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The Asian Square Dance, Part IX: Mini Scenarios

Michael Akerib

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“I predict that it is in Asia where the fate of the future will be decided.”-Tsar Alexander III

Needless to say, forecasts are extremely difficult to make in international relations, and all the more so when so many factors are in play. The author does not have any special information that he could use to forecast the future. The different miniscenarios are very wide and therefore any of these could reasonably, or unreasonably, be expected to occur.

Mini-Scenario I: Integration or growing together in a Sino-centric world

“… economic integration is the path to riches and peace.” E Prescott

China uses its massive wealth to invest in other countries generating wealth and peaceful sustainable development in a Sino-centric world. This will be done through the One Belt, One Road initiative that groups two projects, the Silk Road Economic Belt and the 21st Century Maritime Silk Road which aims at integration, on a number of levels, a large number of countries from Asia to Europe. These projects replace the International Socialization initiative of President Hu.

Central Asia will be the first beneficiary of the first project and could easily be integrated as a supplier of energy and food.

Europe has largely welcomed China’s financial presence – it now rates as the fifth biggest investor with 2014 FDIs of $18 billion. China has signed an Agriculture Cooperation Plan with the European Union. China is also interested in the Ukraine as a food supplier. Russia would welcome investments in the Pacific where China could produce food and timber to fill its large requirements.

The Silk Road initiative is backed by a $40 billion fund and the creation of the Asian Infrastructure Investment Bank (AIIB) of which even the UK has become a founding member, soon followed by France, Germany and Italy. This could alleviate the negative perceptions the US has of the bank.

These two initiatives are very wide and encompass financial cooperation, increased people-to-people contacts, infrastructure building, investment facilitation, opening of economic corridors and trade facilitation.

China’s actions go as far as Latin America where investments in Ecuador and Venezuela cover the entire energy production process. Africa has also been a priority zone for Chinese investments with a priority for infrastructure. The possibility of transferring labor intensive industries to the black continent has also been suggested.

Nevertheless, the US remains the first destination of China’s overseas investments. Chinese companies are buying majority shareholdings in US companies cheaply as the American economy has been underperforming significantly. This has also led the US to considerably reduce its defense spending.

For the project to be fully successful, however, China abandons its bullying tactics in the South China Sea, its aggressive stance towards Japan, the expansion of its naval power in the Indian Ocean and its rhetoric about reconquering Taiwan. Territorial disputes with India are settled. Historical issues leading to tensions with Japan and the negotiation of an agreement regarding the disputed islands should also come about.

It changes its historical narrative to reduce anti-Japanese feelings and above all to increase the GDP per capita of its population.

It is also more cooperative with its ethnic minorities to avoid confrontation and gradually slides towards a fully democratic system.

It should reduce its military spending that make it appear as an aggressive regional power looking to become a hegemon and invest time and money to project a friendlier image to the surrounding countries.

A satisfactory model is the relations between China and South Korea. This has been achieved through frequent meetings and discussions at various governmental levels.

China and Japan reach an agreement on the Senkaku Islands, followed by wider agreements covering trade and investments, and Japan becomes one of China’s closest allies. A number of events related to the US personnel on the military bases in Japan, leads to a downgrading of the relationship between Japan and the US and the latter is asked to reduce the number of military personnel in the country. Effectively the US presence in the China Sea becomes irrelevant. Taiwan can no longer be effectively protected and a referendum approves the return of Taiwan in the fold of the People’s Republic of China.

Another important step in increasing China’s contribution to a peaceful development is the rise of the remimbi – which today is the fifth most used currency and the second most used in trade finance – as a global currency. It first needs to become convertible and then become a reserve currency and part of the IMF’s SDR basket.

MiniScenario 2: Chaos ahead: The collapse of the Chinese economy

The ageing population and the impact of decades of the one-child policy led to a major impact on labor availability. The country stops being considered as low labor-cost. The government may open the country to immigration from the neighboring countries, creating social tensions.

The anti-corruption drive amplifies and touches a large number of well-established senior members of the party that decide to band together. The president is overthrown. Revolts start in several rural areas where income inequality with city dwellers is large. Farmers and workers are reluctant to see corruption gain the upper hand. Social stability is threatened.

Large tracts of land are polluted and the rural labor force ages, agricultural production declines steeply leading to food shortages. Imports of foodstuffs lead to increased prices and a disruption of the grain market, exacerbated by a US-imposed reduction on exports to China. China decides it will no longer support North Korea and a flood of refugees arrives in the poor eastern provinces.

