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<h1>China Aims High on Antarctic Krill</h1>
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<p>A Chinese state-owned distant-water fishery company said China should multiply its krill harvest in the Antarctic, yet regulations at home and abroad are moving towards stringent management. How will the dragon dance on the ice?</p>
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<div class="kicker-image-container" style="width:1020px;"><img width="1020" height="735" src="wp-content/uploads/2016/01/IMG_2247-2-e1453485422299-1020x735.jpg" class="attachment-kicker size-kicker wp-post-image" alt="" srcset="https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2247-2-e1453485422299-1020x735.jpg 1020w, https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2247-2-e1453485422299-300x216.jpg 300w, https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2247-2-e1453485422299-1024x737.jpg 1024w" sizes="(max-width: 1020px) 100vw, 1020px" /><div class="image-caption"><p>Packages of frozen krill products on display at the Qingdao Seafood Expo. China is looking to become the world’s top krill fishing country. (Courtesy: Liu Hongqiao)</p>
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<p>Liu Hongqiao, January 20, 2016</p>
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<p>The Antarctic is heating up.</p>
<p>As a relative newcomer, China is far from being the No.1 krill harvesting country in the Antarctic. But in April 2015, it was suddenly thrust into the spotlight when Liu Shenli, chairman of the China National Agricultural Development Group, reportedly said that China should aim to harvest one to two million tonnes of krill annually, according to the <em>China Daily </em>newspaper.</p>
<p>Liu’s ambition for China is massive when one considers the current scale of krill catch in the Antarctic. According to the Commission for the Conservation of Marine and Living Resources (CCAMLR), the top five countries together harvested 217,354 tonnes of krill in 2013 – a mere tenth or fifth of Liu’s target set for a single country.</p>
<p>In that interview, Liu said his company had so far processed 20,000 metric tonnes of krill products by April 2015. To put this into perspective, China harvested only 54,187 tonnes of krill from 2010 to 2013.</p>
<p>China began to fish in the Antarctic in 2009. Following an Illegal, Unreported and Unregulated (IUU) fishing dispute over toothfish in 2011, krill fishing has been the only exploratory activity conducted by China in the Antarctic. Unlike Norway, which harvested more than half of the krill caught in 2014, China’s share amounted to less than one fifth of the total catch.</p>
<p>Due to the lack of a detailed national development plan on krill fishing, opinions like Liu’s – who is one of the biggest Chinese businessmen in the region and a representative of the nation’s largest state-owned agricultural development enterprise – are often interpreted as signals of the will of the state.</p>
<p>But questions and concerns surround China’s future Antarctic strategy. Is China aiming to become the biggest krill fishing country in the world? What’s the potential capacity of the country’s fleets in the Antarctic? Do Chinese consumers have an appetite for these tiny little creatures from the icy Arctic depths? What’s China’s role in solving the global governance challenges in one of the planet’s last relatively untouched territories? Many questions have yet to be answered.</p>
<h2><strong>Latecomer: China looks for top spot in the Antarctic<br />
</strong></h2>
<p>The exploitation of Antarctic krill dates back to the 1960s. Also known as <em>euphausia superba</em>, Antarctic krill are famous for being the largest stock of a single species in the world and play a fundamental role in the remote ecosystem.</p>
<p>China is now one of the major krill harvesting countries in the world, but it only joined the club in 2009 when the Shanghai Fishery and Dalian Liaoyu Group set sail for their first experimental krill fishing expedition in the Antarctic.</p>
<p>Despite joining late, China is aiming high. Since 2009, the exploitation of Antarctic marine resources was included in a series of high-level national plans and regulations.</p>
<div id="attachment_366" style="width: 1034px" class="wp-caption alignnone"><a href="wp-content/uploads/2016/01/7302488724_021c3507e8_o.jpg"><img aria-describedby="caption-attachment-366" class="size-full wp-image-366" src="wp-content/uploads/2016/01/7302488724_021c3507e8_o.jpg" alt="Krill seen close up (Courtesy: Flickr/Norkrill)" width="1024" height="580" srcset="https://www.futureoceans.org/wp-content/uploads/2016/01/7302488724_021c3507e8_o.jpg 1024w, https://www.futureoceans.org/wp-content/uploads/2016/01/7302488724_021c3507e8_o-300x170.jpg 300w, https://www.futureoceans.org/wp-content/uploads/2016/01/7302488724_021c3507e8_o-672x380.jpg 672w, https://www.futureoceans.org/wp-content/uploads/2016/01/7302488724_021c3507e8_o-1020x578.jpg 1020w" sizes="(max-width: 1024px) 100vw, 1024px" /></a><p id="caption-attachment-366" class="wp-caption-text">Krill (seen close up) feeds most of the Antarctic, including whales, fish and pengiuns. (Courtesy: Flickr/Norkrill)</p></div>
