Chinese Policy in the Arctic: Canada
Canada and China have long-standing bilateral relations, going back to 1970. Although generally productive, the relationship has evolved to one of greater complexity in recent years. Things turned icy between the two in 2018, when Huawei CFO was arrested in Canada at the request of the US government. China retaliated by arresting a Canadian diplomat. Nevertheless, to China, Canada seeks to provide a host of opportunities - an extension of their Polar Silk Road, a source of vast natural resources and, in the case of seasonal defrosting, a new maritime space. Canada will, and does, benefit positively from economic relations - but does this come at a risk, and a potential erosion of their sovereignty?
Image: The leaders of Canada and China
Canada has a land area of an approximate 9.98 million square kilometres, ranking the second largest country in the world by land area. The Northwest Territories, Nunavut, Yukon all fall under Canada’s remit. With 38 million inhabitants, the country is sparsely populated. Canada is also home to indigenous peoples - the Athabaskan, Inuit and Gwich’in. Residing in the Northern territories, these indigenous peoples are represented in the Arctic Council as permanent participants, via the Arctic Athabaskan Council, Inuit Circumpolar Council and Gwich’in Council International. Investment into Northern Canada has been low, and this has been a deep source of tension between the government and the indigenous peoples - Rylund Johnson, a Canadian Politician, acknowledges that ‘Canada is not willing to give indigenous people in the north enough money to survive’. Thus, Canada’s capacity for development in the Arctic has largely been ignored - a gap in the market that China saw and has since attempted to fill.
For China, Canada simply fits into the larger project of the Polar Silk Road, an extension of the Belt and Road Initiative (BRI). In 2018, China released its Arctic Policy - the strategy focuses on scientific research, environmental protection, economic development and strengthening cooperation. This came five years after becoming an observer state in the Arctic Council. China believes that climate change will have a ‘direct impact’ on their own geopolitical and economic status. This claim is likely founded in the attempt to ‘diversify the geographical source of its imports to mitigate the risks associated with supply disruption’. The possibility of new shipping lanes also seeks to reduce the cost of Chinese exports - by travelling through the Northeast passage, China can save 300 tonnes in fuel. China’s interest in the Arctic is also spurred by their grand strategy - Yin Zhuo, a Chinese admiral, exclaimed that ‘China must play an indispensable role in Arctic exploration as we have one fifth of the world’s population’. While the Canadian Government has realised the strategic opportunity their land and resources present to China, Chinese investment remains necessary and crucial to their own Arctic development, and therefore bilateral relations, while not always positive, must be necessary.
China, Canada, and the appetite for natural resources
Rich in resources, particularly fish, oil, gas, timber and rare earths, Canada understands the pivotal role it plays in global markets, and the potential it’s Arctic Region harbours.
China has made several hawkish attempts to acquire mines and land in Northern Canada. In 2011, MMG Limited expressed interest in building roads to remote areas of the Arctic, in order to access highly sought after mineral reserves. More recently, Chinese company Sinomine Resource Group Co. bought the Tanco Mine in Manitoba, and Zijin Mining bought Canada’s Neo Lithium. China’s acquisitions fit into the greater fear of being ‘left behind’ in Arctic discourse - by acquiring such resources, China is buying a ‘stake’ in the right to have a say in Arctic affairs.
According to the research carried out, ‘China’s Arctic Ambitions and what they mean for Canada’, China has developed a ‘Wait and See’ energy policy in the Canadian Arctic. Despite this, there has been significant interest and investment in Canada’s oil and gas industry, focusing primarily on Alberta’s oil sands. According to the Canada China Business Council, Chinese companies have invested over $50 billion in Canada’s oil and gas industry since 2010. Adding to their growing portfolio, in 2012, China National Offshore Oil Corporation (CNOOC) purchased Nexen (a Canadian oil sands company) for $15.1 billion and PetroChina purchased a 20% stake in a liquified natural gas (LNG) terminal, and later in 2016, purchase a 65% stake in the Coastal GasLink pipeline, which was being built to transport natural gas.
As China seeks to invest more money in Canada, it is met with widespread scepticism. There are conflicts in Canada’s political and economic agenda and Canadians are questioning whether or not the economic benefits of Chinese investment threaten their own energy security and policy direction. However, as Chinese investment has increased, so has the idea that the Sino-Canadian relationship can be positive - 49% see the importance of China as more of an opportunity than threat.
A common denominator, and source of positive bilateral relations between China and Canada, is science and research. There has been an emphasis on climate change and protecting the environment, as these both fit into the core interests and Arctic ambitions. The two most recent collaborative projects include the building of the research stations in 2017, and 2019. The first is located on Ward Hunt Island, and used to study the impact of climate change on the Arctic ecosystem. The second one is used for atmospheric and oceanic research, and is located in Cambridge Bay.
