The Twists and Turns of the Polar Silk Road

Huawei office in Oslo [Photo by Marc Lanteigne]
by Marc Lanteigne

Over the past five years, China has been seeking to place its own diplomatic and economic stamp on the Arctic, via what has, since 2018, been frequently referred to as the ‘Ice’ or ‘Polar Silk Road’ (Bingshang Sichouzhilu 冰上丝绸之路), or PSR. The foundation of this ‘road’ was to be the development of enhanced maritime trade through an (increasingly ice-free) Arctic Ocean, as well as associated infrastructure and other offshoot projects.

Two years later, it can be argued that while some components of the PSR are successfully operational, others remain firmly relegated to the drafting board. The successes and delays of the PSR can be determined not only by looking at the finances and logistics of its various components, but also the considerable differences in political thinking among the potential Arctic states which may or may not be forming the building blocks for this northern road.

In the first few years since the government of China announced the initial steps in 2013 of building what would eventually be known as the Belt and Road Initiative, (yidai yilu changyi 一带一路 倡议), or BRI, there was little doubt that, as the Arctic began to experience climate change and ice erosion, international commerce would be increased. This included shipping and resource extraction and the far north would eventually be added alongside Africa, Europe and Eurasia as a key component of the network of trade routes and enhanced economic partnerships Beijing was seeking to develop.

As China began to quietly construct its Arctic diplomatic policies, following the country being granted formal observer status in 2013, speculation grew as to when Beijing would formally announce its interest in creating a northern tier for the BRI. Until a few years ago, China appeared to be taking a ‘watch and wait’ approach to linking the Arctic with the Belt and Road, especially since there were many other parts of the world which were a priority for Beijing’s economic diplomacy via the BRI, (at present, more than 130 governments, along with thirty organisations, have signed some sort of Belt and Road agreement with Beijing).

The first official sign that the Arctic was going to be added to the BRI repertoire arrived via a low-key policy document co-published in June 2017 by the then-State Oceanic Administration (SOA), and the National Development and Reform Commission, (the SOA was folded into the newly-created Ministry of Natural Resources in early 2018). The paper, entitled ‘Vision for Maritime Cooperation under the Belt and Road Initiative’, noted three specific ‘blue economic passages’ (lanse jingji tongdao 蓝色经济通道) essential for future BRI Chinese maritime trade. These were the Indian Ocean-Mediterranean route, the Oceania-South Pacific route, and the Arctic Ocean, although the means by which the Arctic would be added to the BRI was not specified at the time.

As an August 2019 report by the Chinese Institute of International Studies (CIIS) elaborated [in Chinese], not only did the Arctic ‘blue economic passage’ represent an emerging and potentially lucrative maritime shipping route, but also offered potential access to specific goods from Arctic states, notably in the Nordic region, in the areas of renewable energy and green technologies.

Further clarity as to how the PSR would fit within the greater Belt and Road network was provided in January the following year with the release of Beijing’s White Paper on Arctic policy. In addition to outlining specific scientific and economic interests Beijing was seeking to develop in the far north, the paper also stated that:

China hopes to work with all parties to build a “Polar Silk Road” through developing the Arctic shipping routes. It encourages its enterprises to participate in the infrastructure construction for these routes and conduct commercial trial voyages in accordance with the law to pave the way for their commercial and regularized operation.’

As the Polar Silk Road continues to be developed, it is apparent that what China is seeking is similar to other strands of the greater BRI, including an expansion of markets for Chinese goods, investments and technology, as well as enhanced diplomatic ties with major regional governments. By far the most prominent benefactor of PSR policies has been Russia, due to both its geography, as the shortest Arctic sea route between China and Europe lies north of Siberia, and various types of economic-political cooperation. Moreover, it may be argued much to growing American consternation, that the Arctic is evolving as a major nexus of Sino-American cooperation.

Most of the economic agreements relating to the PSR between China and Russia have been in the energy sector, with the Yamal Liquified Natural Gas (LNG) project, overseen by the Russian firm Novatek (НОВАТЭК), in western Siberia acting as the crown jewel of this cooperation. The China National Petroleum Corp. (CNPC) holds a twenty percent stake in the project, with China’s Silk Road Fund acquiring 9.9 percent.

