China Hopes to Gain Foothold in the Arctic through Partnership with Iceland

China looks as though it might set up an unlikely partnership with the small island nation of Iceland. Iceland’s prime minister is currently in Beijing to complete a free trade agreement between the two nations which will massively boost Icelandic exports of fish to China. Chinese diplomats want to use a partnership with Iceland in order to secure a stake in the Arctic.

According to the US Geological Survey the Arctic contains around 30% of the world’s untapped natural gas reserves and 13% of crude oil reserves, as well as huge deposits of rare earth metals and iron ore. Global warming is melting the ice in the Arctic at greater rates each year which is means that these deposits, previously hidden under the ice, are now becoming available for extraction. The Arctic promises to be one of the most important regions of earth for energy developers in the coming decades.

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Malte Humpert, the founder of the Arctic Institute, explained that “China sees itself as a 21st century power and it wants a seat at the table. They are seeing where there is potential … and developing their geo-strategic position.”

Apart from the bounty of resources available due to the melting sea ice, new shipping routes are also opening up which can cut the voyage time, and therefore the costs, of ships travelling between China and Europe, a potentially huge cost saver as Europe is China’s largest trade partner.

Dr. Zhang Yao, director of the Ocean and Polar Research Center at the Shanghai Institutes for International Studies, suggested that “the Arctic route could play a very important role in China’s trade, taking a significant proportion of it.”

By. James Burgess of Oilprice.com