China | Russia eyes new Arctic shipping route for trade with China

Russia eyes new Arctic shipping route for trade with China

March 1, 2016 1:03 AM (UTC+8)

 

MOSCOW–The Arctic’s fast disappearing ice due to global warming may soon make it possible for cargo ships sailing from Far East to Europe to take the shortest route through the Northern Sea Route (NSR) during summer.

Yong Sheng was first Chinese vessel to pass through the NSR in the east Arctic
Yong Sheng was the first Chinese vessel to pass through the NSR in the east Arctic

China knew the significance of this and even sent a ship sailing on a historic journey along the route.

Now the Russian authorities want China to develop the maritime trade in the East Arctic even as Moscow’s earlier plans to create new Eurasian transit corridors remain stalled.

Russia’s deputy Prime Minister Dmitry Rogozin indicated plans to invite China to take part in joint development of NSR which is running along the Arctic coast within Russia’s Exclusive Economic Zone.

In recent decades, the Arctic summer ice cover has dropped by nearly half against a backdrop of global warming. The route is expected to be free of ice in summer in about two decades. But while the summer ice cover of the route is decreasing, safety of shipping remains threatened by icebergs.

Beijing has already indicated interest in the NSR. In September 2013, Young Sheng, the ship owned by COSCO Shipping, became the first Chinese vessel ever to pass through the NSR in the east Arctic.

It took Young Sheng 35 days to sail from Dalian to Rotterdam, while the route through the Suez Canal is about two weeks longer. Yong Sheng’s voyage, supported by Chinese authorities, came as the first move by the world’s top exporter to use the NSR to funnel exports to the European Union.

Russia’s interest to develop NSR is also caused by geopolitical considerations. On February 26, Rogozin made it clear that the NSR became even more important for Russia amid deteriorating relations with Turkey and possible problems with Black Sea-Mediterranean shipping routes.

Although Russia voiced preference of new trade routes to develop business ties with China, bilateral commerce was going down. In 2015, Russia’s trade with China dropped to $63.5 billion, or 28% down year-on-year, mainly due to adverse market conditions and declining energy prices.

In 2011, Moscow had pledged to increase the bilateral trade turnover up to $100 billion/year in 2015 and $200 billion/year in 2020. However, these pledges appeared to be detached from the current economic realities.

While the Russian government suggested China to develop the new trade route in the East Arctic, Moscow’s earlier plans to create new Eurasian transit corridors remained slow to materialize.

In February 2016, the authorities of Kazakhstan voiced concerns that Russia remained slow to develop its section of the Western Europe-Western China road system.

The Western Europe-Western China International Transit Corridor is due to connect China and Russia’s Baltic port St. Petersburg. The route is 8,445 kilometers. The Kazakh government aims to complete all its 2,787-kilometer section of the corridor by the end of 2016.

Although Kazakhstan and China move towards the completion of the project, the Russian authorities have remained slow to develop their 2,233-kilometer section of the new road system. Russia aims to finish the project by 2019-2020.

Furthermore, the existing Eurasian transit corridors became adversely affected by geopolitical complications. In January 2016, Ukraine’s exports to China and Central Asia were down by 60-80% year-on-year, mainly due to Moscow’s restrictions on Ukrainian transit through the Russian territory.

Not surprisingly, there were attempts to bypass Russia and create new Eurasian transit corridors. Last month, Ukraine dispatched a first test train from its Odessa region across Black Sea, Georgia, Azerbaijan, Caspian Sea and Kazakhstan to China.

In the meantime, Russia’s Trans-Siberian Railway also remained slow to become a major Eurasian transit route. In 2015, the railway’s overall volumes of transit freight were down, although China’s transit increased.

Therefore, Moscow’s pledges to develop new Eurasian transit corridors seemed to be declarations of intent, largely lacking economic substance. It remains to be seen whether Russia’s economic ‘Ostpolitik’ could entail actual re-orientation towards East Asia.

Sergei Blagov is a Moscow-based independent journalist and researcher. In the past three decades, he has been covering Asian affairs from Moscow, Russia, as well as Hanoi, Vietnam and Vientiane, Laos. He is the author of non-fiction books on Vietnam, and a contributor of a handbook for reporters.

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