Water scarcity, already a problem, grows worse due to the present agricultural plans. A disaster is only a climatic-wrought drought away.

Pollution is affecting agricultural production and creating major health problems. Air pollution is major cities already led to episodes of civil unrest.

A bank collapse is a clear possibility as the amount of outstanding bad loans is considerable. This could lead the central bank to sell massive amounts of dollars, putting enormous pressure on the American currency.

The Uigur minority revolts in an attempt to secure independence.

Maoists entice the population to revolt and lead them into a civil war. This grinds globalization to a halt and creates a surge in inflation.

MiniScenario 3: The collapse of North Korea

North Korea’s dictator, Kim Jong-un is assassinated and rival army factions launch a civil war. Chaos ensues and large numbers cross into China. The Chinese army tries to secure the border, but facing total lack of success, invades North Korea. The South Korean army also receives marching orders to secure part of the North Korean territories and in particular the Weapons of Mass Destruction. The two armies clash. US ground forces and air support back the South Korean army.

Certain army units that had remained loyal to the Kim clan, led by Kim Jong-Un’s sister, detonate in front of Pohang, South Korea, a nuclear engine loaded on a ship. There follows a large number of deaths. Simultaneously a similar deflagration is carried out in a Japanese port with catastrophic mortality. The average Japanese is reminded of Hiroshima and Nagasaki. North Korean artillery bombs Seoul, including with chemical weapons. Sleeping North Korean operatives in South Korea proceed with assassinations of key figures.

South Korea, having previously obtained nuclear weapons, reciprocates with the use of these weapons destroying major North Korean infrastructure.

Japans’ Primer Minister orders Japanese troops to land on the western beaches of North Korea.      

The NATO allies of the US are expecting to be requested to provide support but no such request is forthcoming. The US wants to avoid having China drawn into the conflict. However, as the US, South Korean and Japanese troops make deep inroads into North Korea and the troops of that country put a stiff resistance, China calls urgent meetings of the Security Council which is simply emitting toothless resolutions. The Chinese military overtake North Korea and explode a nuclear bomb over Seoul.      

MiniScenario 4: Reviving old enmities

China lands a group of group of marines on the Senkaku islands. Japan may not back down on its own claim on the islands and answers to the Chinese provocation by an important landing of Japanese troops and what starts as small skirmishes rapidly escalate as both sides provide air cover to their troops. With obvious Chinese superiority due to proximity and numbers, Japan asks for military assistance from the US.

China disables a several important US satellites, causing disarray in communications among US troops. Chinese ballistic missiles rain on the US bases in Japan as a preemptive move and North Korea bombs Seoul with classic artillery and missiles.

Russian troops seize the opportunity of occupying several northern islands and Hokkaido.

Essentially, the Japanese economy is destroyed and the country suffers millions of dead civilians.

MiniScenario 5: Gas as mediator

For the US, Russia can be a potential player in the containment for China. Russia, while refusing this role, is reluctant to let China’s influence increase even more or to join China in limiting US’ role in Asia.

While tensions rise between China and Japan over the Senkaku islands, and several incidents take place with planes colliding, Russia’s increased penetration in the Ukraine have led to severe sanctions by the European Union and the US. An ever larger part of Russian gas is exported to China, Japan and Korea. A conflict would seriously impair Russia’s exports. Russia therefore successfully acts as a mediator and President Putin’s prestige is enhanced both domestically and internationally.

MiniScenario 6: China choking … or is it?

Several vessels carrying oil for China are hijacked by pirates in the Malacca Straits. In spite of denials by the US and Indian governments, China claims this is a plot against it. A vessel also destined to China explodes a few hundred miles outside the Hormuz Straits and claims are made by an as-yet-unknown Uighur liberation movement. A US frigate was sailing very close to the vessel at the time of the explosion. An oil tanker bound for China is intercepted by a US vessel, thoroughly searched and then allowed to proceed to its destination.

Central Asian and Russian supplies are able to replace the Middle East shortfall in exchange for further Chinese investments and an even greater economic integration.    

MiniScenario 7: Restless islands

The US closely monitors the synthetic islands built by China in the South China Sea and which are claimed to be Chinese territory. Small incidents degenerate and lead to China attempting to close air and naval space to the US military. The US sinks a Chinese naval unit and China reciprocates. Escalation leads to a major conflict. Escalation includes cyber warfare, space warfare and China is able to keep the US outside the South China Sea. Both powers refrain from using nuclear weapons and China is free to continue its regional domination.