China explains that their interest and investment into the Arctic stems from the direct threat that climate change poses to their coastline - Dr Huigen Yang, director of the Polar Research Institute of China at Shanghai, claims that ‘if Arctic sheets melt, the consequent sea level rise would affect China’s coastline and most populated regions such as Shanghai, Guangzhou and Tianjin’. This direct threat gives China a legitimate interest in observation, as well as other states such as Singapore and Japan that joined the Arctic Council at the same time, but are less proactive.
According to Statistics Canada, in 2020, Canada imported $1.1 billion worth of fish and seafood products from China, making China the third-largest source of imported fish and seafood products in Canada. This mutually beneficial relationship has often been tainted by fishing activities by Chinese vessels in Canadian waters - in 2019, a vessel was found to be fishing for squid. Despite this issue, China and Canada do indeed seem committed to positive relations, especially when it comes to sustainability, signing documents in 2016 promoting understanding and collaboration. Aquaculture is another area which China is significantly invested in - in 2019, China-owned companies controlled approximately 16% of Canada’s aquaculture production, with investments both in shellfish and salmon farming.
What is the impact on Arctic economic development?
Canada’s Arctic reserves have been largely neglected. Canada’s legal position that the Northwest passage constitutes Canadian territory is not universally accepted - Wright suggests that ‘some Chinese scholars are examining Canada’s historical claims of sovereignty in the Arctic in general, particularly the Northwest passage’. Increasing Chinese activity in the Canadian Arctic region, while currently amicable, can quickly turn sour. The presence of China in the region will only seek to expand, and when the Northwest passage becomes in frequent use, China’s current investments and bases will put strains on Canada. China is Canada’s second largest trade partner - as of 2022, that value ranks in at US$22.02 billion - thus rendering China indispensable to Canada’s economic growth and stability objectives. Therefore, if Canada seeks to ‘decouple’ from China, it will come at a great cost.
Other geopolitical issues that are spilling over into Sino-Canadian Arctic relations
US-Canadian relations have a significant impact on Sino-Canadian Arctic Relations, and this has been observed increasingly in recent years. As Canada’s largest trading partner, the US exerts power over Canada through a deeply integrated economic relationship. A recent increase in tensions between the US and China, has led to policies fast-tracking an economic and technological decoupling between the two, which will have implications for Canada. This has already been seen, when the US asked Canada to arrest Huawei CFO in 2018. China retaliated quickly and aggressively, and within the hour two Canadian prisoners in China had their sentences increased from 15 years to death. The current frosty nature of US-China relations only means that their stance will become more aggressive.
The disputes in the South China Sea are a prominent geopolitical issue, and one which many China Watchers have sought to monitor China’s maritime and military behaviour through. China’s claims to the South China Sea are contentious - and thus, China is unlikely to stir trouble closer to US and Canadian shores by refraining from challenging Canada’s historical and maritime territorial claims. However, if the US and Canada were to take action against China’s position in the South China Sea, it is fathomable that we could see a retaliation from China in a similar form; more specifically, by challenging territorial claims. China’s deliberate ambiguity provides it breathing space, but also allows for quick action should international circumstances change.
Implications of Chinese Influence in the region, and in the Arctic Council
Debates surrounding Arctic Governance are becoming more wide-spread, as countries recognise both the damage - and opportunity - that climate change can have on their own security and economic initiatives. China has been ‘ahead of the curve’ as a non-Arctic state keen to secure its own resources and relationships in the region. However, it is likely that we could see a ‘securitization’ of the Arctic, with other actors becoming increasingly focused on defence and security. The protection of the environment and sustainable energy has become a core focus of Canada, and several other Arctic states. While China suggests that it is equally committed to their sustainability goals, it does not align with their need and desire for resource extraction, as the world's largest importer of raw materials. Increasing movement and interference in the region will also cause pollution, and may bring harm to indigenous peoples.
While China is increasingly seen as a ‘threat’ to Canada’s resources and Northern territories by Canadian media, with some Chinese academics speaking about the Arctic region as a possible second Middle East, it is unlikely to pose a short to mid-term significant disruption and challenges. However, this could shift if Arctic states become increasingly independent of Chinese investment. China remains only an observer to the Arctic Council - and other states joining this rank will increase as the Arctic region becomes seasonally ice-free. Nevertheless, China seems committed and relentless in having a voice in Arctic affairs - Evans observes that ‘Chinese views, interests and priorities will be increasingly visible and influential; Canada and the West are dealing with a great power with global weight’.