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Part 2: China’s Response
9. China’s Arctic Interests
To understand China’s actions in the Arctic, it is important to first understand what China understands to be its key interests in the region. These key interests have underpinned Chinese foreign policy in the Arctic since it began its Arctic activities in the early 1990s.
China’s key interests in the Arctic fall into three categories:
1. To understand better the environmental changes taking place in the Arctic that have the possibility to impact extreme weather in China;
2. To secure access to Arctic shipping lanes; and
3. To strengthen access as a non-Arctic state to Arctic resources.
9.1 Climate change
The changing Arctic climate has the potential to affect extreme weather in non-Arctic states, and China is no exception. According to Ma Deyi, the chief scientist on China’s fifth Arctic expedition in 2012, research has shown that the unusually harsh storm in southern China with freezing temperatures in early 2008 was directly attributable to the record-breaking increase of melting polar ice in September 2007 (Hao, 2012). Because the changing Arctic climate has the ability to affect weather patterns within its borders, China’s participation in the Arctic region is framed as an issue directly related to China’s socio-economic development and national security (Qin and Chen, 2001).
As Chen Lianzeng, deputy head of China’s State Oceanic Administration has said, “As the largest developing country located in the Northern Hemisphere, the climatic and environmental changes in the Arctic will have a profound effect on the climate and environment in China, and directly relate to Chinese industry, agriculture and people’s living. Therefore, the conduct of scientific research and expectation on the Arctic has significant meaning to China and its sustainable development” (Sun, 2013).
China’s increased funding for Chinese polar expeditions as well as its multilateral cooperation in scientific cooperation is related to its desire to better understand the forces behind changing climate patterns.
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9.2 Shipping routes
Arctic shipping routes are also viewed by Beijing as one of China’s key interests in the region. The dramatic warming of the Arctic, caused in large part by increasing global emissions, is already having dramatic effects on Arctic sea ice. In September 2007, the Northwest Passage was ice-free for the first time in recorded history (Lalonde & Byers, 2009). From 1979-2000, the average minimum summer ice extent in the Arctic was 6.71 million square kilometers; by September 2012 that number had dropped to 3.41 million square kilometers, a 50% decline (Farre, 2014). In the Arctic, the seven lowest recorded minimum ice extents since records began have occurred in the past seven years. By the middle of this century the Northwest Passage, the route above Canada, will be likely be navigable by regular, non-ice strengthened ships for the summer season.
This is an attractive possibility for China, whose economy is heavily dependent on the shipping trade. Since most of China’s trade, whether in manufactured goods or resources, sails into Chinese ports, the “short-term prospects of direct utilization of the Arctic region, in particular the issue of navigation passage, are directly related to China’s economic interests” (Qin and Chen, 2001).China’s imported oil comes primarily by ship from the Middle East and Africa (EIA, 2015). The imported oil is transported through the Malacca Strait to the South China Sea and the further on to Chinese ports. From a security perspective, China is overly dependent on this route, and cannot fully guarantee this route’s safety. The Northeast Route (through the Bering Strait and up above Russia) would be a welcome diversification of shipping routes. As a sign of China’s desire to diversify its shipping routes, China and Russia have signed multiple agreements for natural gas in recent years, with some of it due to travel by sea to China. From an economy perspective, shipping through the Arctic offers a much shorter route from Asia to Europe, up to 6000 miles shorter than the traditional route through the Panama Canal.
This would cut about a week off of shipping time and save about $600,000 USD in fees per vessel (Jakobson & Lee, 2013).
China has begun testing the route for future viability. In 2012, the Chinese icebreaker Xuelong was the first Chinese vessel to navigate the Northwest Passage, sailing from Iceland to the Bering Strait (Pettersen, 2013). If the current trend of melting ice continues, Arctic shipping routes may very well become what China’s top Arctic official
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has called “the new lifeline of international shipping” (Jia & Shi, 2014). In 2014, the Chinese government completed its Arctic shipping guidelines, which will serve as the roadmap for Chinese merchant ships sailing through the Arctic routes (Bennett, 2015).
9.3 Arctic resources
China’s fast-paced growth has naturally led to an increasing appetite for resources;
China’s energy demand is predicted to double by 2040 (EIA, 2015). Moreover, since China’s domestic resources are insufficient to match demand, it has embarked on a global search for reliable energy sources (Jiang, 2010). The Arctic region is rich in resources such as natural gas, oil, strategic minerals and fish. The United States Geological Survey estimates that 30% of the world’s undiscovered gas and 13% of the world’s undiscovered oil are found in the Arctic (USGS, 2009). These untapped resources are a significant source of international interest in the Arctic.12 Arctic resources are also very attractive to China, and some Chinese companies have begun to go out and explore for Arctic minerals, oil and gas.
