Russia and China in the Arctic: A Pragmatic Partnership

12 January 2021

by Hamish Cruickshank – Research Assistant

The warming of relations between Russia and China in the Arctic has driven some Western policymakers to declare that an ‘Arctic Alliance’ has formed between the two powers. Grand energy partnerships, joint scientific ventures and transit cooperation along the Northern Sea Route have driven some Western analysts to conclude that Sino-Russian collaboration in the High North presents a significant threat to regional security. For example, on the eve of the May 2019 Arctic Council ministerial, U.S. Secretary of State Mike Pompeo stunned onlookers by identifying China and Russia as potential destabilising factors in the region and proclaimed that the U.S. was “concerned” about Sino-Russian collaboration in the High North.

But how much truth is there to the contention that a Sino-Russian axis is developing in the Arctic? A deeper examination of the evidence indicates that a destabilising alliance between Russia and China is far from apparent. While the states have cooperated on a number of projects over the past decade, the Sino-Russian relationship in the Arctic is predicated primarily on business interests. Should this pragmatic partnership prove unprofitable at some stage in the future, it will struggle to endure.

Russia and China

Since 1997, when Russian President Boris Yeltsin and Chinese President Jiang Zemin signed the ‘Joint Declaration on a Multipolar World and the Formation of a New International Order’, the two states have strived to consolidate their strategic partnership through economic, political and military ties. When Russia was hit with Western sanctions in 2014 after the illegal annexation of Crimea, cooperation between the two states increased further. On a visit to the Kremlin in June 2019, Chinese President Xi Jinping said that Sino-Russian relations were at “their highest point in history” and the two states appear to have deepened their ties further in 2020.

The partnership is heavily based in economic collaboration between the two states. Bilateral trade in 2019 set a new record of more than $110 billion and while the alliance has seemed somewhat lopsided in the past with Russia relying heavily on Chinese investment, recent events have made Moscow a lot more important to Beijing. China has clashed with the US over a number of issues ranging from a trade war to rights over Hong Kong and the South China Sea, and this has resulted in Russia becoming a vital trade partner for China.

Consequently, Russia has substantially increased energy exports to China. Russia was China’s largest supplier of oil in 2020, and there are plans afoot to substantially increase Gazprom’s deliveries of gas. Additionally, the two states have moved to limit their reliance on the US dollar and constrain American trade dominance through ‘de-dollarization’. Utilising alternative currencies to the dollar provides Russia and China with a means to avoid sanctions and both states are continuing to promote de-dollarization to reduce contemporary foreign policy risks. Meanwhile, the Covid-19 pandemic has provided opportunities for further partnerships in high tech and science.

Still, despite China embracing Russia as an important economic ally, the strategic partnership lacks balance. In 2018, Russian trade with China made up 15.5% of total trade while Russian trade accounted for just 0.8% of total trade in China. The pandemic has had a devastating impact on Russia with the country recording 186,000 deaths from the virus and oil prices have plummeted, hitting the economy hard. Subsequently, Russia is leaning heavily on China at present and the Kremlin must be wary of developing too great a dependence on Beijing.

The Arctic

The Arctic, however, is one area where Russia does enjoy a comparative advantage over its eastern neighbour and in light of the greater lop-sidedness of the Sino-Russian relationship, this is something the Kremlin wishes to preserve. For example, as one of the eight states that head the Arctic Council, Russia was one of the most hesitant in permitting the admittance of China and other non-regional states and entities such as the EU from being granted observer status on the grounds that they may alter the balance of power and draw in unwanted attention to the region. Russia is also protective of its energy resources and sovereignty in the Arctic and has invested heavily in bolstering security infrastructure in the region in recent years to protect key interests.

However, while Russia may wish to retain its primacy in the High North, it needs Chinese capital in the region. The Kremlin has published and promoted grand plans for the development of Russia’s Arctic Zone (AZRF) over the past few decades, such as the Arctic Strategy to 2020 and the new ‘Strategy for Developing the Russian Arctic Zone and Ensuring National Security through 2035’. But these plans for regional development require gargantuan amounts of money, and Moscow needs outside investment to realise these ambitions.

Particularly since the 2014 Crimean annexation and the commencement of war in Eastern Ukraine, China has become a key economic partner of Russia in the Arctic. Given the extent of energy trade between the two states, energy collaboration has become a key facet of this partnership in the High North. For example, in December 2019, the ‘Power of Siberia’ natural gas supply route was inaugurated linking Siberia to China via a 3,000km long pipeline, while Chinese companies have also invested heavily in Russia’s LNG projects on the Yamal Peninsula in Russia. However, Moscow has made sure to prevent foreign firms from attaining dominant stakes in these projects – Beijing currently holds a 29.9% stake in the Yamal LNG project and 20% in the LNG-2 venture.

China is also working with Russia to help develop the Northern Sea Route (NSR), a shipping route running from the Kara Sea to the Bering Strait. The transit route cuts the travel time between Europe and Asia in half and Moscow is keen to develop the NSR along with China to unlock its vast economic potential. As outlined in the Belt and Road Initiative (BRI), China is also keen to utilise the stretch for its own shipping and has talked about using it as an ‘Arctic silk road’. However, transit along the NSR is heavily regulated by Russia. Ships passing along the NSR require a Russian captain, must pass through checkpoints and Russia must receive tolls and prior notice before any voyage can take place along the stretch. Despite China’s previous contention that the NSR is international waters, it is clear that Beijing needs Moscow when it comes to Arctic shipping.

Outside of economic interests, Chinese and Russian collaboration extends mainly to scientific ventures. Talk of a military axis to shift the balance of power in the region appears far-fetched and extremely unlikely to materialise. The Arctic has been a sphere of considerable international cooperation and stability since the end of the Cold War and Russia has repeatedly promoted its commitment to keeping the region conflict-free. While Russia and China can be somewhat unpredictable, both require the Arctic to remain a low-tension zone in order to fully tap into the economic potential of the region.

The future of the Sino-Russian partnership in the Arctic

Much like the greater Sino-Russian relationship, economic interests clearly govern the Sino-Russian links in the Arctic. Both states need each other in order to reap the economic benefits the region can provide in the form of vast natural energy reserves and faster transport. As the reduction of sea ice in the region continues as a result of climate change, one can expect this partnership to endure as new areas of the High North are opened up to exploitation. In this sense, collaboration in the Arctic will continue until it is no longer profitable for both states.

As has been noted, however, Russia is keen to preserve its primacy in the region. The Kremlin currently holds all the cards for China with regards to NSR shipping and energy exploration of the AZRF, but China is keen to increase its stake in the Arctic. China has collaborated with a number of other littoral Arctic states and recently saw its first nuclear icebreaker Xuelong 2 set off for the High North on a research expedition. The Chinese Arctic Strategy labelled China a ‘Near Arctic state’ with rights to scientific research, resource exploration and fishing in the region, and it is clear that being a polar power is a status China wishes to attain. If there is one potential fissure point in Sino-Russian relations in the Arctic it is likely to develop from this ambition, and it will be interesting to see how Moscow reacts should China continue to involve itself further in Arctic affairs.

Image: the Russian nuclear-powered icebreaker Yamal (Source: Tuomas Romu via CC BY-SA 3.0)