<p>In 2012, the Ministry of Agriculture set the tone for China’s approach towards the development of Antarctic resources with a plan entitled, “On promoting the sustainable and healthy development of distant water fishery.” This stated that China would focus on expanding fishery activities in the Antarctic under the CCAMLR framework.</p>
<p>A follow-up notice was published at the ministerial level on “strictly adhering to international Antarctic krill fishery management measures” in late 2013. The notice reiterated and localized many fishery regulations from reporting to monitoring under the CCAMLR management with the aim to “reduce and avoid violations concerning foreign affairs, and promote the sustainable and healthy development of Antarctic krill fishery.”</p>
<p>At the start of the 2013 fishery season, China announced that it was shifting from experimental to commercial krill fishing operations in the region. So far, the country has registered nine fishing vessels with CCAMLR, making Chinese fleet the largest in the region.</p>
<p>Though exploratory fishing activities were solely conducted by state-owned companies, China has opened the door to the private sector. In April 2015, the privately operated Qingdao Distant Water Fishery Company dispatched its giant vessel to the 48-1 fishery grounds in the Antarctic Ocean. The new ship, Mingkai Vessel, said to be the largest factory trawler in Asia, aims to produce 12,000 tonnes of frozen krill, with an estimated output value of US$11.7 million.</p>
<p>Another private company, tentatively named Jiangsu Blue Whale Distant Water Fishery Co., Ltd, was reported to be in the registration process, according to the Oceanic Administration in Nantong City (a coastal city near Shanghai). With registered capital of 300 million yuan (roughly US$ 47.3 million) and phase I investment of 500 million yuan (US$ 78.8 million), the company markets itself as the first domestic specialty company in Antarctic krill fishing with world-leading dredger and most advanced process facilities.</p>
<p>In line with the industrial fervor, the Chinese government has taken several actions to support Antarctic krill fishing, including establishing key research funds, launching an industry platform and creating an innovation alliance.</p>
<p>At the launch ceremony of the Antarctic Krill Major Platform on July 25<sup>th</sup> 2015, Zhao Fuxing, the director of Fishery Administration from the Ministry of Agriculture, announced that the latest goals for Antarctic krill fishing were: “To set up special projects, to grasp exploratory fishing, to strengthen the foundation, to harvest more catch, to develop deep processing, to safeguard the security and to promote development.”</p>
<p>Despite its growing presence in many government regulation texts, no official targets or development plans for krill fishing have been set.</p>
<h2><strong>Chinese consumers: Mixed appetite for ‘whale food’</strong></h2>
<p>On March 28<sup>th</sup>, 2015, China’s state-owned news agency <em>Xinhua Online</em> published an article on the rapid growth of China’s Antarctic krill industry. No longer a small scale operation after four years, the article stated that the “dream” of delivering Antarctic krill to the tables across the country was finally reachable.</p>
<p>Major online fruit and vegetable stores in China started carrying Antarctic seafood products like krill brick, dried icefish and frozen toothfish in early 2014. The popular store Origin Life now features six available products on its site. With just a few clicks, consumers from Beijing, Shanghai and other major metropolises in China can conveniently enjoy a taste of the Antarctic.</p>
<p>But Chinese consumers are hesitant to take a bite out of the budding industry.</p>
<p>Zhao Jing, a 27-year-old who works in the auction sector in Beijing, shared her experience with <em>THE </em>magazine<em>:</em> “I’ve bought four or five Antarctic products online, just for curiosity, but I don’t like the taste.”</p>
<p>Marketed as “high-protein natural seasoning” and “whale food,” the retail price of Antarctic krill brick on the website is 25.80 yuan (roughly US$ 4) per 500 grams. And it often comes with a special discount of up to 20% off. In comparison, the Arctic shrimp, or the <em>p</em><em>andalus borealis,</em> is sold at 39.00 yuan (roughly US$ 6) per 400 grams.</p>
<p>As of mid-October 2015, the product has received 1,187 reviews, but has hardly reached the average rating of other shrimp products. “Why does it smell like gas? It tastes bitter after unfreezing. Is that normal?” one reviewer asked.</p>
