China’s Adaptive Diplomacy and Economic Statecraft in a Fragmented Arctic Order

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Arctic sea ice extent: A rapidly evolving geopolitical frontier. Photo: NASA Goddard Space Flight Center

The Arctic Institute China Series 2025

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The Arctic has re-emerged as a critical axis of 21st-century geopolitics. This transformation is driven by the accelerating effects of climate change and the strategic recalibrations of major powers seeking to access the region’s untapped potential. China’s entry into the Arctic is particularly significant. Despite being a non-Arctic state, China has increasingly positioned itself as an indispensable stakeholder in Arctic development. The state’s presence in the Arctic is neither incidental nor opportunistic. It is a strategic outcome of long-term planning grounded in the logic of economic statecraft, adaptive diplomacy, and a deliberate shift in global governance norms. Its Arctic ambitions are tightly interwoven with the strategic logic of the Belt and Road Initiative (BRI), from which the “Polar Silk Road” (PSR) concept derives.¹⁾Zreik, M. and Derendiaeva, O. (2025) ‘The Polar Silk Road: China’s strategic engagement and its implications for Arctic governance’, Polar Geography, pp. 1–21 The PSR reflects China’s long-term vision: to integrate the melting Arctic into global trade routes, energy corridors, and governance frameworks.

At the heart of China’s Arctic trajectory lies a subtle but strategic calculus: to embed itself in regional governance, trade, infrastructure, and environmental narratives in ways that are politically non-threatening but economically entrenching. This approach transcends simple economic opportunism and reflects a deliberate recalibration of China’s foreign policy instruments for the unique conditions of a fragile, semi-regulated, and heavily securitized Arctic order. China’s Arctic strategy is a case study in strategic patience, where long-term investments in reputation, partnerships, and scientific credibility are gradually converted into geopolitical capital. This article argues that China’s Arctic engagement is best understood not through the lens of opportunism, but as a deliberate, multidimensional strategy grounded in economic pragmatism, strategic hedging, and discursive legitimacy.

Polar Silk Road as a Strategic Extension of the BRI

The BRI is not merely an infrastructure blueprint—it is China’s most ambitious foreign policy platform for reshaping global trade, connectivity, and political influence. The PSR, first outlined in China’s 2018 Arctic Policy White Paper, should be viewed as a geographic and strategic expansion of the BRI into the High North.²⁾Xinhua (2018). China’s Arctic Policy. http://english.www.gov.cn/archive/white_paper/2018/01/26/content_281476026660336.htm. Accessed 15 May 2025 It signifies the inclusion of Arctic maritime and energy corridors into China’s broader network of geopolitical influence, spanning land and sea from Southeast Asia to Northern Europe.

Whereas the traditional BRI emphasizes terrestrial infrastructure and port connectivity across Eurasia and Africa, the PSR pivots toward maritime dominance through Arctic routes. By promoting the PSR, Beijing aims to ensure that it is not a passive beneficiary of Arctic access but a co-architect of the region’s emerging trade geography and norms. In doing so, China attempts to reframe Arctic connectivity as an integral part of global supply chains, where Chinese logistics firms, energy companies, and financial actors are indispensable facilitators.

Diplomatically, the PSR is framed through China’s narrative of “win-win cooperation” and global public goods, but its underlying logic mirrors Beijing’s BRI approach—projecting influence through economic asymmetry. Chinese state-backed banks, policy institutions, and corporations use infrastructure financing as a vector for soft power, subtly drawing Arctic and near-Arctic nations into a web of interdependence.³⁾Doshi, R., Dale-Huang, A. and Zhang, G. (2021). Northern expedition: China’s Arctic activities and ambitions. Brookings. https://www.brookings.edu/articles/northern-expedition-chinas-arctic-activities-and-ambitions/. Accessed 12 May 2025 Moreover, by offering alternatives to Western financing and logistics frameworks—especially in post-sanction Russia—China positions itself as a stabilizer and an alternative development partner in the Arctic system.

This combination of economic embeddedness and diplomatic framing ensures that the PSR is not a peripheral addendum to the BRI but an Arctic-specific modality of the same strategic ambitions: expanding China’s role in global governance while avoiding overt confrontation. The PSR seeks to connect East Asia with Europe via the Northern Sea Route (NSR), drastically shortening transit times by up to 40% compared to the Suez Canal.⁴⁾Humpert, M. (2011). The Future of the Northern Sea Route – A ‘Golden Waterway’ or a Niche Trade Route. The Arctic Institute – Center for Circumpolar Security Studies. https://www.thearcticinstitute.org/future-northern-sea-route-golden-waterway-niche/. Accessed 28 October 2025. Since 2013, China’s COSCO Shipping has completed more than a dozen trial voyages along the Northern Sea Route (NSR), initially aimed at assessing logistical feasibility. However, since 2022, COSCO’s activity along the NSR has slowed, largely due to geopolitical disruptions stemming from Russia’s invasion of Ukraine. Sanctions on Russia and reputational risks have compelled many global shipping firms, including COSCO, to reassess their Arctic transit strategies.⁵⁾Yang, C. (2025). How China Is Driving a Surge in Shipping Traffic along Arctic Sea Routes. South China Morning Post. https://www.scmp.com/economy/china-economy/article/3314324/how-china-driving-surge-shipping-traffic-along-arctic-sea-routes. Accessed 29 July 2025 Nonetheless, these voyages signal more than logistical experimentation; they form part of a gradual normalization of Chinese presence in Arctic shipping lanes.