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East Asia

How Trump’s Covid-19 Response Has Provided a Free Ride to Beijing

Jelvin Jose

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A timeframe of seven months has never been so critical in the history of modern human beings as of now. The COVID-19 outbreak, supposed to be from China’s Wuhan market by December last year, has engulfed  the socio-economic and political spheres of the entire world within this short run. The Beijing’s failure in early diagnosis and its later success, the breakdown of European health administration, Trump administration’s delinquency in fighting virus, U.S.-China blame game over virus mishandling, declaration of American withdrawal from W.H.O., and finally, China’s Health Silk Road could expedite reforms in the existing world order. Although having limited impact, these upshots are enough to fast-track the ongoing restructuring.

Unfolding Virus Spread

The world had never imagined such a grave global health catastrophe imputed to a debilitating economic recession is impending, when first Covid-19 recorded positive at China’s Wuhan in December 2019. According to the BBC, the total cases in China had surged up to 1200 by January end. Multiple expert analyses indicating the Chinese economic slowdown and the ramifications this could have on the much anticipated BRI projects were available in a while. PRC’s National Bureau of Statistics in March projected that around five million people job loss in the initial two months of 2020.

The Chinese Centre for Disease Control and Prevention, launched in 2004, in the wake of the SARS outbreak, was broadly charged for its inefficiency in early virus detection. The international criticism mounted over Beijing for punishing Chinese doctor Li Wenilang who posted an alert on the new virus in his medical school alumni group. Later, his demise, infected by the same, gave rise to a damning indictment of the Chinese governance model for its infringement of freedom of expression and shortfall in transparency. On 24th January, the first human to human transmission was corroborated by WHO in a Vietnamese national who has had no foreign travel. In the Aftermath of worrying spread, both in numbers and virus hit regions, on 31st January, the World Health Organization (WHO) declared it as a global pandemic.

Mounting Criticism

The international criticism raged up against Beijing over its negligence in reporting the virus outburst in its beginning itself. The situation in countries like United States, Italy, Spain, Germany, France, Iran, and the U.K. went aggravated by mid-March as the entire health systems crumbled following the crisis in many of these states. The World Trade Organization (W.T.O.) has prognosticated a drop of 13-32% in global commercial activities. The economic crunch and deepened political predicament triggered howls of outrage from these governments to probe into the origin of the infection and Beijing’s alleged mishandling of the disease.

Subsequently, Mr. Trump explicitly pronounced he would seek reimbursement from Beijing for its lapses. A German Newspaper published an invoice of 130 Billion Euros compensation for Berlinin return for the financial damages due to China’s Covid-19 response. The motion for an independent inquiry into the origin of the deadly virus gained the support of 122 nations incorporating the European Union, Russia, and India at the 73rd World Health Assembly. These events were a slap in the face of the world’s second-largest economy and rising superpower. Beijing’s international reputation got severely hampered. 

But, despite this, the situation evolved dramatically when many European powers with several other North and Latin American heavyweights began to groan under the swift spread of the virus. The PRC’s relative success in bringing the outbreak under control helped it to win-back its lost face for the missteps at the initial stage to some extent. Beijing responded quickly to this opportunity by revitalizing its ‘Health Silk Road’ when many nations have been reeling under the epidemic. As per the report by Xinhua news agency, over eighty countries all over the world have taken Beijing’s assistance to fight the pandemic. The recipient’s list encompasses a wide range of states from Nigeria in Africa, Serbia, Czech Republic, and Italy in Europe to Iran, and the Philippines in the Asian continent.

Albeit the border disputes, Beijing extended its helping hands to neighbor Philippines sending 2000 rapid test kits. Italy, one of the worst-hit nations, obtained three rounds of expert assistance and shipped consignment containing millions of Masks to the Czech Republic. Liberia got flown gloves and PPE (Personal Protection Equipment) kits, and Nigeria acquired the service from the Chinese medical team. Colombo was offered $500 million along with three batches of medical shipments to combat the virus. The Covid-19 related medical supply worth 432 million  euros was made available for Spain through commercial channels to address the shortfall. Serbia’s President was present at the airport to welcome the Chinese material assistance and unreservedly praised Beijing and the Chinese President Xi Jinping. The Czech minister applauded P.R.C. being the sole country capable of providing much needed medical devices in bulk quantities. The Italy and Serbia, desperate over the absence of support from the E.U., pitched into public criticism against the European solidarity.

