China’s investments in Afghanistan have been growing in recent years, as Beijing expands its economic and political influence in the country. In January 2023, a Chinese company signed a $450 million deal to explore and develop oil reserves in northern Afghanistan. In April, the Taliban regime announced they were in discussions with a Chinese firm to undertake the exploration and development of Afghanistan’s lithium reserves. Some in Beijing are hoping that they will succeed where other great powers failed – and somehow stabilize what has lately been a turbulent country.
In contrast to the previous American, Soviet, and British forays into the Afghan frontier, China’s involvement is focused more on the economic and diplomatic side, with a negligible military element. Chinese engagement with the current Taliban regime is driven by a multitude of factors, including the desire to tap into Afghanistan’s natural resource wealth, prevent the spread of extremist ideology, and secure China’s own strategic interests. Afghanistan is rich in minerals and resources such as coal, oil, copper, iron, lithium and rare earth minerals, and Chinese companies appear eager to gain access to these. Furthermore, China seeks to expand its political and economic influence in the region as part of its Belt and Road Initiative, and Afghanistan is the weak link in this chain that extends from China’s Xinjiang region to Europe.
The initiatives undertaken are diverse, ranging from infrastructure projects to mining and energy development. One of the most significant projects is the construction of a massive copper mine in Mes Aynak – giving China access to one of the world’s largest copper deposits. China is also investing in iron and gold mining projects, the agricultural sector, as well as in oil and gas exploration. Infrastructure development projects include the construction of roads and bridges – repairing the Salang Pass and the pavement of Kumar and Laghman Roads serve as an initial demonstration. Future plans include linking Uzbekistan, Turkmenistan, and Tajikistan with Pakistan via railways and highways passing through Afghanistan.
The impact of Chinese investment in Afghanistan is far reaching and has significant implications for the country and the region as a whole. Infrastructure development will help improve the Afghan transport sector and developing the mining sector will provide the Taliban regime with the cash it desperately needs. The Taliban view China as a major stakeholder in Afghanistan’s economic development and appear eager for an increase in Chinese investments, especially as Western aid dries up. Chinese investment has provided a much-needed boost to the Afghan economy and provided some form of legitimacy to the Taliban – who are desperate to prove to ordinary Afghans that they can govern the country. The investment in lithium projects, estimated to be around $10 billion, would create more than 100,000 jobs over the next five years.
However, it should be noted that there is a difference between signing memorandums on paper and the actual investment materializing. China signed many deals with the previous Afghan government. The Amu Darya Project, estimated to generate $7 billion for Afghanistan and create 3,000 jobs, was one such project – but it, along with many other Chinese projects, was delayed for security reasons.
U.S. and Soviet engagements with Afghanistan were marred by a battle-hardened insurgency that hindered any attempts at development. Chinese businesspeople might not have to face a similar obstacle, at least not yet. As of now, there is no equivalent to the Mujahideen backlash against the Soviets or the Taliban insurgency that opposed the U.S. presence in the country. Unlike the past, almost all of Afghanistan’s neighbors – Iran, Pakistan, and the Central Asian states – are likely to play ball and not do anything to impede China’s designs in the region.
The chief threat to China’s enterprises will come from the Islamic State’s branch in Afghanistan, known as Islamic State Khorasan Province (ISKP), which will continue to pose a serious challenge to the security environment in the country. It remains to be seen whether the Taliban could tackle ISKP. In doing so, they would have to transform from an insurgent group to a national government capable of providing security, a task inundated with many challenges.
The Chinese might discover that simply throwing money at a problem doesn’t resolve it. Over the last 20 years, the United States provided more than $150 billion to the previous Afghan regime, with varied results. There were some noticeable improvements, especially in the education sector, with literacy rates rising from 5 percent in 2000 to over 30 percent by 2021. Yet, deep rooted corruption, weak state institutions, and the Taliban insurgency prevented Afghanistan from benefiting from generous U.S. aid.