The infrastructure component of the PSR mirrors patterns established under the BRI. In Russia, China has become a major financier of Arctic energy projects, most notably the Yamal LNG and Arctic LNG 2 ventures. The China National Petroleum Corporation and the Silk Road Fund collectively own significant stakes, while Chinese banks have extended billions in credit.⁶⁾Yermakov, V. (2024). Arctic LNG 2: The litmus test for sanctions against Russian LNG. The Oxford Institute for Energy Studies, pp. 2–5. These projects ensure China not only secures critical energy supplies but also co-authors the development narrative of the Russian Arctic.

Embedding Through Economic Partnerships: Case Studies in the Arctic Periphery

The 2022 suspension of Arctic Council cooperation with Russia, triggered by the political fallout of the Ukraine war, ruptured the region’s long-standing multilateral framework. Once regarded as a consensus-based institution exemplary of low-tension diplomacy, the Arctic Council now faces unprecedented institutional fragmentation. China, though only an observer, has used this vacuum to recalibrate its Arctic positioning, leveraging what Robert Keohane describes as “functional asymmetries”—gaps in multilateral engagement that can be bridged through alternative diplomatic or economic routes.

China’s Arctic influence is perhaps most visible through its strategic use of economic statecraft. It employs what David Baldwin terms “positive economic sanctions”: strategic investments, loans, joint ventures, and aid packages designed not only to serve developmental goals but also to generate long-term political leverage. Beyond Russia, China has carefully cultivated bilateral relationships with smaller Arctic and Arctic-adjacent states to deepen its economic footprint and ensure access to future governance mechanisms. In 2013, China became the first major power to sign a Free Trade Agreement with Iceland. This agreement laid the groundwork for broader cooperation, including geothermal energy development, tourism, and Arctic research. One tangible outcome of this cooperation is the China-Iceland Arctic Science Observatory, operational since 2018 in Karholl, northeast Iceland. The facility conducts joint atmospheric, astronomical, and geophysical studies and is operated by China’s Polar Research Institute and Iceland’s RANNIS (Icelandic Centre for Research). The Observatory allows China to maintain a year-round scientific presence within the Arctic Circle—providing a platform for environmental monitoring and collaboration with Icelandic institutions. Through co-managed scientific infrastructure, China embeds itself in local knowledge production and policy networks, positioning itself not merely as a research partner but as a stakeholder in Arctic scientific governance. This institutional presence contributes to its broader legitimacy claims as a responsible, contributing actor in Arctic affairs, particularly as it continues to assert the narrative of the Arctic as a “shared space” of global concern.⁷⁾Škoba, L. (2013). China-Iceland Free Trade Agreement. Library of the European Parliament. https://www.europarl.europa.eu/RegData/bibliotheque/briefing/2013/130631/LDM_BRI(2013)130631_REV1_EN.pdf. Accessed 14 May 2025

In Greenland, a semi-autonomous Danish territory, China has pursued rare earth mining and dual-use infrastructure projects such as airports and harbors. These initiatives often align with local political aspirations for economic self-reliance and greater autonomy from Denmark. For example, Chinese bids to construct airports in 2018 and interest in the Kvanefjeld rare earth project were framed in ways that appealed to pro-independence factions within Greenland’s parliament. Though not overtly political, such proposals reflect China’s subtle engagement with local elites by supporting development narratives that enhance its strategic foothold. These initiatives sparked strategic pushback from Copenhagen and Washington—culminating in Denmark rejecting several Chinese bids for infrastructure development due to security concerns.⁸⁾Lucht, H. (2018). Chinese investments in Greenland raise US concerns: Strictly business? Danish Institute for International Studies. https://pure.diis.dk/ws/files/2515096/chinese_investments_in_greenland_WEB_1.pdf. Accessed 14 May 2025. Still, the sheer scale and persistence of China’s engagement illustrate its intent to penetrate Arctic logistical networks.

