Beijing’s Strategic Window in the Russian Arctic
Climate change will radically alter the Arctic landscape, creating new opportunities and liabilities for every Arctic state. Moscow, in particular, views less ice coverage as an opportunity to increase its already substantial resource revenues and control key future transport lanes. However, Russia may be willing to partially compromise its future Arctic positioning and control to achieve short-term gains that maintain its war machine and recover after the war’s conclusion. The People’s Republic of China (PRC) is uniquely able to capitalize on this situation in line with its existing goals. As Russia continues to suffer the impacts of sanctions and war, Beijing could decide to stake a greater claim for itself in the Arctic.
Russian Situation in the Arctic
The Russian Federation controls 53% of the Arctic Ocean’s coastline. Its mere 2.5 million people in the region constitute roughly 15% of Russian GDP and 25% of exports. This already outsized influence on the Russian economy exists under the harsh conditions of the Arctic, so it is no surprise that Moscow views its rapid thawing as a potential boon for its economy. President Putin is expected to release an updated Arctic strategy that will focus on development. The primary sector in the region is resource extraction, with the presence of rare-earth elements, metals such as gold, silver, nickel, and lead, as well as gemstones like diamonds or rubies. However, the lion’s share of current and immediate potential wealth is held in its fossil fuels. The Arctic supplies Russia with some 80% of its natural gas and 20% of its crude oil.
Besides what can be dug out of freshly unfrozen ground, Russia also seeks to take advantage of the increasingly open Northern Sea Route (NSR). Although never guaranteed to be free of ice, the North Sea can be navigated successfully in widening swaths of time during the summer and fall, with the best time for passage being mid-September. An open NSR could substantially reduce current shipping times between the Atlantic and the Pacific, as well as ease and expand current resource transportation, such as that from the Yamal Liquefied Natural Gas (LNG) Plant to markets in Europe and Asia. Yamal already manages to transport a large amount of LNG to primarily European markets when passage is clear from June through December.
Economic development of the Arctic by Russia will be a costly endeavor, and serious questions exist regarding the extent they will be able to do so. Large capability and infrastructure investments will be required to exploit the warming North. These include the construction or improvement of rail, road, and aviation infrastructure, as well as expanding ports and icebreaking capabilities. Furthermore, emergency responses to a variety of plausible scenarios, such as oil fires or sinking ships, are difficult, require extensive preparation, and still may be too slow to prevent serious damage. Even with its rapid warming, the Arctic will remain for the next couple of decades an inhospitable place. The region may additionally begin to suffer from more extreme weather patterns that threaten extraction and shipping operations.
Resource Problems in Russia Now
The Russian federal budget’s largest revenue source is the oil and gas industry, with fossil-fuel sales constituting anywhere from 30% to 50% of annual revenues over the past decade. This makes the Russian government particularly vulnerable to price changes, declining sales, or reduced production capacity. The Kremlin’s ability to respond to any of these is hampered by a lack of access to Western technology that would allow for new exploration, as well as by the increasingly severe impact of Ukrainian strikes on Russian refineries. Under these conditions, it will be difficult to adequately ramp up production and export in time for the revenues to provide necessary relief to an expenditure list in which war is the priority.
Nevertheless, the Kremlin will be forced to try or face tough choices. Potential tax hikes have already been announced, which are likely designed to make up for the shortfall in resource revenues. This further deteriorates the “Russian Social Contract,” whereby the people accept government authority in return for social benefits paid out. It may also further increase Russia’s siphoning off money from the National Wealth Fund to meet war costs. This fund is also tied to Russian oil revenues, and without a return to better prices, it could face depletion. These problems may grow enough to threaten the stability of the Russian government and severely constrain its ability to act on foreign and domestic objectives. Even if Russia is unable to correct its deteriorating position on fossil fuels in time to assist its war effort, Moscow must attempt to do so to maintain its model of governance after the peace.