<div id="attachment_363" style="width: 2458px" class="wp-caption alignnone"><a href="wp-content/uploads/2016/01/IMG_2245-2.jpg"><img aria-describedby="caption-attachment-363" class="size-full wp-image-363" src="wp-content/uploads/2016/01/IMG_2245-2.jpg" alt="Liu Shenli’s company, the China National Fisheries Corp, presented their krill products - frozen krill, krill meal, krill meatball and krill cube, at Qingdao Seafood Expo in early November 2015. (Courtesy: Liu Hongqiao)" width="2448" height="3264" srcset="https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2245-2.jpg 2448w, https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2245-2-225x300.jpg 225w, https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2245-2-768x1024.jpg 768w, https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2245-2-600x800.jpg 600w" sizes="(max-width: 2448px) 100vw, 2448px" /></a><p id="caption-attachment-363" class="wp-caption-text">Liu Shenli’s company, the China National Fisheries Corp, presented their krill products – frozen krill, krill meal, krill meatball and krill cube, at Qingdao Seafood Expo in early November 2015. (Courtesy: Liu Hongqiao)</p></div>
<p>However, during another online promotion in May 2015, consumers showed surprising enthusiasm for frozen krill products. With the official support of China’s largest B2C website <em>Taobao</em>, a sub-company of the NASDAQ-listed Alibaba Group, 20 tonnes of quick frozen Antarctic krill harvest by the Qingdao Mingkai Vessel was sold out in 72 hours. Priced at 86.6 yuan (roughly US$13.6) per 750 grams, these krill were processed properly and packaged as krill meat cubes. Similar to earlier reviews, the majority said they enjoyed the fresh taste from the Antarctic while some complained about the strange smell, high price and cold-chain logistics.</p>
<p>According to Ying Yiping, a researcher at the Yellow Sea Fishery Research Institute, eating a small amount of krill won’t result in cumulative damage; however, with growing public concerns on food safety, the fluorine content might be an obstacle to popularizing the products.</p>
<p>Another challenge is the taste. When compared with other commercial fishery species such as toothfish from the Antarctic and tuna from the Atlantic, krill is no cheaper and many consumers simply don’t like the taste.</p>
<p>As Zhao Jing said to <em>THE magazine, </em>her purchase was mainly attracted by the special discounts and beautiful advertisements. “They look fresh and attractive, but not tasty. If the price is acceptable, I’d like to have a try. But if taste no good, then that’s end of the story.”</p>
<h2><strong>From bottom to top, Chinese industry is moving in</strong></h2>
<p>While individual consumers are developing their love and hate towards “whale food,” one potential big consumer of krill – the downstream krill processing industry – also shows limited digestive ability at the present stage.</p>
<p>According to Ying, the consistent demand for krill is not expected to come from small consumers, but from larger fishery aquaculture operations such as salmon farming as well as the demand for high-value krill oil and other extracts.</p>
<p>Barry Weeber, who is co-chair of Environment and Conservation Organisations of Aotearoa New Zealand and also an adviser of the Antarctic and Southern Ocean Coalition (ASOC), however, has different opinion. In an email reply, he told THE magazine that the salmon aquaculture industry is instead using soya bean and chicken feathers as a substitute for fish products, rather than krill and krill-byproducts.</p>
<p>But what’s for sure is that high value added krill oil formulators for nutraceuticals and other extension products are attractive to investors across the world. The global landscape of deep process industry may seem interesting to many – though Norway, Korea, China and Ukraine are responsible for most of the krill catch, major deep process operates are located in Canada and Israel, which are non-CCAMLR member countries, according to Weeber.</p>
<p>In a recent <em>Xinhua</em> article, Li Lingzhi, a researcher from the East China Sea Fishery Research Institute, said highly processed products like krill oil are generally rare in the Chinese market. In fact, Antarctic krill oil was only approved as a “new food ingredient” to be legally circulate in the food industry and food market in December 2013.</p>
<p>After years of research and development under various national funding, the Chinese industry has only recently started to move in the field. In line with the goal to “develop deep processing” set by the Ministry of Agriculture, the industry is speeding up to improve technology and build up capacity.</p>
<p>Among those, the Shandong Keruier Biological Products Co., Ltd, is worth noting. The company, which is reported to have exported 70% of the global Antarctic Krill Oil raw materials, has announced plans to build “the largest comprehensive industry park on Antarctic Krill in the world,” according to <em>China Economics Online</em>, a news website attached to the state-owned Economic Daily Group.</p>
