Meridian Newsletter: Fall/Winter 2011-Spring/Summer 2012 - Canada and China in the Arctic

Canada and China in the Arctic:  A Work in Progress

Rob Huebert

As recently as five years ago, the suggestion that China was well on its way to becoming a major player in Arctic affairs would have been treated with a combination of surprise and disbelief in Canada. Yet it has become abundantly clear in the last few years that China not only is interested in Arctic issues but is also actively developing the means to play an increasingly powerful position in the region. This has caught Canada off guard. Given the growing economic wealth and power of the new China, Canada needs to take into account Chinese interests in the Arctic. The Chinese government is now spending considerable resources on ensuring a sustainable and long-term arctic capability. What then, are the Chinese interests there, and how do they impact Canada?

Only since 2009 have western academics and media begun to take serious notice of China's arctic ambitions [1]. Much earlier, however, there were signs that should have alerted Canadians. In 1999 the Chinese arctic research vessel Xue Long (Snow Dragon) arrived at Tuktoyaktuk, NWT, at the mouth of the Mackenzie River. This marked the first Arctic voyage for this vessel, which had already seen extensive operations in Antarctic waters. Its arrival caught local Canadian officials off guard. While China had notified Canada of its intention to do research in the adjacent waters of this region, the information was not passed on to officials in the North [2]. This was only the beginning of Chinese arctic research efforts.

China: the next Arctic science powerhouse?

The Chinese have at least four major areas of interest in the Arctic: science, maritime navigation, resources, and geopolitics. They are currently focussing on developing their scientific program to further their understanding of the Arctic, especially the impacts of climate change on the region. To support these efforts they rely primarily on the work of the Polar Research Institute of China, based in Shanghai, and the China Institute for Marine Affairs, the research department within the State Oceanic Administration, in Beijing [3]. As well, several universities are developing increased arctic expertise. In 1993 China purchased the Xue Long, which at 21,000 tonnes is one of the largest non-nuclear powered research vessels operating in the Arctic. It has completed three arctic research voyages and a fourth is planned for the summer of 2012. A second research icebreaker, an 8000 tonne vessel designed by Finnish engineers and powered by British-built engines, is under construction in Chinese shipyards. China established an Arctic research station, "Yellow River", at Ny Ålesund, Svalbard, in 2004.

   Chin Q.Z. Chang]
The Chinese arctic research station in Svalbard is unmistakeable with its guardian lions (shishi) at the entrance. Its facilities support research in meteorology, space-earth measuring, glaciology, marine ecosystem, and environment. The station can accommodate 25 people. [Photo: Chin Q.Z. Chang]

  ©International Polar Foundation/René Robert]
The Xue Long, China's Arctic and Antarctic re-supply and research icebreaker. [Photo: ©International Polar Foundation /René Robert]

   Timo Palo]
Scientists at work on the Arctic Ocean drift ice, seen from the deck of the Xue Long. [Photo: Timo Palo].

In the spring of 2010, I participated in an academic visit to both the China Institute for Marine Affairs and the Polar Research Institute of China [4]. We were shown the large number of research buildings currently under construction in Shanghai which, once completed, will greatly expand Chinese scientific capabilities. It was obvious to the Canadian participants that China is investing heavily in science.

Our Chinese hosts made it clear that, while they have several research interests, they are most interested in understanding the processes of climate change in the Arctic, in order to understand its impacts on China itself. As one of the Chinese researchers stated, what happens in the Arctic has a direct bearing on China's western deserts and on the sea levels along its eastern coasts.

The Chinese are also very interested in the potential impacts of climate change on maritime navigation routes, for much of China's economic growth is based on exports to North America, Europe, and Asia through maritime trade. They are watching for the possibility of new trade routes developing in the Arctic Ocean. Our hosts showed us a map that places an ice-free Arctic at the centre of the globe, with potential new routes marked out between China and Northern Europe, and between China and Eastern United States [5]—illustrating how an ice-free Arctic would substantially reduce travel distances and times. Of course no one is yet suggesting that this will occur any time soon, except during very short periods in summer, but the Chinese are monitoring this closely. 

