For the past 20 years, Afghanistan has heavily relied on international aid and investment to finance its economy and state activities. About 75% of the government’s non-military budget was supported by the United States and other international donors. Once the Taliban ascended to power, however, most of the foreign aid and investment disappeared along with the American military. The US government froze $9.4 billion USD in Afghanistan’s international reserves, and the International Monetary Fund suspended over $400 million in the country’s emergency reserves. Earlier this month, the Afghan currency plunged to a record low against the American dollar.
The retreat of foreign finance and the callback of the US forces has exacerbated social insecurity and the economic predicament in Afghanistan. Prices of necessity goods have soared, leaving 97% of the population falling back into poverty and more than half the population facing severe hunger. Banks have reopened but only with limited cash availability. Millions of refugees and internally displaced people, meanwhile, pose a security concern to neighbouring countries as well as local communities. A severe drought is worsening these economic and social concerns by further threatening food insecurity and the livelihoods of millions of citizens.
The Taliban now needs to stabilise its economy even more urgently than it requires international political legitimacy. How can the Taliban achieve this? One strategy is to look beyond western actors and engage more cooperatively with nearby states, like China, Russia, Qatar, Iran, and Pakistan. Collaboration between Beijing and Kabul in particular has emerged as a promising avenue for economic rescue. This article discusses the interests of China in Afghanistan and the prospect of Chinese investment in the Taliban government. China has three core interests in Afghanistan, and it is unique to other players in the country. This has provided China with an opportunity to develop largescale and mutually beneficial economic projects. At the same time, however, many Chinese projects in Afghanistan are considered inefficient, untransparent, and disruptive to local communities. In this way, Taliban engagement with China presents both challenges and opportunities, which ultimately reveal the future potential of greater Sino-Afghan economic collaboration.
China and Other Great Powers in Afghanistan
Powers that loom large over Afghan politics include Russia, Pakistan, India, Iran, and the US. These powers have fought for decades over conflicts concerning borders, drugs, terrorism, and religious differences. There are historic border disputes between Afghanistan and Pakistan, and decades of conflict between Pakistan and India over Kashmir. Unsurprisingly, it has been challenging to establish coordinated India-Pakistan action on Afghan affairs. The US and Russia, meanwhile, have invaded Afghanistan in the past to fight terrorism and consolidate communism respectively.
The Taliban is yet to gain international legitimacy and completely consolidate its control over Afghan society, so regional powers, pursuing and protecting their interests, are increasingly taking action to maintain peace and control crime. Russia is reaching out to the Taliban to safeguard regional security and secure the borders of its Central Asian allies against a surge of terrorism, separatism, and drug smuggling. New Delhi is concerned that the Taliban will jeopardise its feud with Pakistan and its position in Kashmir against the insurgents. It recognises the possibility that insurgents could be encouraged by the success of their Islamic counterparts in Afghanistan and that the Haqqanis – a faction of the Taliban – could drive Kabul to favour Islamabad. Pakistan, meanwhile, is placed in a more nuanced position. On one hand, it is worried that the rise of the Taliban in Afghanistan could intensify its conflicts with Tehreek-e-Taliban Pakistan (TTP), an armed group which has fought for years to overthrow the Pakistan government. On the other hand, Pakistan is such an ardent supporter of China that its decisions are almost always formatted in line with China’s agenda.
China, meanwhile, is unique to other players. It possesses no conspicuously adverse historical legacy in Afghanistan. It encourages and facilitates no-strings-attached economic projects and aid. And it has shunned any prior military intervention in the country. This has made China a suitable prospective partner of the Taliban government – one that can mediate between the feuds of other powers; establish peace talks; finance economic projects; and channel aid and assistance while the Taliban’s international legitimacy remains in dispute. Increasing the share of China’s investment and assistance in its portfolio of external finance would also reduce Kabul’s financial reliance on western actors. And it would formulate a more balanced set of foreign assistance that could shield the country’s economy against the vagaries of international politics.
China developed a friendly relationship with the Taliban even before the fall of Kabul. In June 2020, at the Fourth China-Pakistan-Afghanistan trilateral dialogue, China’s Foreign Minister Wang Yi welcomed the Taliban in its return to ‘mainstream’ politics. In September, after the Taliban had captured Kabul, Wang Yi pledged to send $31 million USD worth of food, overwintering supplies, vaccines, and medicines in urgent humanitarian assistance. In return, the Taliban declared China would be their ‘principal partner’ in the international community. It has emphasised in particular the possibility of engaging with China through the Belt and Road Initiative (BRI) framework.
China has three major interests in Afghanistan: minerals and rare-earth materials, the BRI, and militants associated with the Eastern Turkistan Islamic Party. Afghanistan is estimated to be home to $1 trillion worth of minerals, including some 60 tons of copper reserves, more than 2.2 billion tons of iron ore, and 1.4 million tons of rare earth minerals. China has been particularly eager to exploit the benefits of those metals, given its giant domestic production industry and its increasingly intense technology competition with the US.
The same holds for China’s interest in extending the influence of the BRI to Afghanistan. In 2016, the two countries signed a Memorandum of Understanding to enhance cooperation under the initiative. Beijing is already developing connectivity through the Wakhan Corridor – which connects China’s Xinjiang province to Afghanistan – as a complement to the China-Pakistan Economic Corridor. So far, however, Afghanistan has not been fully placed under the BRI gambit and further commitment from both sides is required to integrate the country completely into the framework.
China’s third interest lies in protecting its territory from the terrorism of Uyghur militants affiliated with the Eastern Turkistan Islamic Party. Afghanistan has been accused as a training hub and shelter for such insurgents, who aim to separate Xinjiang from China and conduct terrorist attacks in the province. Beijing is determined to foster Afghanistan’s development into a stable and friendly state to secure its borders. Investigating and extraditing terrorists named by China – and therefore thwarting threats to Chinese domestic security – is therefore the strongest political leverage that the Taliban can exert on Beijing.
