Exploring the Relationship between China’s Investment in the Arctic and Its National Strategy

This report is part of a series that CNA produced to fulfill requirements outlined in the fiscal year (FY) 2020 National Defense Authorization Act (NDAA), Sec. 1260E. The FY 2020 NDAA mandates that a federally funded research and development center “complete an independent study of Chinese foreign direct investment [FDI] in countries of the Arctic region, with a focus on the effects of such foreign direct investment on United States national security and near-peer competition in the Arctic region.” The Department of Defense selected CNA to conduct this analysis, for which CNA produced four reports. In this report, we examine the relationship between FDI in the Arctic by entities based in the People’s Republic of China (PRC) and the PRC’s strategic national objectives. We also identify potential implications of the PRC’s Arctic investments for the United States and its allies and partners.

Key findings

PRC leaders see the Arctic as important to achieving the PRC’s overarching strategic objectives, including the following:

• Sustaining economic development. Authoritative PRC writings describe the Arctic’sabundant energy and mineral resources as important to China’s economicdevelopment. They also note that Arctic shipping routes would drastically reduce thetime and distance—and therefore shipping costs—of transporting goods betweenNortheast Asia and Europe and North America.
• Defending national sovereignty, security, and development interests. People’sLiberation Army (PLA) strategic thinkers have noted several reasons that the Arctic isimportant to China’s security objectives, including the deterrent value of deployingnuclear missiles to the Arctic and the fact that Arctic shipping routes offer potentialalternatives to the Suez Canal, Panama Canal, and the Strait of Malacca, all of which arepotential chokepoints.
• Reforming the global system to align with PRC interests. PRC leaders seek torestructure the international system in ways that suit China’s interests and afford itgreat power status. PRC policy statements describe the Arctic as part of the“community with a shared future for mankind”—a community in which Beijing hopesto play a leadership role.

China’s coordinated efforts to advance its interests in the Arctic employ multiple elements of state power.