Map of potential arctic maritime trade routes from Shanghai (China) to New York (USA) via the Northwest Passage, and from Shanghai (China) to Rotterdam (the Netherlands), via the Northeast Passage
Potential arctic maritime trade routes from China to North America and Europe. [Image: Chinese Arctic and Antarctic Administration (in Jakobson)].

The Chinese are also keenly interested in possible new resource opportunities. They have made it clear that they do not challenge the sovereign rights of the Arctic coastal states to their resources within the existing 200 nautical mile Exclusive Economic Zones or in any future extended continental shelf zones; but they have both stated and demonstrated that China wants to be an active participant in the economic development of the region. They have begun to purchase shares in various resource development companies throughout the circumpolar north including Canada, focussing on midlevel corporations and offering premiums on their stock purchases [6]. This is clearly a long-term strategy designed to give them an important foothold while at the same time allowing for the corporate world to get used to their increasing participation.

Knocking on the door of the Arctic Council

China's fourth area of interest is the geopolitical developments of the region, and on an official level they are very interested in participating in the governance forums now developing. In particular they are, like the European Union, attempting to become permanent observers to the Arctic Council. There has been a reluctance within the Arctic Council to grant this status to either. After some debate the Council postponed decision on the EU's application in 2011 by deciding to create new criteria for membership [7].

In part the Arctic states are still adjusting to the desire of non-Arctic states to participate more actively on this body. To a certain degree China has been caught in the reluctance of Canada to extend permanent observer status to the European Union because of its concerns over the European ban on seal products [8]. At the same time the dispute between Norway and China over the awarding of a Nobel peace prize to Chinese dissident Liu Xiaobo has also given rise to speculation that the Norwegians are not enthusiastic about the Chinese application [9]. While it is difficult to know the official positions of Canada and Norway regarding the Chinese application, it is clear that the Arctic Council has delayed addressing this issue. One of the biggest challenges that will face Canada when it takes over the chairmanship of the Arctic Council in 2013 will be dealing with these applications.

There is growing recognition that it would be better to have China in the Arctic Council rather than outside. But the Canadian position on new permanent observers will be coloured by the EU request. The European ban on seal products has hurt the interests of Canadian Inuit, and the Inuit Circumpolar Council (ICC) and the other Permanent Participants are therefore reluctant to see the EU given permanent observer status. Given Canada's close relationship with the ICC, Ottawa has objected to the EU application. But this places Canada in a difficult situation. How does Canada support the Chinese efforts to become a permanent observer while at the same time opposing the European application? There is no easy answer.

Once Canada assumes the chair of the Arctic Council it may simply attempt to postpone any decision. But what impact will this will have on Canadian-Chinese Arctic relations? China could view such a postponement as a slight, which could in turn affect other aspects of the relationship. If Canada supports both the European and Chinese applications, this could damage Canada's relationship with the permanent participants. If Canada supports only the Chinese application and not that of the EU, it runs the risk of being labelled as inconsistent and anti-European. The only good solution for Canada is if the Swedish chair surprises everyone and resolves the issue before 2013.

China in Arctic geopolitics: panda or tiger?

Chinese scholars have also begun to address issues pertaining to the strategic value of the Arctic Ocean, and the Polar Research Institute of China has recently created a department of strategic studies to examine these [10]. A debate is developing between scholars who contend that China should take a more assertive role and those who argue instead that Chinese interests are best served by focussing on cooperation with the various Arctic states, including Canada. The Chinese government has not taken sides, nor has it indicated its preference in this regard; some Canadian scholars have suggested that China is still waiting to see how this debate develops before issuing a position [11].