Trump’s Covid-19 Response

The United States pandemic administration, both in terms of internal and external, has poured water to Beijing’s mill. First of all, the U.S. failure in keeping the virus at check has damaged its outlook as a global leader capable of taking the lead during the emergencies. The United States is currently one of the most severely affected nations since the coronavirus outburst was confirmed. The American response to the epidemic has generated a trust deficit over the credentials of American institutions. Beijing’s much higher degree of success in virus control and its active diplomatic outreach, compared to the United States has quietly enhanced its global stature or at least have substantiated its toehold in some pockets.

Contrary to the protagonist role played by White House while the 2014-15 Ebola outbreak in West Africa, Trump’s America with internal focus is stepping back from the frontlines of coronavirus battle.  The Coordination, leadership, and aid from the United States during this pandemic hardly meet international expectations. Rush Doshi serving as director of China Strategy initiative at Brookings, describes the Covid-19 outbreak being the first instance in decades without meaningful American leadership and with substantial Chinese presence

The United States hasn’t yet spent a third of the $1.59 billion pandemic assistance package approved by the U.S. Congress, three months before, aimed to deliver through U.S. Agency for International Development and the country’s state department to the nations in need. Apart from this, many actions by Trump administration are eroding the country’s global credibility and the leverage which it enjoys over the international institutions. Trump’s attempt to strike an exclusive deal with German biopharmaceutical firm CureVac, to secure priority for the U.S. in vaccine supply brought Berlin and White House to loggerheads. The US president on similar lines preferred to stay out of the jointly funded venture to develop an effective drug for Coronavirus convened by European Union in May. A group of nations that include Canada, Norway, Japan, and Australia pledged to raise around $ 8 billion for the proposed mission.

Donald Trump’s withdrawal plan from the World Health Organization (WHO), marks another instance of his policy formulations based on misconceptions. The United States has been the largest donor and contributor of WHO since its formations in 1948. Even in the latest funding cycle, Washington retains its top spot with $893 million (15%) in the list. Although Mr. Trump’s announcement is hard to meet the constitutional norms, the unilateral proclamation has harmed U.S.’s image as a responsible global leader that it pushed for many decades and has allotted more space to Beijing for expansion in a critical international body. The Beijing, cashing in on this opportunity, stepped in with an additional $30 million contribution besides the $20 million offered for the Covid-19 prevention. Even though the Chinese contribution remains far lower than the U.S., the President’s move has strengthened its position at the cost of the United States. 

President Trump, having been campaigned on to ‘make America great again’ never seems to realize the fundamental pillars of the U.S.’s leadership and the role of international institutions in this process.  Trump’s decisions like the recent withdrawal proposal from WHO and the exit from the Paris Climate Agreement are all boomerangs that undermine America’s position in the international arena. To counter Beijing’s expansionist ambitions, the White House needs to spring into action, reclaiming the political space which it has granted to Beijing. 

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Wolf warriors: A brand new force of Chinese diplomats

Abdul Rasool Syed

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China has made a tectonic shift to its decades old foreign policy. It has, under the caption of “Wolf Warrior diplomacy”, adopted a brand new modus operandi to deal with the foreign world which is hawkish, aggressive, and exceedingly offensive. It is diametrically opposed to almost all diplomatic niceties once pursued and fostered by Chinese political forefathers in their dealings with external world.

There was a time in China when the foreign ministry was deemed so spineless, constantly flattering foreign countries, that an anonymous critic sent some calcium tablets for the diplomats. A memo was attached telling them to “strengthen their bones,” a Chinese diplomatic source reveals. Not today. China’s hard line and highhanded “wolf warrior diplomacy” has captured the attention of observers both at home and abroad.

Repercussions of this paradigm shift in Chinese way of conducting its foreign affairs may not be as fruitful as expected by Bejing. However, it might pave the way for its antagonists to exploit the situation and thereby coalesce and collude to counter Chinese attempts, prejudicial to their respective interests, by forming an impregnable synergy.

“Wolf Warrior” is actually the title of a hugely-successful blockbuster series of patriotic action films in China, featuring Rambo-like protagonists who fight enemies at home and abroad to defend Chinese interests. The first film was released in 2015 and made more than $ 76 million (545 million yuan) at the box office.

