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Preparing for an Ice-Free Arctic: Part 2 - The Commercial Lure of Melting Ice


by Linda Jakobson.

A small group of Chinese academics is turning its attention to the commercial and strategic worth of newly open waters – and urging the government to take note. Linda Jakobson reports in this second installment of a three-part article on China’s growing interest in the thawing north.

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As China’s economy is reliant on foreign trade, there are substantial commercial implications if shipping routes are to shorten during the summer months each year. Nearly half of China’s gross domestic product (GDP) is thought to depend on shipping. The trip from Shanghai to Hamburg via the Northeast Passage – which runs along the north coast of Russia from the Bering Strait in the east to Novaya Zemlya in the west – is 6,400 kilometers shorter than the route via the Strait of Malacca, a strip of water between Malaysia and Sumatra, and the Egypt’s Suez Canal.

Moreover, due to piracy, the cost of insurance for ships traveling via the Gulf of Aden, in the Arabian Sea, towards the Suez Canal increased more than tenfold between September 2008 and March 2009, according to a new report, to be published by Martinus Nijhoff later this year.

Chinese research remains primarily focused on how the melting Arctic will affect China’s continental and oceanic environment and how, in turn, such changes could affect domestic agricultural and economic development. However, a small number of Chinese researchers are publicly encouraging the government to prepare for the commercial and strategic opportunities that a melting Arctic presents.

Li Zhenfu, associate professor at Dalian Maritime University, together with a team of specialists, has assessed China’s advantages and disadvantages when the Arctic-sea routes open up. “Whoever has control over the Arctic route will control the new passage of world economics and international strategies,” writes Li, referring both to the shortened shipping routes between East Asia and Europe or North America and to the abundant oil, gas, mineral and fishery resources presumed to be in the Arctic.

Commenting on the successful test voyages from South Korea to the Netherlands via the Northeast Passage by two German commercial vessels in the summer of 2009, Chen Xulong of the China Institute of International Studies writes that “the opening of the Arctic route will advance the development of China’s north-east region and eastern coastal area . . . It is of importance to East Asian cooperation as well.” Chen also says that China should have a long-term vision regarding Arctic shipping.

Li Zhenfu has criticized the fact that Chinese research on the Arctic-shipping route has not been planned and conducted in a comprehensive manner to enable China to protect its interests. According to Li, China’s research “fails to provide fundamental information and scientific references for China to map out its Arctic strategy” and, therefore, limits China’s power to speak out and protect its rights in the international arena.

Li’s article, which was published in a national journal administered by the prestigious China Association for Science and Technology (CAST), points out that the Arctic also “has significant military value, a fact recognized by other countries”. And, in a rare open-source article about the Arctic by an officer of the People’s Liberation Army, senior colonel Han Xudong warns that the possibility of military force cannot be ruled out in the Arctic due to complex sovereignty disputes.

The increasing military importance of an ice-free Arctic is, indeed, reflected in recent decisions by all five littoral states to strengthen their military capabilities in the Arctic. In August 2007, Canada announced that it was setting up an Arctic military-training center in Resolute Bay; in March, 2009, Russia announced that it would establish a military force to protect its interests in the region; and, in July 2009, the Danish parliament approved a plan to set up an Arctic military command and task force by 2014, to take just three examples.

Another Chinese researcher on Arctic politics, Guo Peiqing of the Ocean University of China, has also voiced disapproval of China’s natural sciences-oriented Arctic research and said it is not in China’s interests to remain neutral. Guo has said that China, which is transitioning from a regional to a global power, should be more active in international Arctic affairs. He notes that “any country that lacks comprehensive research on polar politics will be excluded from being a decisive power in the management of the Arctic and, therefore, be forced into a passive position.”

Chinese Arctic specialists acknowledge the same uncertainties as many of their western counterparts when contemplating how lucrative the Arctic routes would ultimately be in comparison to the current routes through the Suez and Panama canals. Although passing along the Northeast Passage from eastern China to western Europe would substantially shorten the journey, high insurance premiums, lack of infrastructure and harsh conditions may make the Arctic routes commercially nonviable, at least in the short term.

Drift ice will continue to be a problem for ships, even when the Arctic passages are officially deemed ice-free. As Greenland’s ice cap melts, the number of icebergs is also expected to increase, forcing ships to proceed slowly and make detours. Furthermore, the shallow depth of some of the passages along the shipping routes (in particular the Bering Strait) makes the Arctic unsuitable for big cargo ships.

The opening up of the Arctic will also provide access to new reserves of energy and other natural resources on which China’s economic growth increasingly relies. The US Geological Survey estimates that the Arctic contains up to 30% of the world’s undiscovered gas and 13% of the world’s undiscovered oil. Additionally, the region contains vast amounts of coal, nickel, copper, tungsten, lead, zinc, gold, silver, diamonds, manganese, chromium and titanium.

The technological challenges associated with extracting energy and mineral deposits in the Arctic have been noted by both Chinese and Western observers and China will need to partner with foreign companies in order to exploit the Arctic’s resources. As one Chinese scholar notes, “There is a rather large gap between Chinese and advanced foreign deep-sea oil extracting technology.” Russia, which controls many of the resources in Arctic waters, lacks both the technology and the capital needed to extract them – opening the way for tri-lateral joint ventures in Russian waters using Chinese capital and western or Brazilian technology. For example, when in late 2009 Russia’s state-owned oil company Rosneft announced plans to apply for the operating licenses to develop 30 offshore sites on Russia’s Arctic continental shelf, industry experts predicted that it would not be able to develop these deposits on its own.

Another potential multilateral joint venture in which China’s capital could be used in exchange for the opportunity to gain the experience it seeks in deep-water drilling is the ongoing cooperation between Statoil, Total and Gazprom to develop the first phase of the Shtokman gas fields in the Barents Sea, a section of the Arctic Ocean north of Norway and Russia. This is regarded not only as a huge commercial opportunity but also a formidable technological challenge.


Next, read Part 3: Charting Political Waters

Part 1: China's Growing Interest in the Thawing North.

Linda Jakobson is the director of the Stockholm International Peace Research Institute (SIPRI) China and Global Security Programme.

An earlier version of this article was published as “China prepares for an ice-free Arctic,” SIPRI Insights on Peace and Security, No. 2010/2, March 2010.

This post originally appeared on China Dialogue.

Image shows a Canadian military training exercise in Resolute Bay and is from Combat Camera. Photo by: Master Corporal Kevin Paul, Canadian Forces Combat Camera.

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