The Role of the Northern Sea Route in Expanding China's Exports to Europe

Abstract

Recently China has been facing a problem of reduced exports to Europe caused by the rise of the yuan, the increasing labour and transportation costs. This article aims to investigate the opportunities for expanding China’s exports to the EU offered by the Northern Sea Route. Comparison of the distances between the main sea ports connecting China and Europe via the Northern and Southern Sea Routes shows that the former may well prove to be a viable option if China uses the part of the route running along the Russian Arctic coast. One of the possible economic benefits of the Northern Sea Route is that, when navigable, it significantly saves transportation time and reduces shipping costs. In addition to China's already established trading partners in Europe, Finland, Norway and Ireland could provide new markets for Chinese goods since these countries have multiple ports, which can be easily accessed from the sea. Keywords-northern sea route, China, exports of China I. RELEVANCE OF THE RESEARCH PROBLEM The Northern Sea Route (NSR) is a vital transport and logistics route in the north of Russia, capable of competing with the southern maritime shipping routes via Cape of Good Hope and the Suez Canal. The Southern Sea Route is overloaded, especially by big container ships sailing from Asia to Europe. Russia is one of the main beneficiaries of the NSR: for Russia, the gains in developing the route primarily include easier access to remote regions in the winter period to provide them with food, fuel and other necessities; defence of its territorial interests from the external threat of the USA; extraction and transportation of mineral resources such as oil, gas, coal, nickel ore and so on; protection of the marine ecosystem from oil spills and other man-made disasters. For China, one of the primary benefits of the NSR is that it allows fast and cheap transportation of goods to Asia and Europe. The Chinese government is aware of the NSR’s potential for the country's export growth and therefore, engages in active cooperation with its Russian colleagues within the framework of the Belt and Road Initiative. The Initiative encompasses over sixty countries and seeks to attract investment to establish an extensive transportation network, including overland and maritime routes for passenger and cargo traffic. The usage of the Southern Sea Route involves a lot of risk for China due to its geopolitical rivalry with the USA. Their relationship is further complicated by the dispute over America’s military bases in Singapore, Australia, and the Philippines near the Strait of Malacca, the waterway which is crucial to China's trade: over 80% of all Chinese exports and imports transit the Strait en route to Asian and European countries. Among China's key trading partners there are other Asian countries. China's biggest trade rival is the USA, which has the trade turnover volume of 587.3 billion dollars. In 2017, as compared to 2016, China's exports to the USA and South Korea decreased by 0.5 percentage points and to Singapore by 6.3 percentage points due to the political tensions between the countries and U.S. restrictions on Chinese exports. In 2017, there was a growth in China’s exports to only three partner countries: Hong Kong (+3.0%), Brazil (+0.6%) and Malaysia (+0.1%). As for European countries, such as Germany, Russia and the UK, there was a decline in the consumption of Chinese goods. China’s strategic goal is now to promote its goods in internal European markets and thus create new jobs, new channels for Chinese products and address the problem of disparity between its eastern and western regions. The result of this strategy is that, for example, China’s trade volume with Germany is 168.1 billion dollars and Germany now ranks 6th among China's top trading partners; the trade volume with the UK is 79.03 billion dollars (15th place), while other European countries account for smaller shares of Chinese exports. II. LITERATURE REVIEW D. Kerr [1] and I. Torbakov [2] examine the ongoing process of division of spheres of influence among the three world powers China, Russia and the USA. Special attention is paid to the question of how their interactions may affect European states. Two research teams K. Li, M. Jin, G. Qi, W. Shi [3] and M. He and J. Zhang [4] considered the transformations that developing countries undergo in their transition to higher levels of development in the context of the New Silk Road Project and its participants. Russian studies lay a particular focus on Russia-China cooperation in the sphere of freight transportation as the two countries are jointly developing the infrastructure of the Trans-Siberian Railway (B.V. Bazarov [5], S.L. Sazonov, E.S. Kudryavtsev, and U. Zi [6]). Another focus is made on ways of advancing this bilateral cooperation (A. Lukin [7]). 2nd International Conference on Education Science and Social Development (ESSD 2019) Copyright © 2019, the Authors. Published by Atlantis Press. This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/). Advances in Social Science, Education and Humanities Research, volume 298