The Ice Silk Route: Sino-Russian cooperation in the Arctic

China's Belt and Road Initiative includes a "Vision for Maritime Cooperation under the Belt and Road Initiative." Paragraph 4.2 covering "Ocean-based prosperity" states that China is going to participate in Arctic affairs. Russia is currently one of the leading players in the Arctic, and is a member of the Arctic Council, which is led by the eight countries with territory which has access to the Arctic Ocean: Russia, the USA, Canada, Sweden, Denmark, Finland, Iceland and Norway. China has been pressing for years to become a major player in arctic affairs. So it is prudent to look into what China's main priorities are in the Arctic, and how that is likely to be bolstered by China-Russian cooperation.

China's icebreaker Xuelong, or "Snow Dragon", runs forward through floating ice after crossing the Arctic Circle, July 20, 2012.[Photo: Xinhua]

The Northern Sea Route (the NSR), or, as some Chinese politicians and media outlets have called it, "the Ice Silk Route," has huge potential in China's future development. There are a few reasons why China is so interested in the Northern Sea Route:

Costs

Cheaper and faster logistics: delivering cargo by sea is cheaper than railroads and trucks. The Northern Sea Route is also cheaper and faster than the Southern Sea Route (through South-East Asia, India, Middle East, Northern Africa, the Suez Canal and Mediterranean Sea). The NSR runs along the northern shores of Russia through the Arctic Ocean. The distance between ports in northern China and Western Europe, the North Sea and the Baltic Sea are reduced by 25-55%. According to experts' estimates, by 2020, due to the opening of the northern routes, 15% of China's international trade is likely to move through the Northern Sea Route. In 2016, Chinese state-owned shipping giant COSCO successfully sent five vessels through the NSR; one of them, the "Xia Zhi Yuan 6," departed Tianjin to deliver cargo to the Russian Arctic port of Sabetta, delivering equipment for "Yamal LNG" project (see below). In mid-August in 2016, the "Xia Zhi Yuan" passed through the Bering Strait on the heels of an icebreaker escort moving to the west. This cut transport by 8,000 nautical miles and 32 days, according to COSCO.

Resources

Development of rich mineral deposits, especially energy resources, such as coal, oil and natural gas in the Arctic could be very profitable. The Arctic region has a special status, defined by International Law, as an area of "common use." The Chinese government is very interested in cooperation with Russian energy companies on this front. A Russian-Chinese project, "Yamal LNG," involves the construction of a plant for liquefying natural gas (LNG), which became operational in 2017. It's expected to provide around 16.5 million tons of liquefied natural gas and up to 1.2 million tons of gas concentrate annually. Observers expect around 20 tankers filled with liquefied natural gas will be arriving every year in China by 2021. As the route passes along the borders of Russia, supplies are considered both safe and consistent. 9.9% of the Yamal LNG project is financed through the Silk Road Fund, while another 20% is owned by the Chinese National Petroleum Corporation (CNPC). 51% of "Yamal LNG" project is controlled by Russian company NOVATEK. The project has been hailed as a political and business milestone between the two countries.

Security

Cooperation with Russia through the joint development of the Arctic will tie China and Russia strategically. It will also help China defend its national interests. The escalation of political conflicts with the United States, Malaysia, India, or other countries could potentially affect China's trade and economic activity. Instability in countries such as Somalia, Yemen, Syria, Libya and Egypt might also jeopardize the security of trade through the Suez Canal and the Mediterranean. Piracy also remains a major concern, which ultimately adds to the insurance costs for Chinese shipping companies. Utilizing the Northern Sea Route along Russia creates a safe alternative.

Prestige

China has four Arctic bases, two of them operating year-round. Their maintenance requires regular and timely supplies of food and equipment. China has also begun work on its second large-scale icebreaker, the "Xue Long 2." Russia has the biggest icebreaker fleet in the world, and is active throughout the Arctic. To keep up with "the Arctic explorer" image in the international arena, China will have to invest in its fleet and Arctic infrastructure, as well as work with Russian ports, bases and terminals.

Russia is an important and reliable partner in the Belt and Road Initiative, which will play a significant role in development of the "Ice Silk Route." The development of Sino-Russian ties in the Arctic will have huge strategic, economic and geopolitical implications. With ties between China and Russia at their highest level in history, there is a solid foundation of trust between the two countries, which makes it much easier for mutual investment opportunities. Both countries will benefit from the "Ice Silk Road," with expectations that in the coming five years, both countries will expand their economic activity in the Arctic region.

(Nikita Ermakov, Yenching Academy of Peking University)