China is investing heavily to become a significant research actor in the Arctic, and its presence is already being felt. It is only a matter of time before Chinese researchers and scholars take a position at the cutting edge of Arctic studies and debates, and China's strategy of investing in resource industries that include Arctic developments will pay dividends over the long term.

China has been very careful not to appear overtly assertive in its efforts to become a player in the Arctic, and has been very careful to follow the rules established by the Arctic states; but it is also increasingly apparent that the Chinese will continue to press for inclusion on Arctic-related governance issues, regardless of any concerns that may arise. In addition to the request for Arctic Council observer status, Canada will face a number of longer term issues pertaining to this increasing Chinese presence. Some will be more easily dealt with than others.

First, the increasing Chinese scientific efforts will provide important new avenues of cooperation for Canadian science. It has long been established that cooperation amongst scientists is one of the best ways to reduce the high costs of arctic research. China's willingness to invest heavily in research provides Canadians with opportunities to develop new relationships with Chinese scholars, who will have substantial support from their government. This will of course require Canadian scholars to seek out partnerships with their new Chinese colleagues, and welcome their involvement. Given Canada's record of scientific collaboration—reinforced during the recent International Polar Year—there is little doubt that they will do so.

Canada-China Arctic relations: a complex challenge

The increasing Chinese presence in the Canadian resource industries is a more complicated challenge. On the one hand, Canada is committed to the prosperity provided by an open and liberal international economic system. Furthermore, the Canadian government has made it clear that they welcome Chinese investment and will consider a recent Chinese request to develop a free trade agreement [12]. On the other hand, there have been rising sensitivities about increasing foreign ownership of Canadian resource companies. This was recently demonstrated by the response of the Canadian government to the efforts by Australian companies to invest in the Canadian potash industry. However, in a period of economic uncertainty following the economic crisis of 2008 and the ongoing European crisis regarding the Euro, Chinese investments offer economic opportunities for Canada that will be hard to resist. But given the fact that China remains an authoritarian government, questions will remain as to the independence of the Chinese corporations that are buying into Canadian resource companies. Does this provide undue indirect control of Canadian resources to the Chinese government in the long term? Does it matter? It may be that these companies are now completely independent of the government -- but at the moment this is not certain, and thus concerns will continue to exist. Perhaps, as Canadians adjust to an increasing Chinese presence in their resource industries, these will subside.

Complicating the situation is the Canadian government's intention to diversify export markets from the current heavy reliance on the United States. The ongoing issue of the Keystone pipeline has raised questions about the export of oil and gas to the United States. Furthermore, growing American concerns about the environmental impact of the oil sands have also raised questions in Canada regarding the long-term reliability of the American market. The proposed construction of the Northern Gateway pipeline is partly premised on the hopes of increased oil exports to Asian markets, including China. Any effort to limit Chinese investment in Canadian resource companies could damage these efforts. Canada now faces an increasingly complex trading relationship with China that will impact resource development across the country, including the Arctic.

In the long term Canada, along with the other Arctic states, may face the issue of Chinese fishing fleets entering the Arctic Ocean. There is still considerable debate about the possibility of commercially viable fish stocks developing in an increasingly ice-free Arctic. Many researchers think this unlikely, while others do not rule it out. But if it were to occur China and other non-Arctic states would have the right to fish in any region beyond the Exclusive Economic Zone of coastal states. This means that the water column above the extended continental shelf is open to international fishing. While it is entirely possible that some form of regional fishing agreement could be developed that would protect and promote the interests of both the Arctic coastal states and foreign fishing fleets, disagreements are also possible

In the much longer term, questions will arise over the Chinese view of the legal status of the Northwest Passage. There has been no official statement by Chinese officials on this issue and, when asked whether they view it as internal waters or as an international strait, they have declined to commit. Ultimately, their position will reflect a mixture of concerns over their own coastal waters and their ambitions as a rising maritime and naval power. Canada can hope that China will not side with the Americans, but should not assume that they will automatically support Canada.