The United States’ experience demonstrates that generous aid is not a substitute for strong state institutions, a well-functioning bureaucracy, and a safe security environment. In the absence of partnership with the global community and sustained reforms, there is little chance that Chinese investments, on their own, will result in social and economic development. These are issues that the current Taliban regime has yet to address, assuming they are inclined to do so in the first instance. The ban on female education serves as an indicator of the Taliban’s regressive views on social progress.
Nevertheless, China has its own strategic imperatives for engaging with the current regime. The Chinese leadership hopes that through investment, the Taliban may be persuaded to limit their theocratic designs to their own country and not export these views to the rest of the region. This is especially true of Xinjiang, where the Chinese government has faced severe criticism due to its alleged mistreatment of the native Uyghur Muslims. Investment may be seen as an incentive to the Taliban to ignore developments in Xinjiang and rein in groups like al-Qaida who may be tempted to expand their operations in Xinjiang for ideological reasons. This is easier said than done, since a rational calculation of economic self-interest rarely factors in the decision-making process of extremist organizations.
On their part, Chinese investors will be anxious about a repetition of the 1990s. There were hopes then that the Taliban would transform in to a more pluralistic national government and reach out to opposition groups. This would have been achieved by a grand national jirga and would inevitably require some form of power sharing with the Afghan opposition and members of the erstwhile Northern Alliance. So far, there are no indications of this materializing.
In the past, such failures have resulted in civil wars as groups who find themselves excluded from power politics resort to taking up arms and the country ends up being divided between various factions. At this stage, we cannot rule out the past repeating itself. If this were to happen, not only would all prospects of Chinese investments end, but the ensuing turmoil would spill over to neighboring countries. Already, the Taliban takeover has been followed by a series of attacks within neighboring Pakistan, endangering Chinese investments in that country. China has invested billions in Central Asia and Pakistan, and an Afghan civil war or Islamist misadventures could seriously jeopardize those developments.
Even if Chinese companies push ahead with investments, there are questions about how much of this money will flow into the coffers of the Taliban and how much will be used to generate revenue that can be used to improve the standard of living of ordinary Afghans. Moreover, the absence of strong state institutions will raise concerns about the ability of the current Taliban regime to ensure transparency and tackle corruption. Cut off from the West and with a significantly weakened economy, there is a chance that the Afghans end up signing favorable deals to entice Chinese investors at their own expense. For example, Afghanistan has few institutions and little legislation that could mitigate the environmental impact of large-scale mining and resource extraction.
As China expands its economic and political footprint and influence in the region, it is likely to face increased scrutiny from the international community, particularly since it is now seen as a competitor to the Western led world order. The United States may have withdrawn from Afghanistan and will have limited interest beyond counterterrorist operations; however, countries like India will view China’s growing influence in the region as a threat to their own strategic interests. This will be especially poignant if the Taliban start harboring groups that not only threaten the U.S. but also target India. Given the trajectory of China-India relations, this will likely lead to increased tensions in the region, which could undermine stability and security in Afghanistan and South Asia.
In conclusion, Chinese plans in Afghanistan are a complex and multifaceted issue, with both positive and negative implications for the entire region. Chinese investments have provided a much-needed boost to the current Afghan regime but will also have to deal with concerns of transparency and political stability. Stabilizing Afghanistan will be a herculean task for China.
Afghanistan is not going to be a key issue in Beijing – policymakers are likely to have their hands full with Japanese rearmament, the formation of AUKUS, superpower rivalry with the United States, and a potential conflict with Taiwan. However, securing Afghanistan would create an arc of Chinese influence, from China’s western regions all the way to the Euphrates, encompassing Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Afghanistan, Pakistan, and Iran. The region would be linked with China via highways, railways and pipelines, funneling their resource wealth in the Chinese industrial sector. Doing so would give China an advantage as it gears up for superpower rivalry with the United States.