Input-output analysis of economic linkages between China and Arctic countries

Abstract

In the context of climate change, the growing cost-efficiency of Arctic shipping routes is expected to enhance maritime activities between China and Arctic countries. As one of the world's leading trade powers, China has implemented a series of policies and guidelines aimed at Arctic resource development and engagement in Arctic governance. However, the industrial interdependencies between China and Arctic countries, as well as strategies for reshaping leadership and hub roles within global interdependence frameworks, remain underexplored. This study employs global input-output tables from 2013 to 2022, utilizing input-output (IO) model and the Hubness Measurement Index (HM) to examine the industrial trade value distribution and dependency relationships between China and the Arctic countries. Our analysis identifies several key industrial sectors with higher influence coefficients, including manufacturing (1.09), wholesale and retail trade (1.07), and finance (1.04), which play significant roles in driving regional economic development in both China and Arctic countries. Furthermore, the construction sector exhibits remarkably high sensitivity coefficients (4.93) in both China and Arctic nations, followed by public administration (3.03) and professional activities (2.58), indicating strong demand-driven economic effects. Between 2013 and 2022, China's economic dependence on Arctic nations, contrasted by increased dependence on China among most Arctic countries, particularly Russia. This growing reliance stemmed principally from the robust growth of China's core industries, notably manufacturing, mining, and construction. These sectors not only fueled China's domestic economic expansion but also reshaped the trade dependency patterns of Arctic economies. This study analyzes key industrial sectors that strengthen trade between China and Arctic countries, contributing to both economic restructuring and the evolution of bilateral trade patterns. It further aims to provide policy recommendations to promote the sustainability of trade relations.