In Norway, the port of Kirkenes has been identified by Chinese stakeholders as a potential Arctic logistics hub.⁹⁾Staalesen, A. (2019). Kirkenes port developers put their faith in the Chinese. The Barents Observer. https://www.thebarentsobserver.com/news/kirkenes-port-developers-put-their-faith-in-the-chinese/228287. Accessed 15 May 2025. Situated near the NSR and proximate to key maritime chokepoints, Kirkenes is seen as a future node in China’s Arctic transport corridor. Similarly, China’s involvement in feasibility studies for a trans-Arctic railway linking Kirkenes and northern Finland further suggests a long-term interest in integrating the Arctic into China-centric trade flows.¹⁰⁾Kopra, S. (2020). China and its Arctic Trajectories: The Arctic Institute’s China Series 2020. The Arctic Institute – Center for Circumpolar Security Studies. https://www.thearcticinstitute.org/china-arctic-trajectories-the-arctic-institute-china-series-2020/. Accessed 15 May 2025.

These investments are not merely about securing market access. They constitute what political economist William Norris describes as “commercial diplomacy”—the strategic use of economic activity to generate political capital. By embedding itself in the economic lifeblood of Arctic localities, China ensures it cannot be easily excluded from future rule-making processes. Beijing’s capacity to build track II and track I.5 engagements with Arctic states, as well as with non-Arctic Global South actors, allows it to cultivate alternative governance nodes that circumvent formal institutional bottlenecks.

A core pillar of China’s Arctic engagement strategy lies in its use of scientific diplomacy. Unlike in more securitized arenas like the South China Sea, China has maintained a discourse of cooperation and shared global responsibility in the Arctic. It frames its activities through the lens of environmental stewardship, aligning itself with global concerns over climate change and biodiversity loss. China’s Yellow River Station in Svalbard has been active since 2004, conducting research on atmospheric sciences, marine ecosystems, and climate modeling. The station enables China to participate in long-term scientific monitoring projects with Arctic states, offering a platform for soft power projection.¹¹⁾Kantchev, G. (2024). Russia and China Defy the West Deep in the Arctic. The Wall Street Journal. https://www.wsj.com/world/svalbard-russia-china-arctic-trade-e6187bd8. Accessed 16 May 2025 Additionally, China has developed and deployed icebreakers such as the Xue Long and Xue Long 2, which not only enhance scientific capabilities but also serve as symbols of technological prowess.¹²⁾Humpert, M. (2018). China Launches Domestically-Built ‘Xue Long 2’ Icebreaker. High North News. https://www.highnorthnews.com/en/china-launches-domestically-built-xue-long-2-icebreaker. Accessed 15 May 2025. China has also developed its own suite of Earth observation satellites, some with polar-oriented capabilities, which contribute to real-time monitoring of ice melt, atmospheric conditions, and potential maritime routes.¹³⁾Humpert, M. (2020). China to Launch Satellite to Monitor Arctic Shipping Routes. High North News. https://www.highnorthnews.com/en/china-launch-satellite-monitor-arctic-shipping-routes. Accessed 15 May 2025.

However, the alleged dual-use nature of polar research—especially in satellite surveillance, bathymetric mapping, and subsea communication—has prompted concern among Western powers. The Pentagon and NATO allies have questioned the strategic utility of China’s Arctic data, particularly as China expands its satellite constellation and underwater monitoring systems.¹⁴⁾Funaiole, M.P., Hart, B., Bermudez Jr, J.S. and Powers-Riggs, A. (2023). Frozen Frontiers: China’s Great Power Ambitions in the Polar Regions. Center for Strategic and International Studies. https://features.csis.org/hiddenreach/china-polar-research-facility/. Accessed 16 May 2025 While critics cite risks of civilian data supporting submarine navigation or space-based surveillance, these claims are often speculative and lack corroborating evidence of militarization. Yet, the ambiguity persists, partly because China itself has not articulated clear boundaries between its scientific, commercial, and strategic objectives.

A constructivist reading of China’s Arctic strategy reveals that much of its legitimacy-building effort hinges on redefining Arctic norms. By participating in climate change initiatives, contributing to Arctic biodiversity studies, and invoking the environmental vulnerabilities of the Global South, China reshapes the discursive space of Arctic politics to make non-Arctic participation appear necessary and beneficial. This discursive shift, though subtle, represents an effort to reshape Arctic governance from a club model of regional sovereignty to a more porous regime responsive to global concerns.

Strategic Hedging and Multilateral Balancing

China’s Arctic behavior illustrates a classic hedging strategy—balancing between cooperative postures and latent capabilities while avoiding direct confrontation. This approach allows China to cultivate influence without triggering institutional backlash. Despite its close energy and logistics ties with Russia, China has also sought cooperative channels with Nordic countries, Canada, and Arctic-adjacent partners like South Korea and Japan.

