China Treads Cautiously on Expanding Trade and Investment with the Taliban --[Reported by Umva mag]

Three years after the Chinese government’s cautiously supportive stance toward the Taliban’s takeover of Afghanistan led to Chinese netizens blasting their government for being “Taliban in spirit,” China has maintained its friendly relationship with the Taliban, and numerous diplomatic and investment deals demonstrate their growing cooperation. While most other countries have criticized the Taliban’s severe suppression of women’s most basic human rights, China has used its leverage to instead legitimize the new de-facto government. Several recent articles discuss how Beijing’s priorities lie in advancing mutual security and economic interests, although progress remains limited.

Connectivity is a major goal in the effort to increase bilateral trade. To that end, and as part of China’s broader efforts to cement its place as Asia’s trade and transportation hub, China is building a rail line from Kashgar in Xinjiang to Samarkand, Uzbekistan that would give China easier access to Afghanistan and its copper and iron ore reserves, as The New York Times reported. A more direct route has also been undertaken along the Wakhan Corridor, a narrow, mountainous stretch of land connecting Afghanistan with China. While a new dirt road was recently completed, “[T]here is a need for significant infrastructure investment, which can be an estimated $10-15 billion dollars for this project” to pave the road and thereby convert it into a major trade route, Hamidullah Farooqi, Afghanistan’s former Minister of Transport, told VOA. “China has not yet made any particular commitments in this regard, because of the security threats and political instability in the region,” he added. For The Diplomat, Aarish U. Khan described the logistical hurdles of making the land link through the Wakhan Corridor a reality: 

In January, a Taliban government official from Afghanistan’s Badakhshan province as well as the governor of the province announced the completion of the construction of a road link up to the country’s border with China. 

Despite the announcement of the completion of the project, however, a road link with China remains far from suitable for meaningful cross-border trade. It still takes four hours to cover the 150 km distance from Faizabad – the capital of Badakhshan province – to Eshkashem on Afghanistan’s border with Tajikistan at the start of the Wakhan Corridor. It takes another four hours to cover the next 80 km to reach a town called Khandud on a dilapidated dirt track. After Khandud, there is hardly any road to speak of; just an off-road dirt track with several tricky water crossings that might lead a lucky off-roader to the Chinese border after a grueling eight to ten hour journey through unadulterated wilderness. It’s hard to imagine trucks laden with goods making it through the region. 

Therefore, while some analysts are of the view that China has opted to not open the route owing to lack of customs infrastructure on the border and security concerns from Afghanistan, the lack of a road – despite the Taliban’s claim to have completed one – remains the primary challenge. It is for this reason that most of Chinese trade with Afghanistan — amounting to $1.33 billion in 2023 and highly in favor of China — is via the sea route primarily through Pakistan’s ports in Karachi. [Source]

The extractive industry is another area of growing cooperation between China and the Taliban. This summer, the Mes Aynak copper mine project resumed, 16 years after development rights were awarded to the state-owned China Metallurgical Group. Afghan media outlets also reported this week that Song Wenbing, the head of a Chinese contracting company, revealed plans to invest over $5 billion in the first phase of the Mes Aynak copper mine. Reporting on the project for Foreign Policy last month, Christina Lu described how the Taliban have attempted to leverage the mine and other Chinese investment projects for their own strategic goals: 

In the global scramble for raw materials to power clean energy technologies and advanced weapons systems, Afghanistan’s mineral wealth should position it for success—at least on paper. The country may hold as much as $1 trillion worth of valuable minerals, according to U.S. estimates from 2010, and is home to what could be the world’s second-biggest copper deposit. But decades of war, political instability, and uncertainty have long thwarted any efforts to extract those treasures, leaving the country’s resource riches untapped. 

[…] The Taliban are “all in” on this project, said Michael Kugelman, the director of the South Asia Institute at the Wilson Center and the author of FP’s South Asia Brief newsletter. “The Taliban would see this project as very much a part of this broader vision that the Taliban have for making Afghanistan a bigger part of connectivity projects spanning South and Central Asia.” 

[…China’s eagerness to resume the mine] is good news for the Taliban, who have been searching for new revenue streams and sources of foreign investment. After they seized power, foreign aid to the country plummeted as a result of international sanctions—a change that decimated the country’s economy and pitched millions of Afghans deeper into a humanitarian crisis.

[…] Hungry for more cash and international legitimacy, the Taliban have actively sought out deeper economic ties with Beijing. Just last year, the group announced plans to officially join Chinese President Xi Jinping’s flagship foreign-policy program, the Belt and Road Initiative (BRI), as well as the China-Pakistan Economic Corridor [CPEC], which emerged under the BRI. [Source]

Security issues remain a major impediment to greater Chinese investments in the region. Pakistan is an example: frequent militant attacks against Chinese citizens and investment projects in the country have led Beijing to downgrade Pakistan and CPEC among its priorities, according to some analysts. Given that the Taliban has an even lower capacity for counterterrorism operations than the Pakistani government, it is unlikely that Afghanistan will be able to mitigate the even thornier security challenges that threaten Chinese interests. (Barnett R. Rubin at the Stimson Center recently published a chapter on Chinese peacemaking efforts in Afghanistan over the past five decades.) Makhdum Karam Shah published an analysis for the Wilson Center outlining how security issues in Afghanistan affect calculations by both China and the Taliban regarding their potential collaboration:

ISKP [The Islamic State-Khorasan Province] will be determined to sabotage Chinese investments to prevent the Taliban from securing legitimacy both internationally and domestically by bringing economic benefits to a struggling population. Their goals are simple: prevent the Taliban from gaining legitimacy, continue recruiting disenfranchised Taliban fighters and other Afghans unhappy with the regime, and continue using Afghanistan as a base to carry out their local and transnational terror activities. ISKP already attacked a Kabul guest house popular with Chinese businesspeople, wounding five Chinese citizens, in late 2022. This attack showcased ISKP’s intent and capacity to strike Chinese targets in Afghanistan, and it was accompanied by a dramatic increase in anti-China rhetoric deriding the “communist Chinese imperialists” for seeking to exploit Afghanistan’s resources. These developments are highly concerning for Beijing, and it will remain cautious about investment deals in Afghanistan until it feels these security anxieties are being properly addressed. Tellingly, the aforementioned China-Taliban oil extraction deal was announced only after the Taliban very publicly stated that they had arrested ISKP militants involved in the Kabul guest house attack. 

[…] The previously mentioned Chinese investors who were hoping to invest in Afghanistan’s minerals already cited ensuring safety as the “first and foremost” priority because “if safety is not guaranteed, the gain will not be worth the loss… we need to further observe the situation in the country before deciding whether the company will go in.” [Source]

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