Chinese companies are relatively inexperienced in Arctic mining and drilling and have had to partner with more established companies. Nevertheless, Chinese companies have been increasingly active in Arctic resource development. A key focus of Chinese companies has been the Nordic countries, with their vast reserves of minerals and oil. In 2009, one private company from Jiangxi Province acquired the rights to explore for metal minerals in Southern Greenland (Pu, 2011). Later that year, another company from Jiangxi Province partnered with the United Kingdom’s Nordic Mining Corporation to mine for precious metals in Greenland (Jakobson & Lee, 2013). In 2014, the Icelandic government gave Chinese state-owned oil company CNOOC license to drill for oil in the sea off the north east coast of Iceland, within its EEZ (Johannesson, 2014).
12 The abundance of natural resources in the region does not mean that there will be a rush to claim resources as some pundits have claimed. Most of the oil and gas is located within existing territorial boundaries or the EEZ’s of coastal states. While the outer boundaries of coastal states’ extended shelf have not been settled, the resources in the Arctic are located well within proposed outer boundaries. The right to control how these sea-based resources are extracted is therefore based on the rules laid out in UNCLOS.
Article 56 of the UNCLOS gives the coastal state sovereignty over the exploration and extraction of natural resources within its EEZ (UNCLOS, 1982). Therefore, the extraction of Arctic resources is under the supervision of the domestic law in the country in which those resources lie.
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To assuage concerns of China’s commercial acquisitions, Chinese officials have stressed that China not yet created a system to research the potential to extract Arctic oil and gas, and will continue to work with circumpolar nations to develop resources (Yao, 2013).
9.4 The Arctic Council and China’s key Arctic interests
The Arctic Council operates within a framework of established international law, but still plays an important role in Arctic governance, especially in the aforementioned three areas where China sees its key interests. Its role was previously seen as an influencer; its impact coming from its ability to influence policy-makers and other relevant officials who participate in the Council’s activities, and having those officials take back these ideas to their home countries and implement domestic policy. In recent years, however, the Council has been moving towards legally binding agreements that touch on climate research, shipping and resource development.
Climate change research is the area where the Council has traditionally had the most impact. There have been significant Council outputs over the years. The Council’s reports had significant impact on the 2013 Minimata Convention. Negotiations on the convention, which agreed to lower global mercury emissions, were informed by a longstanding cooperation between the Council’s Arctic Monitoring and Assessment Programme (AMAP) and the UN Environment Programme (UNEP), an observer to the Arctic Council since 1998.
Commercial shipping requires predictable, stable governance systems. The main instruments that govern Arctic shipping are the UNCLOS, IMO, domestic legislation, and the Arctic Council. Under UNCLOS, coastal states generally do not have much power to control regulation of shipping in territorial waters. Under ice-covered waters, however, coastal states have more control.13 The Arctic Council working group PAME, which conducts research on Arctic shipping, has produced several evaluations of policy priorities regarding Arctic shipping hazards, including its 2009 Arctic Marine Shipping
13 As per Article 234 of UNCLOS, within ice-covered waters, “Coastal States have the right to adopt and enforce non-discriminatory laws and regulations for the prevention, reduction and control of marine pollution from vessels in ice-covered areas within the limits of the exclusive economic zone, where particularly severe climatic conditions and the presence of ice covering such areas for most of the year create obstructions or exceptional hazards to navigation, and pollution of the marine environment could cause major harm to or irreversible disturbance of the ecological balance. Such laws and regulations shall have due regard to navigation and the protection and preservation of the marine environment based on the best available scientific evidence.” (UNCLOS, 1982).
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Assessment, which put forward 17 recommendations for Arctic shipping (PAME, 2009).
Other normative measures have been adopted by the Council, including the 2004 Guidelines for Transfers of Refined Oil and Oil Products in Arctic Waters, which listed guidelines for tankers transporting oil to and from Arctic ports (PAME, 2004). Moreover, the Arctic Council has provided a platform for encouraging regional states to deepen participation in broader environmental bodies, such as the IMO (Stokke, 2007). The decision of the IMO to develop a Polar Code was to a considerable extent influenced by PAME’s 2009 report (Molenaar, 2012).
Regarding Arctic resources, the Council has worked to establish norms governing resource exploration and extraction. The 2007 Oil and Gas Assessment, undertaken by AMAP, assessed the environmental, economic, and social impacts that oil and gas activities have had on the region and mapped out the regions that are particularly sensitive to oil spills (Stokke, 2007). In 2009, the Council adopted the Arctic Offshore Oil and Gas Guidelines, which set forth the Council’s recommendations regarding the exploration and extraction of oil and gas in the Arctic region. The goal of the Guidelines was to encourage regulators in relevant states to improve domestic legislation regarding oil and gas exploration and extraction. In 2013, Arctic Council member-states signed the Oil Pollution Agreement, which increased the cooperation between Arctic states on preparing for a future oil spill. It required each state to set up a national system for
“responding promptly and effectively to oil pollution incidents”, to coordinate with oil and shipping companies, and to share relevant data with other Arctic states (AC, 2013b).
Since the Arctic Council’s mandate extends into all three areas of China’s key Arctic interests, it is no surprise that China has paid close attention to its workings. Given China’s three key interests in the region, it is no surprise that China’s activity in the Arctic has increased in scope and substance in recent years.