Its 2018 Arctic Policy White Paper articulates support for the sovereignty of Arctic states while simultaneously calling for inclusive governance based on international law. This dual discourse allows China to argue that the Arctic’s environmental and economic stakes justify broader participation. Within the Arctic Council, China has maintained its observer status since 2013 and continues to participate in working groups on climate, biodiversity, and maritime safety. Unlike Russia, which has revitalized Cold War-era Arctic bases, and the U.S., which has deployed submarines and aircraft in joint Arctic drills,¹⁵⁾Baker, M. (2022). With Eyes on Russia, the U.S. Military Prepares for an Arctic Future. The New York Times. 27 Mar. https://www.nytimes.com/2022/03/27/us/army-alaska-arctic-russia.html .Accessed on 16 May 2025 China has not established any permanent military presence north of its territory. Its partnership with Russia is marked by economic, not military, convergence. Joint naval drills have occurred, but they are limited in scale and frequency. By abstaining from overt power projection, China protects its narrative of benign engagement and avoids securitization by Arctic stakeholders. This enhances its diplomatic flexibility and credibility as a multilateral participant. Moreover, this allows China to maintain compatibility with both Western-aligned Arctic states and revisionist actors like Russia. These engagements reflect a hedging strategy that minimizes overreliance on Moscow while embedding Beijing in broader regional discussions. This distributed approach reflects a realist strategy of redundancy: avoiding strategic bottlenecks by cultivating multiple access points to the same geopolitical theater.

China’s participation in observer groups within the Arctic Council, its investments in Arctic scientific diplomacy, and its ongoing participation in Arctic-themed UN discussions all serve as instruments of this broader multipolar diplomacy. The flexibility of its approach—alternating between state-to-state deals and multilateral platforms—enables it to maximize strategic gain while minimizing exposure to political risk. More recently, China’s hesitation to endorse Norway’s chairship of the Arctic Council following Russia’s exclusion reveals its nuanced diplomatic stance.¹⁶⁾Jonassen, T. (2022). China: ‘Will Not Acknowledge Arctic Council Without Russia’. High North News. https://www.highnorthnews.com/en/china-will-not-acknowledge-arctic-council-without-russia. Accessed on 12 May 2025 While not openly challenging the Council’s legitimacy, China subtly signals that Arctic governance must remain multipolar and inclusive—or risk fragmentation. The sum of China’s Arctic activities—commercial, scientific, diplomatic—points toward a singular objective: to move from observer to indispensable stakeholder. It has done so not by seeking territorial claims or military footholds, but by embedding itself in the Arctic’s material and institutional systems. In this sense, China’s Arctic strategy resembles a form of infrastructural realism: using the tools of connectivity, logistics, and economic interdependence to reshape geopolitical hierarchies.

This approach echoes broader patterns in China’s global strategy. Just as the BRI has enabled China to establish transcontinental influence without formal political alliances, the Polar Silk Road offers an Arctic corollary—linking economic cooperation with geopolitical presence. It also reflects a unique form of norm entrepreneurship. By promoting a narrative of shared destiny and cooperative development, China seeks to legitimize its Arctic role within existing legal and institutional frameworks, while quietly expanding its capacity for independent action.

Conclusion: Implications and Strategic Futures

China’s engagement in the Arctic is a case study in adaptive strategy and long-range planning. It represents neither benign cooperation nor malign revisionism, but a hybrid mode of influence grounded in pragmatic investment, diplomatic signaling, and normative flexibility. The challenge for Arctic states is not merely to assess China’s intentions, but to recognize the structural shifts that enable such non-Arctic powers to play outsized roles in regional politics. In this context, China’s foreign policy can be best understood through a blend of neoclassical realism—which highlights how domestic interests and systemic constraints shape strategic choices—and the logic of complex interdependence, which emphasizes the use of economic and institutional linkages to advance influence without direct confrontation.

Rather than challenging Arctic sovereignty directly, China seeks influence through embeddedness—leveraging investment, research, diplomacy, and institutional signaling to become an actor whose exclusion would impose costs on the region. This negotiated inclusion does not require formal membership or territorial claims; it is achieved through the strategic accumulation of relevance. As the Arctic becomes more accessible and economically viable, tensions between sovereignty and global governance will intensify. China’s presence will continue to test the balance between regional control and international participation. Whether the Arctic remains a zone of peaceful cooperation or becomes another theatre of strategic rivalry will depend on how existing stakeholders choose to engage—or contain—China’s rise.

In either case, ignoring China’s presence is no longer an option. The onus now falls on Arctic states to determine whether their governance model can adapt to a world of transregional influence and globalized environmental interdependence. Rather than erecting barriers to participation, Arctic governance should embrace regulated, transparent engagement that channels rising powers like China into mutually beneficial roles. Without a conscious evolution of Arctic governance to reflect contemporary multipolarity, efforts to exclude China may only drive its influence underground or into alternative structures.

Riva Panchal is a Visiting Lecturer and Research Scholar at Pandit Deendayal Energy University.