Canada may eventually need to deal with a Chinese naval presence in the Arctic, as in time China could come to see the region as strategically important. While most western observers suggest that such a move is unthinkable, it needs to be remembered that very few observers had thought that China would become a major actor in Africa, and would begin to deploy warships off the Horn of Africa under the mandate to engage pirates; and yet in 2012, the Chinese presence is an accepted fact both in Africa itself and in its waters. Given the current efforts of China to extend its economic involvement in the Arctic region, it would be naïve to believe that there could never be a Chinese naval deployment in the future. The arrival of Chinese surface or sub-surface vessels near its Arctic waters would complicate the strategic picture facing Canada.

The evolving Canadian Chinese arctic relationship is one that will grow in complexity over time. Very few people had even thought that such a relationship was likely or possible just a few years back. But the Chinese determination to understand the changes that are now occurring in the Arctic, and to avail itself of the opportunities that may arise as a result, will increasingly challenge Canadian decision-makers. The Chinese are willing to approach their new arctic enterprises in a cooperative fashion; but they have made it equally clear that they will proceed regardless of the response from the other Arctic states, including Canada. They are clearly making the expenditures to transform themselves into a major Arctic power. This will bring opportunities for mutual gain, as Canada can benefit from working with the Chinese on a wide range of issues, but China is beginning to view the Arctic in a broader geo-political context, and on this level Canadian and Chinese interests may not always meet.

Canada needs to recognize to recognize that there is a new actor in the Arctic, one that will soon become much more powerful. Canada would be wise to start thinking much more seriously about this increasingly complex and interesting relationship.

Rob Huebert is Associate Professor of Political Science and Associate Director of the Centre for Military and Strategic Studies at the University of Calgary. He is a member of the Board of the Canadian Polar Commission.

Footnotes

 [1] The first major article on China in the Arctic was produced by  Linda Jakobson, "China Prepares for an Ice-Free Arctic" [PDF, 1.93 MB], SIPRI insights on Peace and Security, no. 2010/2 (March 2010). In Canada there is an increasing number of authors who have been examining this issue. See Frédéric Lasserre "China and the Arctic: Threat or Cooperation Potential for Canada?" [PDF, 1000 KB]China Papers, no 11, Canadian International Council (June 2010); Joseph Spears, "China and the Arctic: Awakening the Snow Dragon", China Brief vol.9, issue 6, the Jamestown Foundation (March 18, 2009); and David Wright, The Panda Bear Readies to meet the Polar Bear: China and Canada's Arctic Sovereignty Challenge [PDF, 1.24 MB], (Calgary: Canadian Defence and Foreign Affairs Institute, March 2011).

[2] Aldo Chircop, "The Emergence of China as a Polar-Capable State" [PDF, 309 KB], Canadian Naval Review, vol 7 no 1 (Spring 2011); 9.

[3] Jakobson, p. 4.

[4] The Canadian delegation was composed primarily of legal scholars from Dalhousie University and the University of Victoria as well as an historian from St. Jerome's University and a political scientist from the University of Calgary. It took place in February 2010.

[5] This map is included in Jakobson, p. 4.

[6]  For example see: Margo McDiarmid, "China keen market for oil sands, Oliver says", CBCNews (November 9, 2011); Cecilia Jasmasmie, "China secures major second stake in Canadian oil sands with a Cd$2.1 billion deal"Mining.com  (November 28, 2011).

[7] Andrew Willis, "EU gets cold shoulder in the Arctic"euobserver.com (May 13, 2010).

[8] CBC news, "Canada against EU entry to Arctic Council because of seal trade ban", (April 29, 2009).

[9] Jonathon Watts, "Norway could shut China out of Arctic Council after diplomatic  snubs"the Guardian (January 25, 2012).

[10] Wright, pp. 2-5.

[11] Ibid.

[12] Jason Fekete and Mark Kennedy, "Multibillion dollar deals 'new level' for Canada-China relationship", National Post (February 9, 2012).

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