Worsening matters even further, the European Union (EU) and Japan continue to account for significant portions of Russian natural gas exports. Their LNG purchases as a percentage of Russian export revenue in June 2025 stood at 51% for the EU and 18% for Japan, with the EU also purchasing 37% of Russian pipeline gas. The EU is currently drawing up and implementing plans to fully phase out Russian gas by 2027, although it has had difficulties in achieving them, as imports increased in 2024. The EU, under increasing security pressure from Russian incursions and Donald Trump, will attempt to accelerate the ban in a 19th sanctions package. Japan, although less certainly, may find itself declining to renew its LNG contracts as soon as 2026. Russia’s Arctic natural gas installations are deeply exposed to these potential developments, and without new buyers, they may become unviable. Poor future trade prospects with pre-war partners have and will continue to make Moscow more open to an increased reliance on the PRC.
The PRC Can Help
The PRC has assisted Russia with critical economic and wartime shortages due to Western sanctions. It also declared itself in 2018 to be a “Near-Arctic State” with direct interests in Arctic policy. This led to many reports on the potential large-scale investment in and takeover of Arctic extraction operations by the PRC, with reports citing hundreds of new companies established towards these operations and other ends. This narrative is contested, with some contending that the PRC’s activities and investments may have been overblown and that most of these investments have failed to fully come into fruition. Furthermore, firms in the PRC have recently been reluctant to directly invest in Russia due to threats of U.S. sanctions, but this factor will be reduced in their decision-making if the U.S. decides to impose tariffs anyway.
Although rather limited in other countries, the PRC’s largest Arctic partner by far has been Russia. Their working together exists within the larger context of the “no limits” partnership, declared just weeks before the 2022 Ukraine invasion, that has since developed into a quasi-alliance. Even though Russia typically prefers to maintain control of its strategic interests in the Arctic and maintain a diverse set of partners to prevent over-reliance on any single one, they have become increasingly reliant on the PRC. The confluence of factors above may push them to fully realize that only the PRC has “the capital, competence, interest, and willingness” to assist the Russian situation. The PRC’s primary interests lie in having a say in the future global governance of the Arctic and its “Polar Silk Road”: Beijing’s name for the North Sea Route. The PRC views the region as one in which strong international norms are not yet established and would like a strong hand in their eventual crafting. Investments and participation in Russian resource extraction, amongst other activities, would give Beijing greater sway over both Russian and global Arctic policy.
PRC-provided technology can fill gaps that were previously provided by the West. China can also innovate in areas such as icebreakers, which the PRC will use to normalize travel through the NSR. During Putin’s September 2nd visit to Beijing, a preliminary agreement was reached on the construction of the Power of Siberia 2 gas pipeline between the two countries.
At the projected 50 billion cubic meters per year, this would nearly make up for the $52 billion imported by the EU in 2024. Although likely not sufficient to pull Russia out of all its funding problems in the short run, this deal may radically help Russia balance the books and shore up the stability of the PRC’s northern neighbor.
As the war in Ukraine drags on and Russia continues to suffer economically, the PRC has the option to take a large stake in future Russian holdings by moving soon on direct and indirect investments. The Russian government may become willing to compromise on future Arctic strategic control and allow itself to grow even more dependent on the already unequal partnership with Beijing. If the PRC desires influence in the Arctic and over Russia more broadly, the decision could be made that now is the time to act.
The New Window
The majority of the Arctic shoreline is controlled by Russia, and a top priority of Moscow is to expand its already significant mining and fossil-fuel industries in the region. The Russian government remains reliant on resource revenues, which disproportionately come from the Arctic. Due to the Russo-Ukrainian War and inherent natural challenges, Russia is currently struggling to fulfill its objectives. Investment and/or support from the PRC is likely the best pathway to adjust to immediate problems and prepare for future ones. The nature of any collaboration could alter the relationship between the two powers for decades to come. Russian desperation may accelerate the race for Arctic dominance by giving the PRC a key foothold to pursue its objectives.
Views expressed are the author’s own and do not represent the views of GSSR, Georgetown University, or any other entity. Image Credit: Offshore Energy