It quickly spawned a sequel that became China’s highest money minting movie at the time when it was released in 2017. “Wolf Warrior 2″‘ was based around a squad of People’s Liberation Army soldiers sent into an African country to rescue Chinese civilians. The film’s tagline was, “Even though a thousand miles away, whoever offends China will be punished. At the end of the film, the red cover of a Chinese passport is displayed, accompanied by the message: Citizens of the PRC: When you encounter danger in a foreign land, do not give up! Please remember, at your back stands a strong motherland.

 As mentioned earlier, wolf warrior statecraft is an absolute antithesis of the type of diplomacy that China had been practicing for decades: that of keeping a low profile and working behind the scenes. This principle was enshrined in the 1980s by then-leader Deng Xiaoping, who said: “Hide your strength, bide your time, never take the lead.”

Nowadays, Bejing stands as the center of foreign criticism exclusively of xenophobic remarks due to corona virus pandemic, as countries—particularly the US- increasingly view it as soley  responsible for the spread of deadly pathogen. Moreover, China’s mass oppression of Uighurs, and suspicion of Huawei’s 5G infrastructure have also been prime sources of tension.

In this milieu of scathing stricture, the wolf warrior’s counterblasts are helping china a lot to assert its narrative abroad as well as rebut efforts made by its adversaries to weaken her stance on international forums. Recent events vividly suggest that Whenever any statement aimed at tarnishing the image of China comes, the wolf warriors quickly  resort to their social media handles( twitter, whatsapp, instagram)  and leave no stone unturned to hit it back by floating the counter arguments.

Two prominent proponents of wolf warrior diplomacy are Hua Chunying and Zhao Lijian, top spokesmen at China’s Foreign Ministry. In recent months, they have launched unfounded conspiracy theories and sneered at countries over their reactions to crises like the coronavirus pandemic and the Black Lives Matter movement.

In March, as tensions between the US and China continued to mount over the origins of COVID-19, Zhao tweeted a conspiracy theory. He said: “it might be US army who brought the epidemic to Wuhan.” (Twitter later put a fact check tag on that tweet). And as Black Lives Matter protests swept the US, Hua also ramped up her attack on American leadership.

In late May, Hua responded to the US State Department’s support for Hong Kong protesters by tweeting: “I can’t breathe” — an attempt to divert US criticism of China to crises on American soil.

And in June, shortly after President Donald Trump signed a bill to sanction China over its oppression of Uighur Muslims, Hua tweeted: “The US should enact an African American Human Rights Policy Act instead.”

However, Chinese Wolf warrior diplomacy is not restricted only to America other countries are also not immune to this malicious style of diplomacy. One such example was seen in April, as France’s coronavirus cases were skyrocketing, China’s embassy in Paris published an article alleging that nursing staff at French retirement homes had “abandoned their posts overnight, deserted collectively, leaving their pensioners to die of hunger and illness”. The claim was inflammatory and groundless. China latter, issued a rebuttal saying that it was based on a misunderstanding and deleted the post from the embassy’s site.

Additionally, An earlier wolf warrior move was witnessed in January 2019, when China’s ambassador to Canada  accused the country of  “White supremacy “ over its detention of Huawei CFO Meng Wanzhou, who was arrested over claims that she violated US sanctions on Iran.

Inter alia, this wolf Warrior diplomacy is, without iota of any doubt, is getting approval and patronage in Bejing.

Zhao’s history of attacking the US on social media — which once prompted former National Security Advisor Susan Rice to call him a ” racist disgrace” — earned him a rapid promotion from China’s deputy chief of mission in Pakistan to deputy director-general of the Chinese Foreign Ministry’s information arm in Beijing late last year.

Chinese President Xi Jinping even hand-wrote a memo to diplomats last year telling them to show more “fighting spirit,”  Reuters reported, citing sources familiar with the matter.

Moreover, Chinese foreign Ministry told Reuters in March. “We will not attack unless we are attacked, but if we are attacked, we will certainly counterattack.”

Wolf warrior diplomacy is also aimed at scoring political points and stoke patriotism among its own citizens — both those living at home and abroad. While commenting on Chinese wolf warrior diplomacy Allen Carlson, director of Cornell University’s China and Asia Pacific Studies program said: “China has more power on the world stage than at any point before in its modern history. Xi is now experimenting with how to make use of such expanded capabilities.”At the same time … he has also created expectations within China that the country is already well along the path to national rejuvenation.”