These core interests shape China’s diplomatic strategy in dealing with the Taliban. On the one hand, Beijing is eager to establish further economic projects under the BRI framework. On the other hand, China seeks to take advantage of its regional political position to participate actively in the peace process in Afghanistan, so that it can prevent terrorism from harming its interests at home and abroad.
Chinese Projects: Opportunities and Challenges
Chinese firms have several advantages compared to their western counterparts in conducting business in Afghanistan. This includes their state-owned nature, which makes them uniquely risk-tolerant and less concerned about financial liquidity. However, many of China’s projects in Afghanistan are characterised by non-delivery and low efficiency.
The most frequently cited example is the Mes Aynak copper mine in Logar Province, funded by the Metallurgical Corporation of China. In 2008, the corporation bid for this project and purchased the copper mine with the hope of generating further opportunities and investments. Due to severe security issues involving the murder and kidnapping of local Chinese workers and technicians, however, the project has languished in recent years. Consider also the China National Petroleum Corporation, which in 2011 acquired a $400 million USD bid to drill three oil fields in the provinces of Faryab and Sari-Pul, including the Amu Darya basin. This project has made little headway in the past few years. The same holds for the development of proposed BRI infrastructure – like the Five Nations Railway Corridor (FNRC) and the Sino-Afghan Special Railway Transportation Project. And the fragile security situation has disincentivised any largescale investment scheme in construction.
Indeed, one reason for the inefficiency of Chinese projects is concerns over the safety and security of Chinese workers. Before the US and other western powers withdrew from Afghanistan, China was said to have taken a free ride on the security they provided and conducted business beneath their protective umbrella. Now that this umbrella is gone, Chinese projects in Afghanistan have become even more precarious and expensive. Although safety persists as a principal concern of Chinese investors, China is still less targeted by Afghan militants than other western and regional powers. And so Beijing remains in a comparatively favourable position to improve on its reputation as an inefficient project deliverer among local communities.
China also has great political leverage in mediating the peace process in Afghanistan with its strong political relationship with Pakistan. China plays a constructive role in facilitating the peaceful dialogue between Pakistan and the Taliban, and between the US and the Taliban. On China’s side, there is therefore much it can do to improve the overall security level of Afghanistan. The Taliban, meanwhile, should consider dispatching additional police forces to and implementing more security measures in concerned areas, so that it can prevent attacks aimed at workers and technicians and secure more productive contracts with China.
A second reason that stands in the way of efficient Chinese project delivery is China’s lack of transparency and miscommunication over partnership terms. The outside world does not have enough access to information regarding the details of Chinese transactions and key decision-making processes. Some scholars suggest that these foreign projects are designed to acquire greater political influence over the host country, rather than truly expecting them to be viable and profitable. Therefore, for China to illustrate its commitment to productive and mutually beneficial collaboration with Kabul, its firms should open the black boxes of their inner workings and make their decisions traceable to relevant stakeholders and the international community. The Taliban should also consider adding transparency terms into the contract to pressure delivery.
A third concern is the effects that these Chinese projects have on local communities. Literature focusing on other regions report that disputes sometimes erupt between Chinese firms and local communities. Often they involve resettlement, procurement policies, and working conditions that ’create isolated Chinese enclaves and bring little benefit to the local population’. Similar concerns have been raised in Afghanistan as well. At the same time, Beijing claims to respect the right of Afghans to decide their future, intimating that the Taliban’s victory reflects the will of the people. Critics suggest that this implies that China will not question the Taliban’s human rights violations unless Chinese citizens are involved.
However, it seems that the Chinese government’s intention is to improve – and not worsen – humanitarian conditions in Afghanistan. In Wang Yi’s recent address to the foreign ministers of Afghanistan’s neighbouring countries, at least two of the six agenda items he proposed centred on supplying the country with and facilitating its access to humanitarian supplies. Therefore, to win the hearts and minds of the Afghan people and the international community, China and Chinese firms need to publish how their projects influence and improve the plight and development of local communities. They also need to illustrate how they answer international calls for a more humanitarian-friendly regime in Kabul. This would be a promising start.
China, Afghanistan, and the Future
With the retreat of the US and the ascendancy of the Taliban, Afghanistan is facing severe economic hardship that places millions of civilian lives in danger. Understanding the regional political implications of a Taliban-led Afghanistan and channelling desperately needed investments into Afghan society have emerged as pressing concerns. Engaging more with regional powers – and China in particular – seems to be the way forward.
While Russia, India, Pakistan, and other powers have conflicting interests, peace is increasingly recognised as a shared goal. But their engagement with Afghanistan is also hampered by their unfavourable historical legacies in the country. China, meanwhile, has evaded this obstacle. And it encourages no-strings-attached conditions in its economic projects and aid, and has shunned any prior military involvement in Afghan affairs. These factors make China a suitable mediator of peace processes and a regional economic developer in and partner of a Taliban-led Afghanistan. It also places Beijing in an ideal position to pursue its interests in the country, which include minerals and rare-earth materials, the BRI, and militants associated with the Eastern Turkistan Islamic Party.
Though China’s investment projects in Afghanistan are often inefficient, these challenges also point to the future of – and opportunities in – greater Sino-Afghan economic collaboration. Beijing is well positioned to establish closer ties with its neighbour; to disclose project details further, signal stronger commitments, and press for delivery; and to incorporate the concerns of local residents into its decision-making processes, which will improve China’s image in both local and international communities. As Kabul’s ‘principal partner’, Beijing has a promising opportunity to improve Afghan security and alleviate the hardship of its citizens.