilities (Lulu 2016).

[5] Western sanctions introduced in 2014 included a ban on the supply of equipment for the development of shelf and shale oil and gas, as well as financial restrictions on loan funds for the major Russian banks and energy groups, such as Novatek and Rosneft.  

[6] The compagnies involved in the infrastructure and energy projects in the Russian Arctic enjoy a number of benefits, including 5% severance tax rates on the extraction of oil and 1% on the extraction of gas on Russia’s shelf and 0% severance tax rates on LNG and gas processing projects on the Russian continent for a period of 12 years (Devyatkin 2020).