Moreover, Carlson said: the Communist Party is “appealing to nationalists within China, whose views of the world have been framed by decades of state emphasis on patriotism and nationalism, and, who have come to expect, even demand, that their country do more to stand up to perceived  insults.”

Here, the question arises whether the Chinese new diplomatic approach for reaching out to world is paying her dividends or not; apparently, the concomitant events suggest vice-versa.  This new ambassadorial strategy adopted by china is uniting China’s allies against it, rather than scaring them off.

In this regard, a recent report noted that the “Five Eyes” intelligence alliance – Australia, Canada, New Zealand, the UK and the US – are drawing even closer together in their own effort to block China. That report follows another, published in 2018 that noted that Germany, Japan and France were also being inducted into a loose coalition against China.

It also appears that other coalitions, albeit comprising most of the same countries, are working in other ways to balance China. In the wake of China’s ban on Australian barley, for example, Australia entered into an agreement with India to sell its barley there. Another outcome of the negotiations held between Prime Ministers Modi and Morrison was that both countries would provide greater access to each other’s military bases. That would eventually allow for greater interoperability between them and military exercises in the Indian and Pacific oceans. Since India and Australia individually have joint exercises with the US, it is a logical step for them to have joint exercises as well. That would appear to indicate, again, a greater integration of the Quad coalition members – Australia, India, Japan and the US.

The US is, simultaneously, ratcheting up the pressure against China, flying sorties over Taiwan, forcing a Taiwanese integrated circuit fabrication plant to terminate sales of computer chips to Huawei , etc. In addition, Jens Stoltenberg, the NATO Secretary-General, meanwhile has warned against China’s increasing footprint in and the threat that it poses to Europe. In  US itself, apart from the various tariffs that he imposed on goods manufactured in China, President Trump is now targeting the export of expertise to China. He has restricted the entry of Chinese graduate students in the sciences, technology, engineering and mathematics, if they are believed to have any ties to the Chinese Communist Party, into the US. He has, furthermore, intensified investigations into American scientists and academics that are believed to assist Chinese research efforts.

 To cap it all, China’s aggressive diplomatic posture has, so far been a disaster for country’s international image. It should, therefore, revisit her foreign policy and espouse smart power tactics of diplomacy to win over friends and to keep away the foes…

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The implementation of the BRI project at sea: South Maritime and Arctic Silk Roads

Maria Smotrytska

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In 2013, China started to launch a global system of transport corridors that should connect China with the entire world – the countries of Central Asia, Europe, the Middle East, Africa, Latin America, and Oceania. Within the Framework of the Belt and Road initiative (BRI), it was planned to build roads and railways, open sea and air passages, lay pipelines and power lines. Thus, China decided to involve 4.4 billion people – more than half of the world’s current population – in its orbit of influence through the new geopolitical initiative.

Launching BRI land corridors, the PRC created an additional branches of the project – the “Maritime Silk Road of the XXI century” (MSR) and the “Polar (Arctic) Silk Road”. On March 29, 2014, in Nanyang city (Southeast Asia) was hosted a Symposium of East Asian States, dedicated to building the community of China and the ASEAN countries and implementing the regional “MSR project in the XXI century”, proposed by the Chinese President in October 2013 at the Council of people’s representatives of Indonesia and during the 16th China – ASEAN summitin Brunei.

The initiative to create alternative routes was not proposed by chance, since they all have a clear focus:the main land BRI corridors (“New Eurasian Land Bridge”;“China – Mongolia – Russia Corridor”;“China – Central Asia – West Asia Corridor”;“China – Indochina Peninsula Corridor”;“China – Pakistan Corridor”;“Bangladesh – China – India – Myanmar Corridor” (see Figure 1)) are generally aimed at Central and Western Asia, Central, Eastern and Western Europe, and the “Maritime Silk Road” – to South – East Asia and Africa, “Polar Silk Road”potentially covers northern part of the BRI, connecting China with Europe.Thus, China’s “One Belt, One Road” strategy is aimed to improve China’s diplomacy with countries all across the world.BRI blueprint encompasses over 60 countries, which account for 60% of the world’s population and a collective GDP equivalent to 33% of the world’s wealth. It focuses on connectivity and partnerships with neighbouring countries and builds upon existing multilateral mechanisms.

