A “Near-Arctic” Newcomer: China’s Maturing Arctic Strategy

Graphic design for annual Barents Spektakel in Kirkenes, Norway, depicting Chinese characters in celebration of the festival’s 2019 theme: ‘The World’s Northernmost Chinatown’” Photo Credit: Pikene på Broen AS, featured at Crypolitics.

By: Ashley Postler, Columnist

The globalized nature of climate change—“what happens in the Arctic does not stay in the Arctic”^[i]—and the vast economic potential of the circumpolar north are increasingly drawing non-Arctic states to the region. China, in particular, seeks access to the Arctic’s natural resources and emerging maritime routes, and correspondingly strives to make its voice heard in Arctic affairs and governance. Over the past 15 years, the solidification of China’s “self-defined Arctic identity,”^[ii] together with its regional foreign direct investment (FDI), has strengthened the country’s position as a stakeholder better able to leverage soft and sharp power in the United States’ Arctic backyard.

An Evolving Arctic Narrative

In 2004, the Arctic Council invited China to apply as an observer in the then only eight-year old organization in an attempt to bring the world’s second-largest CO2 emitter into the conversation about climate change in the Arctic.^[iii] China took the Council up on this suggestion in April 2007, believing at the time that without research on polar politics, the country would be “‘forced into a passive position’”^[iv] in Arctic management decisions. The Council postponed its decision on China’s 2007 and subsequent 2009 and 2011 observer applications due to rising concern among the eight permanent members—those states with territory above the Arctic Circle, namely Canada, Denmark, Iceland, Finland, Sweden, the U.S., Norway, and Russia—about the organization’s growing “internationalization.”^[v]

During these years, a discernible shift in China’s position on Arctic affairs occurred that likely played an important role in the country’s eventual admission to the Council as an observer in 2013. In 2010, Chinese Rear Admiral Yin Zhou commented that “[t]he Arctic belongs to all the people around the world, as no nation has sovereignty over it. . .”.^[vi] Moreover, Chinese commentators were noting that “‘[w]ho[m]ever has control over the Arctic route will control the new passage of world economics and international strategies’…[and the Arctic] ‘has significant military value.’”^[vii] By 2012, however, China began to refer to itself as a “near-Arctic state,”^[viii] an identity that endures in the country’s first official Arctic Policy published in January 2018.^[ix] In this current iteration, China “respects” the sovereignty of Arctic states while expecting the same in return regarding non-Arctic states’ access to the region in accordance with international law.^[x] For the time being, this more-or-less balanced narrative seems sufficient for Arctic states to permit China’s involvement in the Council and other regional forums.

China’s Arctic FDI Foothold

Promoting Arctic development is a tenet of China’s Arctic Policy, and Chinese FDI in Arctic states’ economies—which from 2005 to 2017 totaled over $1.4 trillion^[xi]—helps ensure the country’s role as a regional stakeholder and gives it a larger and perhaps outsized voice in Arctic geopolitics. For example, a 2017 CNA report assesses that Sino-Russian economic cooperation in the Arctic makes Russia “extremely vulnerable” to Chinese influence, given that “Russia had over 281 inbound investment transactions with China from 2012 to 2017, worth on average, $691.7 million each. This is equal to 2.8 percent of Russia’s annual GDP.”^[xii] More pronounced is Chinese FDI in Greenland, which in 2017 accounted for 11.6 percent of the latter’s GDP,^[xiii] nearly a third of the annual block grant from Denmark upon which Greenland is heavily dependent.^[xiv] Such investments also strengthen China’s soft power, as was seen when potential Chinese port investments in Kirkenes, Norway,^[xv] led the city to fashion itself “The World’s Northernmost Chinatown”^[xvi] and launch a Chinese version of the local Barents Observer in February 2019.^[xvii]

China has already employed its FDI and soft power to establish its foothold in Arctic affairs, notably with Iceland which critically voted to support China’s Arctic Council observer application in 2013.^[xviii] Iceland might have been motivated to do so in part because of its newly-inked FTA with China, which the latter moved to establish in the wake of Iceland’s economic difficulties stemming from the 2008 financial crisis.^[xix] Chinese language and cultural understanding in the country,^[xx] promoted by organizations such as the Northern Lights Confucius Institute at the University of Iceland, likely also helped.

Of course, there are concerns about whether China’s investments actually serve a broader strategic purpose under the guise of economic development. For example, when in 2017 Sri Lanka found itself unable to service a Chinese loan, it was consequently compelled to grant China a 99-year lease on a strategically valuable port in the Indian Ocean.^[xxi] Port ownership and stakes in other infrastructure projects opens “the door to non-commercial activities like hosting military forces and collecting intelligence,’”^[xxii] as Center for Strategic and International Studies director Jonathan Hillman frames it. Such concerns recently prompted the U.S. to convince Denmark to outbid China to finance the construction of new airports in Greenland.^[xxiii]

U.S. Policy Options

The U.S., however, is not without options if it wants to manage China’s growing role in its Arctic backyard. The U.S. should increase its currently minimal diplomatic presence in the region by, for starters, naming an American representative for the Arctic, a post that has remained vacant since President Trump assumed office in January 2017.^[xxiv] The U.S. can also move to establish a permanent diplomatic presence in Greenland’s capital of Nuuk, which would simultaneously serve to reciprocate the opening of Greenland’s own D.C. office in 2014^[xxv] and monitor Chinese activities there.

U.S. Freedom of Navigation Operations^[xxvi] and comments such as the one made by U.S. Admiral James Foggo that the Arctic is “nobody’s lake”^[xxvii] coincidentally lend credence to China’s perspective of the Arctic as an international rather than regional zone, so statements like this should be made carefully. Moreover, the U.S., in coordination with its Arctic neighbors, could work to offer an alternative to the ‘bank of China’ for Arctic states looking to fund development projects, such as creating an Arctic Development Bank.^[xxviii] Such steps could help to offset growing Chinese influence in the Arctic and ensure that Arctic states, rather than peripheral newcomers, maintain primary responsibility for governance and security in an increasingly accessible Arctic.