by Malte Humpert Part 4 of the series on the future of the Northern Sea Route (NSR) analyzed the potential for cost savings along the NSR and discussed how credible these claims are. The final part in this series will discuss China's future as an Arctic Maritime Nation and take a closer look at its influence on the development of the NSR.
China has been very cautious about formulating and propagating its interests in the Arctic and continues to quietly advocate for unobstructed access to the region. China’s advocacy for unimpeded access to the region for all states, while certainly economically and politically self-motivated, may help it to garner significant support from the international community, especially smaller export- and import-dependent countries who would benefit from liberal access to the Arctic’s shipping routes.
China’s rising economic power, especially its role as a growing exporter to Europe and the United States, may allow it to overcome its position of weakness in Arctic affairs. The country is neither an Arctic littoral state, nor an observing member to the Arctic Council. Chinese Arctic research remains focused on the environmental impact of climate change in the region; economic, political, and security implications, however, are increasingly being considered. China’s economic development is highly dependent on international shipping and foreign trade contributes 46 percent to the country’s GDP.
China's efforts to develop into an Arctic maritime nation and become a destination for Russia's Arctic hydrocarbon resources are well documented. In addition to commissioning a number of ice breakers, the country continues to invest in ice-strengthened bulk carriers and tankers with dual-directional technology which combine the fuel-efficient bow of a cargo ship on one end and with the hardened bow of an icebreaker on the other.
Until recently China appeared to be wary of Russia’s intentions in the Arctic, e.g. the planting of the Russian flag at the North Pole, but cooperation has increased as of late. China National Petroleum Corporation recently signed an agreement with Sovcomflot, the largest operator of Arctic shuttle tankers and ice-class LNG carriers, to" develop a long-term partnership in the sphere of seaborne energy solutions, with the SCF fleet serving the continually growing Chinese imports of hydrocarbons."
Chinese officials have repeatedly called the NSR the "Arctic Golden Waterway" and Bin Yang, a Professor at the Shanghai Maritime University, estimates cost savings between $60-120 billion per year if China makes extensive usage of Arctic shipping routes.[1] At the same time, Russia's GDP is closely tied to its Arctic natural resource development which in turn depends on the ability to deliver these resources to the global markets, e.g. via pipelines or the NSR. Russia is seeking to tap Asian demand for oil and gas to help justify developing remote deposits in the Arctic and eastern Siberia. Hence, Russia has a strong interest in developing the NSR into a commercially viable shipping route and ensuring access to one of the fastest growing consumer market for hydrocarbon resources: China and greater south-east Asia.
China's efforts to gain a foothold in Arctic shipping must be seen as an attempt to diversify the trade routes of its oil and natural gas supply and thus overcome its strategic weaknesses known as "Malacca dilemma." Currently 78 percent of China's hydrocarbon imports pass through the narrow 1.5 mile-wide channel at the Strait of Malacca.[2]
China's demand for crude oil is slated to grow from 8.2 million barrels per day (mbd) in 2008 to 17 mbd 2030. Over the same period the production deficit of Asia as a whole will increase from 15 mbd to 48 mbd.[3] China is not only attempting to secure access to Africa’s growing share of world petroleum exports, e.g. in Angola and Sudan, in order to satisfy its growing demand for hydrocarbon resources but also diversify the trade routes of its natural gas and oil imports. Becoming an Arctic maritime shipping nation represents an important step in China's goal to achieve long-term energy security.
The series on The Future of the Northern Sea Route looked at a number of factors which determine if the route will develop into a "Golden Waterway" or remain a niche trade route. The rate of climate change in the Arctic, world trade patterns and global trade dynamics, the economics of shipping lanes and the potential for cost savings, and China’s role as a potential key benefactor of Arctic shipping, are key variables to the development of the NSR as global shipping route. The entire article can be found here.
Sources:
[1] Michael Byers, "Asian juggernaut eyes our ‘golden’ waterways," August 29, 2011, http://m.theglobeandmail.com/news/opinions/opinion/asian-juggernaut-eyes-our-golden-waterways/article2144360/?service=mobile
[2] You Ji, "Dealing with the Malacca Strait Dilemma," April 12, 2007, http://www.eai.nus.edu.sg/BB329.pdf
[3] Based on projections by Ramón Espinasa from the class "Energy Security: Western Hemisphere" at Georgetown University
-01.png){kind=small}