<p>With phase I investment of 170 million yuan (roughly US$ 26.7 million) and an estimated phase II investment of 250 million yuan (roughly US$ 39.3 million), the new Antarctic Krill Industry Park located in the capital city of Shandong Province aims to build up a production capacity of 100 tonnes of krill oil, high-protein peptide, high-end cosmetics and daily food products.</p>
<p>Unlike krill catch, on which reporting to CCAMLR is required on a monthly basis during the fishing season, figures on the domestic market and the industry are hardly seen in statistic books or authority reports. Therefore, it’s hard to estimate the actual scale of the krill industry in China, let alone draw a general picture from the supply chain to the market. Judging from available public information, China seems to have a large raw material process capacity and export share on certain products; but on the other hand, the technology standard and production capacity for finished products is unknown.</p>
<p>A senior researcher on China’s krill policy from Shanghai Ocean University, who asked to remain anonymous, told<em> THE magazine</em> that he was also in the dark.</p>
<p>“I don’t have the statistics on the annual output of processed products in different categories and I doubt if there were any,” he said. “Many krill products in the Chinese market are imported rather than produced by China.”</p>
<h2><strong>What’s next? A vague message from China</strong></h2>
<p>With China now in the final year of its 12th Five-Year Plan period, all major departments from the central government are working on drafting a new economic agenda. Will China publish a comprehensive strategy for the Antarctic ocean for the next five years? Chances seem high.</p>
<p>A few months ago, for the first time ever, China embedded its polar strategy into law. In its new National Security Law issued on July 1<sup>st</sup> 2015, China declared the country’s intent to “adhere to the peaceful exploration and use of outer space, the international seabed and polar regions.” In addition to upgrading polar exploration to a national security level, the law also said that China will safeguard the security of such activities in these regions.</p>
<p>“We [China] do have many plans and documents on Antarctic krill fishing, but those are classified. Without such documents, Liu Shenli can’t be that confident to boast,” a delegate in the Chinese negotiation team at CCAMLR told <em>THE </em>Magazine. “And that’s all I can comment.” He also refused to reveal his name.</p>
<p>In contrast with such caution, increased exploration activities, the growing krill harvest, and strong investment from both state-owned and private companies have placed China in a tricky position regarding Antarctic krill conservation and exploration. The scientific community and many international parties have expressed concerns about the Chinese government’s vague plans in the Antarctic region. One of the major concerns is whether or not would China expand its krill catch in the coming years.</p>
<p>“The whole world has to guess what exactly are China’s intentions in the Antarctic,” Chen Jiliang, a researcher of Policy Center from Greenovation Hub, told <em>THE Magazine</em>. Chen has been observing the CCAMLR conference since 2012 as an ASOC delegate. According to him, domestic academic community has been urging China to demonstrate and publicize its interest in Antarctica in the form of a white paper or other similar policy document, but progress on this seems to be slow.</p>
<p>“We’re far from reaching the verdict of China becoming the largest harvesting country. There are many potentials for further studies,” Liu Qin, a researcher from the Information Strategy Research Center of the East China Sea Fishery Research Institute, said via email.</p>
<p>Chen believes that China has passed the period of “making a big fortune without being noticed.” And he is not alone. Xue Guifang, Chair Professor of KoGuan Law School in Shanghai Jiao Tong University, also agrees that China could and should take a role as a “responsible power” in the region. To start, she says, the country should change its hesitant and uncertain attitude.</p>
<div id="attachment_365" style="width: 2458px" class="wp-caption alignnone"><a href="wp-content/uploads/2016/01/IMG_2249-2.jpg"><img aria-describedby="caption-attachment-365" class="size-full wp-image-365" src="wp-content/uploads/2016/01/IMG_2249-2.jpg" alt="The krill meatball attracted Expo participants for a free taste. But many say it tastes too “fishy”. (Courtesy: Liu Hongqiao)" width="2448" height="3264" srcset="https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2249-2.jpg 2448w, https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2249-2-225x300.jpg 225w, https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2249-2-768x1024.jpg 768w, https://www.futureoceans.org/wp-content/uploads/2016/01/IMG_2249-2-600x800.jpg 600w" sizes="(max-width: 2448px) 100vw, 2448px" /></a><p id="caption-attachment-365" class="wp-caption-text">The krill meatball attracted Expo participants for a free taste. But many say it tastes too “fishy”. (Courtesy: Liu Hongqiao)</p></div>
