Report: China's Investments in the Arctic are Exaggerated

China’s growing presence in the Arctic has been a source of concern in western policy circles, with some viewing it as a potential geopolitical risk. Primarily, the Chinese ambition to become a major polar power has attracted scrutiny from the Arctic States (excluding Russia), all of whom are NATO members. The mainstream narrative has been that Chinese investments in the Arctic are dual-use in nature, serving both commercial and military purposes.

However, a recent analysis by the Harvard’s Belfer Center reveals that Chinese interests in the Arctic are highly exaggerated. According to some estimates, Chinese investments in the Arctic are worth about $90 billion, and the study claims that the figure could be inflated. In examining the estimate, Belfer researchers observed that analysts often include unsuccessful and proposed projects that have not been implemented.

“China’s actual footprint in the Arctic is far more limited than many believe. There’s a major gap between what’s discussed publicly and what’s actually happening on the ground,” said the study co-author P. Whitney Lackenbauer, a Professor at Trent University.

A common misrepresentation of China’s investments in the Arctic, is its economic partnership with Russia in the region. Although Western sanctions have led to stronger trade ties between China and Russia, the scale of their cooperation in the Arctic is overestimated, with some key projects failing to pan out.

This is most evident on the Northern Sea Route (NSR), where China has recalibrated its investments due to the impact of Western sanctions since the start of the invasion of Ukraine. One of the projects that took a hard hit is the Belkomur railway, often discussed as an example of Chinese-Russian partnership in the Arctic. The project proposes to link the Russian Urals with the Arctic port of Arkhangelsk, including the proposed Indiga seaport. However, limited financing has stalled the project.

Another unsuccessful project that China had agreed to pursue with Russia is in exploration for oil in the Barents and Pechora Seas. The involved Chinese company, CNPC, later pulled out, citing too many risks. Similar challenges have also been observed in Russian energy projects, including the Arctic LNG 2 project. With the West escalating economic sanctions against Russia, Chinese companies have significantly reduced their stake in the Arctic energy projects.

Last year, the Chinese energy technology firm Wison announced that it is ceasing all cooperation with Russia. The company went ahead to sell off its Zhoushan Yard, which early this year was sanctioned by the U.S for continued delivery of LNG technology to the Arctic LNG 2 project.

Nevertheless, Russia by far retains the largest amount of Chinese Arctic investments of all the Arctic states. But as the study found, the economic value and strategic value of these investments may not always be the same. Again, Chinese companies may express interest and willingness to make an economic investment, but this does not always translate to implementing the project.