The “MSR”, as well as the land corridors, were planned along an ancient trade route: from Guangzhou in China along the coasts of Vietnam, Thailand, Malaysia, Singapore and Indonesia, past to the Red sea (with branchesto the Persian Gulf and Africa), through the Suez canal in the Mediterranean. Before the beginning of the Ukrainian crisis, the Chinese considered Crimea as a separate entry point to Europe – a deep-water port was planned to be built in the Western part of the Peninsula. In addition, Russia and China discussed another route – the Arctic one: it was mentioned about the possible inclusion of the Northern sea route development project (NSR) into the BRI strategy.

fig.1

China currently does not have access to the Arctic ocean. Thus, with no physical access to the Arctic, Chinese strategists have long been concerned about the country’s chances of becoming an Arctic power.

In June 2017, the state Committee for development and reform and the State Oceanographic administration of China named the Arctic as one of the directions of the “One belt, One road” project. The “Concept of cooperation at sea within the framework of the BRI”refers to the need to involve Chinese companies in the commercial use of Arctic transport routes.

Soon after Russia has signed a Memorandum of understanding with the Chinese Oceanographic authority, aimed at expanding international cooperation in the field of Arctic and Antarctic researches. The same documents were signed with China by Norway, the United States, Germany, Chile and Argentina.

There are three potential routes across the Arctic: the Northeast passage around Eurasia, the Northwest passage around North America and the Central Arctic ocean route. For China, they offer a shorter and cheaper alternative to current shipping routes, which reach major markets in Europe via the Indian ocean and the Suez canal.

In practice, Yong Sheng, owned by COSCO Shipping, was the first Chinese cargo ship to master the Northern sea route (Northeast passage) in 2013. After a trial voyage, the Chinese carrier COSCO showed interest in further using this project. However, analysts expressed doubts about its profitability. The main problems were that when traveling along the Northern sea route, ships of lower cargo capacity have to be used, the route is seasonal, and the travel conditions are extreme.

In the summer of 2017, another six Chinese vessels took this route. In September, the Chinese research vessel Xue Long made its first Northwest passage voyage along the Northern coast of Canada, reducing the travel time from New – York to Shanghai by seven days compared to the route through the Panama canal.

It should be borne in mind that China’s position is quite convenient in geopolitical terms : it is one of the observer States of the Arctic Council. In total, there are eight countries in the region (Canada, the United States, Denmark, which has access to the Arctic via Greenland, Norway, Russia, Iceland, Sweden and Finland) and 13 other countries that do not have access to the Arctic, but whose using the function of monitoring the relations of the countries in the region. Thus, China is actively using its status with the development of the Arctic programme.

fig.2

It should be empathized that Beijing’s position on the development of the Arctic route supports the view that both routes contain potentially very profitable transit points that can shorten the path between Asia and Europe, not to mention between Asia and parts of North America.

In January 2018, the state Council of China published the first “White paper on China’s Arctic policy”, which states that Beijing is interested party in Arctic Affairs. It was noted that China intends to create,jointly with other States, the sea trade routes in the Arctic region within the framework of the “Polar Silk Road initiative”. Thus, it was decided that the Polar Silk Road will be part of the broader Chinese “Belt and Road” program, creating sea trade routes and strengthening trade relations with different countries in the region.

Due to the fact that other Trans – Eurasian sea transportations may be extremely unstable in the long term, especially in terms of security, the Chinese authorities have shown interest in the Northern, alternative sea route.

Analyzing the logistics of the existing route through the Suez canal and the Mediterranean sea, even taking into account the planned expansion, it is easy to see that it is already overloaded. Secondly, the middle East is still azone of instabilityand its infrastructure requires large financial investments.

Another potential route, through Central America – the Panama or Nicaraguan canal – is also not entirely rational in terms of reconstruction and big amount of investments. It makes sense to use it for Asian – American trade, which is also planned to be improved in terms of logistics and infrastructure.

Based on this, it can be noted that the two remaining Polar routes have begun to arouse real strategic and long-term interest on the Chinese side(see Figure 2).

The first of these routes is the American Northwest corridor (Northwest passage), first passed by water byRoald Amundsenat the beginning of the last century, but it also retains certain problems. First of all – with Canada, which believes that the Northwest Passage passes through its territorial (internal) waters. The second problem is the US position: the country’s authorities do not want to have a trade highway under the control of such strategic competitor as China.