In April 2019, the CNPC agreed to a ten percent stake in a successor operation, ‘Arctic LNG 2’, with an announcement made in January this year that the Shanghai firm Hudong-Zhonghua Shipbuilding (沪东中华造船) was hoping to build LNG-carrying icebreaking vessels which would be attached to the Arctic LNG 2 project. Beyond energy, there has also been Chinese interest in potential Russian Arctic infrastructure projects, including a June 2018 bilateral investment deal which could be used to underwrite various initiatives attached to the PSR. However, the situation with the COVID-19 virus, and the related closure of the Sino-Russian border in the last month, may complicate new Arctic cooperation, at least in the short-term.

Russian President Vladimir Putin speaking at the ceremony marking the loading of the first LNG tanker from the Yamal facilities, December 2017 [Photo via Wikimedia Commons]

The results of the PSR outside of Russia have been mixed. One issue is that Moscow remains the only government amongst the ‘Arctic Eight’ to have formally signed on to the Belt and Road in its entirety. The chances of the United States, especially under its current government, aligning with the BRI are nonexistent, and American attempts to create an alternative to the Belt and Road have so far been long on grandiloquence and short on details or actions. Ongoing Chinese diplomatic strains with both Canada and Sweden have precluded any possibilities of either government signing on the Belt and Road in the near future. Other Arctic states, such as Finland and Iceland, have been more neutral on the subject, while seeking to maintain strong bilateral relations with Beijing.

PSR-related cooperation with Norway was greatly hampered by the six-year diplomatic break between Beijing and Oslo due to the 2010 Nobel Prize incident, but since that time there have been occasions of PSR cooperation. For example in December of last year, the Halogaland Bridge outside of the northern Norwegian town of Narvik was officially opened. The span had been constructed by the Chengdu-based Sichuan Road and Bridge Group (四川公路桥染建设集团).

Other potential Chinese investments in Nordic infrastructure projects are far less certain, including the long-touted Arctic Corridor railway connection between Kirkenes in Norway and Rovaniemi in Finland which could in theory link to Russian, Chinese and other European rail lines. Reactions by both Helsinki and Oslo have been tepid at best about the rail line, and the prospect of Chinese investment.

As well, this month Sámi representatives from Finland and Norway sought to issue a solid veto against the railway, arguing that it would irreparably damage traditional reindeer herding lands. Nonetheless, local politicians, including in Kirkenes, continue to support the project as means of opening up the Nordic-Arctic region to increased investment, including from China. At present, the Arctic Corridor appears to be the Schrodinger’s Cat of regional infrastructure plans.

Another related endeavour to run into recent political headwinds is the Helsinki-Tallinn (Talsinki) tunnel project, which has also attracted Chinese investment interest. However, a February 2020 report [pdf] by the main intelligence agency in Estonia flashed a yellow light regarding both economic and strategic concerns about Chinese investment in the tunnel construction.

[Photo by Marc Lanteigne]
Finally, another offshoot of the PSR, which has been slowly taking shape over the past two years, is ‘Arctic Connect’, a proposed Arctic fibre-optic line which would stretch at least eighteen thousand kilometres between China and Northern Europe via the Siberian coast. In June 2019, a memorandum of understanding was signed between the Finnish company Cinia and the Russian telecom firm MegaFon (МегаФон) to commence building of the undersea Arctic Ocean cable. In 2016, Cinia had approached China’s communications giant Huawei as a partner for a potential Asia-Europe communications link, and the following year it was reported that China’s Ministry of Industry and Information Technology (MIIT) and China Telecom had expressed interest in supporting the project.

Then, in July of last year, under American pressure, Huawei agreed to sell off its undersea cable division, Huawei Marine, the same subsidiary which was active as a partner to Cinia in the Arctic cable project. By the end of last year, the Chinese cable firm Hengtong Group (亨通集团), based in Suzhou, was cited as a potential buyer for Huawei Marine, which would affirm that Chinese interests would remain engaged in the cable’s construction, and potentially place this project within Beijing’s proposed ‘Digital Silk Road’ (shizi sichouzi lu 数字丝绸之路) wing of the BRI. However, in a comprehensive policy paper published last week via the Sinopsis project, it was argued that Chinese investment in the cable presented security risks in the form of over-reliance on a single provider, the possibility of wiretapping/illicit monitoring, and dual-use (civilian/military) potential of the link.

Despite these setbacks, the Polar Silk Road policies are likely to continue, with maritime transport being at the centre of China’s PSR interests. The question now is whether Beijing will be able to navigate both the economic diplomacy required to continue to build this ice road while also being aware of political storms appearing in the far north as overall Chinese Arctic interests continue to widen and deepen.