New Polar Silk Roads Discussed At The Arctic Circle Assembly
The Arctic Circle Assembly has discussed the development of the new Polar routes with China and Russia seen as major players
The annual Arctic Circle Assembly, has just concluded in Iceland’s capital Reykjavik, with China, Russia and other Arctic Circle member states attending. This year’s event was notable for extensive discussions about the Polar Silk Road.
The Polar Silk Road refers to Arctic shipping routes connecting three major economic centers – North America, East Asia, and Western Europe – through the Arctic Circle. As melting sea ice in the Arctic is making it possible for the region to open to navigation, it is creating significantly shortened shipping lanes, such as the Northern Sea Passage.
Participants at the assembly noted that opening the Arctic route will promote the overall growth of the economy in the circumpolar North and bring about major changes in global trade and shipping patterns.
As an important stakeholder in the Arctic, China released its first white paper on Arctic policy in 2018, to “jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative.” That was followed by the first delivery of Arctic sourced LNG to China in July that year.
The Vladimir Rusanov, an icebreaking LNG carrier, delivers the first Yamal LNG via Northern Sea Route docking at Rudong port in Jiangsu Province, China, July 19, 2018. Note the vessel is registered in Hong Kong.
According to the white paper, the initiative brings opportunities for concerned parties to jointly build a Polar Silk Road and facilitates connectivity and sustainable economic and social development of the Arctic.
Arctic Circle Chairman Olafur Ragnar Grimsson said at the assembly that China and the Arctic have close links, and China has participated in Arctic-related dialogue and cooperation in a constructive and pragmatic manner.
“So far, China has brought primary science and diplomatic policy into the Arctic dialogue,” Grimsson said. “We have seen very important projects between Russia and China, and the gas pipeline from the Siberian part of Russia all the way down to Shanghai being an illustration of new infrastructure project through the north.”
China and Russia have cooperated effectively on liquefied natural gas (LNG) projects, for which global demand has rapidly increased.
The Yamal LNG project, located on Russia’s Yamal Peninsula inside the Arctic Circle, is the first Polar Silk Road cooperation project between the two countries and the largest LNG project in the world. It was put into operation in 2017, with the first LNG shipment delivered to China in July 2018. The Power of Siberia second pipeline is due to come onstream in mid 2022 and will alleviate China’s current power shortages.
In August 2021, China Communications Construction Company won the contract to construct an LNG terminal in the Kamchatka Peninsula, Russia, which will further extend Russia’s LNG shipments to Asia.
The commercialization of the Arctic is gathering steam, with the Russian city of Murmansk, itself the new free trade capital of the Russian Arctic, now offering University courses in Arctic logistics and economics.
Much of the initial Polar Silk Road will concentrate on the Northern Sea Passage, as this reduces the time and cost of shipping goods between Europe and Asia by as much as 35%. New rail, port and airport upgrades are being undertaken by Russia, often with Chinese and Indian investment to secure the safety and logistics of supply chains across the region.
Russia declared the Russian Arctic a complete Free Trade Zone in 2020 and has been incentivizing businesses and individuals to settle the region.
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Silk Road Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Asia, and assists foreign investors into the region. For strategic advisory and business intelligence issues please contact the firm at silkroad@dezshira.com or visit www.dezshira.com