The second alternative is the Northern sea route, which runs North of the Russian Federation (see Figure 3). Due to China’s increasing interest in developing the logistics of the Northern route, the Russian government has set a high bar for a large-scale Arctic project running along the coast of the new sea route, which is becoming more accessible to navigation as a result of climate warming and ice melting. The head of state outlined a large-scale task: to reach the level of 80 million tons per year by 2025.

In addition to the development of the construction of a new port in Russia’s Arkhangelsk (the capital of the region on the White sea is one of cities in the Far North), construction of a new port and a railway line has begun, which should connect with one of the branches of the Chinese BRI.

fig.3

Thus, it can be noted that today the Arctic opens up new prospects for trade between Europe and Asia. The North, which has huge reserves of hydrocarbons, is of interest not only to Western countries, but also to China. The use of sea routes and natural resources in the Arctic can have a huge impact on the energy strategy and economic development of China, which is one of the world’s leaders in foreign trade and is the largest consumer of energy in the world. For example, the Northern sea route will allow China to deliver cargo to Europe by sea faster than the 48 days (that it takes on average) to travel from the Northern ports of China to Rotterdam via the Suez canal. Last year, the Russian Arcticgas tanker “Christophe de Margerie” reached South Koreafrom Norway without an icebreaker escort, and the journey took only 15 days.

Thus, the Northern sea route will allow China to deliver cargo to Europe faster by sea, reduce the route by 20 – 30%, and save on fuel and human resources. Given that 90% of Chinese goods are delivered by sea, the development of the Arctic silk road promises Beijing serious savings and profit growth .

In addition to gaining possible economic advantages, China hopes to increase its energy securitythrough Arctic trade routes. Currently, most of the fuel imported by the Asian giant crosses the Strait of Malacca, which connects the Indian ocean with the South China sea.

Thus, it can be traced that China is interested in Arctics Arctic natural resources. This region contains a fifth of the Earth’s natural resources. However, even if this is the case, China’s interest in Arctic underground storerooms is rather long-term and the calculation is made for the remote future. The problem is that China is still dependent on foreign technologies for offshore drilling, even in the warm seas surrounding it. Technologies for extracting natural resources in Arctic waters are much more complex, and China does not have enough sufficient experience in this area.

Also, analysing the logistics of BRI routes, it can be seen why China is getting more interested in developing alternative North corridors :

The transport routes of the “Silk Road Economic Belt” project cross the Eurasian continent in the middle, the route of the “MSR of the XXI century” project runs along the South and there is no Northern water route yet. The main value of the Arctic sea route is that the regions through which it passes are relatively calm and stable. It should be noted that the “Economic Belt” crosses many countries with high conflict and crisis potential (Central Asia, Middle East, East Europe). The “MSR of the XXI century” runs through the South China sea, South – East Asia, and the Indian ocean  – the region which has similar problems. Also in terms of infrastructure development these roads may cause certain risks, connected with big number of participants, different level of infrastructure capacities of countries and different legislative obstacles. Thus, the Northern route may act as a more stable alternative that it can become a serious incentive that will contribute to the Eurasian economic integration.

The economic component of Arctic direction of the BRI is no less important. The Chinese expert reminded that the routes through The Northwest passage and the Northern sea route would save Chinese companies time and money on their way to Western countries. Taking into account the melting of ice in the Arctic ocean, the Northern sea route can become an alternative to the main transcontinental route that runs through the southern seas of Eurasia and further to Africa via Suez canal. Thus, the passage of a cargo ship from Shanghai to Hamburg along the North sea route is 2.8 thousand miles shorter than the route through Suez canal.

The modern logistics projects such as “Arctic Silk road” and“MSR of the XXI century” connect China with other countries of South – East Asia, the Middle East, East Africa and some EU countries through sea trade routes, such as such in the Red sea. Thus, it can seen that three new transport corridors will connect Europe with the Russian Federation, Central Asia, China, India, Pakistan, Iran, Korea, Japan, Vietnam and Thailand. Analysing “MSR” logistics it becomes clear that the project is designed to connect three continents into a single transport system: Europe, Asia and Africa. It is no secret that many of these countries have a lot of political differences, but the benefits that the implementation of this large-scale project promises can make them forget about old claims to each other.

One of the long-term prospects for the development of the BRI project is the creation of free trade zones with countries participating in the initiative. The result of such multi-countries collaboration may be the emergence of a large-scale free trade zone from the North – Western provinces of China, Central Asia, to Europe and Africa. About three billion people live on the project’s path. In this case, we are talking about the “mega – market”, and, of course, about the “mega – potential”.

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