China can support Arctic through B&R
Media reports said that temperatures in the Arctic region have exceeded 30 C in recent days. This is bad news, but global warming could make shipping routes through the Arctic viable, and that could be increasingly important for international trade.
According to media reports, the Northern Sea Route has become a focal point for both China’s and Russia’s Arctic strategies. The Sea Route could provide a much swifter passage from Asia to Europe than existing ones, such as going through the Suez Canal.
The Polar Silk Road is an important component of China’s Belt and Road (B&R) initiative, and it could be considered as part of an ambitious strategy to change China’s land and sea connections to Europe and the world. It is expected to bring new markets and development opportunities for China. If it succeeds, it will not only contribute to the economic and social development of the Arctic region, but it also could possibly change global trade and economic patterns.
Its main importance of course is to reduce transportation costs by cutting distances. It could offer China a faster sea route to many ports than current routes. Some estimates indicate that the new sea route through the Arctic could reduce shipping times by half.
China has also shown an interest in developing oil, gas, renewable energy and mineral resources in the Arctic region. From an energy perspective, it is estimated that the Arctic region has about 30 percent of untapped global natural gas reserves and 13 percent of world oil reserves. As the world’s largest importer of oil and gas, and with continued strong growth in oil and gas demand, China can look forward to development of oil and gas, in addition to other resources in the Arctic region.
In particular, China’s gas demand increased more than 17 percent last year. China is aiming to have 10 percent of its energy come from natural gas by 2020 and 15 percent by 2030. So it is expected that China is going to experience very strong gas demand and at the same time, it will worry about where the gas will come from.
With better infrastructure and transportation facilities, China should be able to cooperate with other nations and Arctic states to develop these resources.
In addition, it can reduce dependency on the Strait of Malacca, which is China’s main shipping route for oil and gas at present. For example, close to 80 percent of China’s oil imports go through the Malacca Strait. This could be a challenge for China.
In the process of building a Polar Silk Road, China will need to show it’s being a responsible partner in the region, instead of plundering Arctic resources or damaging the environment. Also, China should not be seen as an Arctic nation, but as a supporter of the development of Arctic nations.
China has a plan for three oceanbased routes that will connect Asia with Africa, Oceania and Europe. The plan intends to advance maritime cooperation under the B&R initiative, but it will encounter at least three major challenges.
The first is difficulties in cooperation. Different countries have different interests and objectives in terms of Arctic development. There may also be big differences when it comes to property rights, environmental standards and technology. Therefore, cooperation will be difficult. China will work with Russia and certainly hopes to work with all parties to build a Polar Silk Road through developing Arctic shipping routes. All the parties involved should respect international laws and regulations. In short, Arctic development should be a case of win-win cooperation. The second challenge is environmental protection, which should be the first principle in the development of the Arctic. Countries participating in the development need to be very careful in this regard, as the Arctic environment is very fragile. If an environmental disaster occurs, it will be difficult and expensive to clean up. The third challenge is technological innovation. Opportunities in the Arctic are just potential ones at the moment and at very early stages of development. To turn potential into reality, there is still a long way to go. In the Arctic, the climate is cold and the natural conditions are not suitable for conventional development. We need technological innovation and good business models to make development commercially viable, as well as prevent environmental disasters during development. The author is dean of the China Institute for Studies in Energy Policy at Xiamen University. bizopinion@ globaltimes.com.cn
It could offer China a faster sea route to many ports than current routes. Some estimates indicate that the new sea route through the Arctic could reduce shipping times by half.