<p>“Let’s be clear — there is nothing wrong with pursuing its legitimate interests in the Antarctic. The lacking of a clear national strategy in the region, however, will cast a shadow on China’s international image,” Prof. Xue said.</p>
<p>She also warns about the uncertain investment risks under the current ambiguous national strategy on Antarctic krill exploration. Without proper guidance from the government, she said, the industry can easily become short-sighted as investors will rush to achieve their economic returns as soon as possible under an ambiguous regulatory situation. As a result, companies tend to harvest as much as their capacity allows, which is not sustainable to maintain either China’s responsible image or the krill stock.</p>
<p>Whether it’s China or any other country to expand the harvest, the risks are real – more krill in the market would reduce already low prices and it remains to be seen if global consumers have a taste for the product.</p>
<h2><strong>Moving towards stringent global governance</strong></h2>
<p>Following the commitment of world leaders at the Rio+20 in Brazil in 2012 to address the protection of the high seas, the world is now moving towards a legally binding treaty to protect its living resources and biodiversity.</p>
<p>On June 19, 2015, the United Nations (U.N.) General Assembly adopted a resolution to launch a new global treaty on marine life conservation in the high seas. A commission has been set up to prepare further negotiations.</p>
<p>“If the treaty would be passed by the U.N.’s 193 member countries in 2017 or 2018, it will be the Kyoto Protocol of the high seas. It’s epoch-making,” Chen Jiliang said to <em>THE Magazine</em>.</p>
<p>According to the U.N., the new treaty will be under the U.N. Convention on the Law of the Sea as well as the General Assembly. In addition to fishery resource management, it will also touch on hot topics like genetic resource utilization and deep ocean exploitation. Once passed, it would be the first comprehensive international treaty on the global ocean governance in the last two decades.</p>
<p>Prof. Xue is also positive about the new treaty. According to her, it would give more power to the regional fisheries management organizations (RFMOs). Krill fishing as well as toothfish and icefish in the Antarctic Ocean would then be exposed to stronger and much more stringent management under international law. The landscape of future marine fishery exploitation in Antarctic ocean would look very different.</p>
<p>“The age of operating free of regulation on the high seas will soon be gone. China should change its thinking right now and prepare for the changes,” Prof. Xue said.</p>
<p>While the country’s attitude on resource development is ambiguous, China continues to publicly push a conservation agenda. During President Xi Jinping’s visit to the U.S. in September 2015, China announced it planned to cooperate on building a conservation zone in the Antarctic’s Ross Sea.</p>
<p>But during this year’s annual CCAMLR meeting in Hobart, Australia in October, fierce debate on krill fisheries once again took center stage. Issues such as the aforementioned conservation zone, as well as plans to raise the tariff on krill resources, and improve vessel position reporting frequency and observer coverage were tabled. Observation groups pointed the finger at China, who they say blocked progress for the second year in a row.</p>
<p>While current disputes under the CCAMLR framework are mainly focused on krill stock monitoring and fishery management, it’s climate change, not fishing activities that remain the most urgent threat to Antarctic krill. Scientists <a href="http://www.nature.com/nclimate/journal/v3/n9/full/nclimate1937.html">warn</a> that unless carbon dioxide emission are mitigated, otherwise by 2300 the Antarctic krill population could collapse and cause dire consequences for the entire ecosystem.</p>
<p>At the climate negotiations last December in Paris, world leaders adopted a legal-binding agreement that sets the goal to hold global temperature warming to within 2℃ by 2100. The importance of maintaining the integrity of ocean ecosystems and protecting biodiversity was also discussed. Will future actions to address climate change expose the krill fishery business to additional risk? It seems likely. Business leaders like Liu Shenli should probably think twice before taking another bold move in the Antarctic.</p>
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