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Friday, May 17, 2024

How Russia-Ukraine conflict helps China’s Polar Silk Road

According to Ali Haider Saleem, the geoeconomic fallout of Russia’s advancement in Ukraine turned out to be beneficial for China’s economic expansion strategy. Western sanctions force Russia to look for further assistance from China, giving China an opportunity to push forward the Polar Silk Road.

The Russian annexation of Ukraine in 2014 brought Russia closer to China as it was hit hard by economic sanctions by the West. Prior to the Crimean crisis, Russia did not have much urgency to enhance its economic cooperation with China but the Kremlin realized that it has to work with Beijing for the sake of its future economic and technological needs.

The geoeconomic fallout of Russia’s advancement in its neighboring country turned out to be beneficial for China’s economic expansion strategy. In September 2013, shortly after taking charge, President Xi Jinping announced his One Belt, One Road Initiative (now referred to as the Belt and Road Initiative) through which China would develop routes to new markets and resources while increasing its investments in partner countries.

This plan did not go well with many Western countries and their leaders urged other countries to shun Chinese investment proposals. For many countries even in the West, however, China’s alternative development and cooperation model sounded quite appealing and they opened their doors to the rising superpower.

Read more: What are the challenges for China in the execution of BRI?

As an ever-expanding economy, China has been on the constant lookout for international markets and resources since its opening up in the late 1970s. The majority of China’s imports and exports pass through the hotly contested South China Sea region where any potential escalation can severely impact its economy. In order to curtail this risk, China has been exploring alternate routes to bypass the region. Unsurprisingly, the BRI includes two major projects to serve this purpose namely the Gwadar port in Southwest Pakistan and the Polar Silk Road through the Arctic Region.

China as a ‘Near Arctic State’

For many years prior to the BRI, China had been exploring opportunities to build its presence in the region and gain access for its shipments once the ice further melts due to climate change. A few months before President Xi announced the BRI, China signed a Free Trade Agreement with Iceland making the Arctic country the first in Europe to have such an arrangement with Beijing.

This was followed by China earning the Observer status at the Arctic Council which is the leading intergovernmental forum for the region. This development came 6 years after China first expressed its desire to join the organization. In 2015, Chinese Foreign Minister Wang Yi, while addressing the 3rd Arctic Circle Meeting labeled China as a ‘Near Arctic State’ and argued for China’s legitimate role in the region.

Initially, Russia had objections over China’s entry into the forum as it sought to exert its dominance in the region. Moscow had always been reluctant over the inclusion of non-arctic states in the council and having a major power like China on the table seemed a potential threat to its interests but the deteriorating economic relations between Russia and the West would turn things around for Russia-China cooperation in the arctic as Chinese technology and investment became more critical for Russia. On the other hand, President Obama’s pivot to Asia to curtail China incentivized Beijing to deepen its cooperation with Russia.

Russia has majorly relied on external financial assistance to develop LNG projects in the Arctic Circle. In 2013, China National Petroleum Corporation (CNPC) purchased 20% stake in the Yamal LNG project and also agreed to purchase 3 million tons of LNG annually. In December 2017, Phase I of the project became operational. President Putin remarked that “this project is of great significance, for it can help strengthen our economic cooperation with countries in the Asia Pacific region, particularly the People’s Republic of China, one of our most important partners in the region.”

Read more: Understanding the political relevance of CPEC

Two years later, CNPC also invested heavily in another LNG plant in Russia namely the Arctic LNG 2. The Company proclaims that it is working with its Russian counterparts under the concept of “mutually beneficial and win-win cooperation for common development”.

Ukrainian crisis: China’s opportunity?

Although other European countries also have significant stakes in Russian energy projects, the severity of the economic war unleashed against President Putin this time around would very likely drive European companies out and leave Russia to look for further assistance from China. In return, China would be able to make further inroads in the Arctic region and push forward the Polar Silk Road.

In February, President Putin travelled to China for the opening ceremony of the 2022 Winter Olympics whereas many Western leaders boycotted it. The Joint Statement of the Russian Federation and the People’s Republic of China on the International Relations Entering a New Era and the Global Sustainable Development stated: “friendship between the two States has no limits, there are no ‘forbidden’ areas of cooperation, strengthening of bilateral strategic cooperation is neither aimed against third countries nor affected by the changing international environment and circumstantial changes in third countries.”

With the desire to maintain close ties with Russia, Beijing’s stance on Russia’s war with Ukraine has been in much contrast with the West. A famous Chinese proverb says, “Crisis is an opportunity riding a dangerous wind”. Beijing might be looking at the Ukrainian crisis in very much the same way.

Ali Haider Saleem has worked with the Institute of Strategic Studies Islamabad (ISSI) and National Defense University (NDU). His research interests lie in sustainable development, regional integration, and security cooperation. He has studied public policy at Queen Mary University of London and economics at NUST, Islamabad. The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.