Afghanistan Analysts Network – English

Regional Relations

Chinese Investments in Afghanistan: Strategic economic move or incentive for the Emirate?

Thomas Ruttig 2 min

When the West withdrew from Afghanistan, many assumed its acquisitive neighbour, China, would reap the economic benefits of the change of government in Kabul. Afghanistan has immense, but largely untouched mineral and hydrocarbon wealth, including strategically valuable metals, such as lithium. That assumption was fed in the first half of 2023 by a flurry of high-level business meetings and some potentially significant contracts between Chinese companies and the Islamic Emirate, including on mining projects. Given the perilous state of Afghanistan’s economy, major investment could help Afghans, as well as potentially giving the Emirate a more stable economic footing. Yet, in reality, Chinese engagement in Afghanistan is still tentative. This raises the familiar question of whether the Chinese government is pursuing real economic interests there or using them to incentivise the Emirate to play along with its security concerns. AAN’s Thomas Ruttig tries to decipher the real deals from the spin, and weighs the arguments in the debate over what Beijing’s primary motivations is – security or economy?

The Emirate’s acting Foreign Minister Amir Khan Muttaqi welcomes China’s then Foreign Minister Wang Yi at Kabul airport, ahead of a meeting of Afghanistan’s neighbours in Beijing. Photo: IEA Ministry of Foreign Affairs/AFP, 24 March 2022.

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In the first six months of 2023, there was a series of business deals and contacts between Chinese companies and Islamic Emirate of Afghanistan (IEA) officials in mining and other sectors, supported by China’s leadership in Beijing and its embassy in Kabul. The Afghan media, including state-owned media outlets, covered these deals and meetings between IEA officials and Chinese business delegations extensively and a number of Western researchers have also weighed in on the issue. The coverage has been conspicuously less widespread in Chinese, perhaps reflecting Afghanistan’s relative insignificance for it. Yet, what might seem like ‘small fry’ projects for China – a mere ‘slip road’ in its global Belt and Road Initiative – hold the potential to inject significant income into the Afghan economy and the Emirate’s lean coffers.

While China’s policy remains difficult to read, it is not indecipherable. Its activity in Afghanistan appears big because of two facts: first, the United States-led West has left, and this has opened more space for other actors; secondly, there is relative peace, making business easier. That does not mean, however, that China will (or is inclined to) step in with investments to match the amounts the US invested in Afghanistan between 2001 and 2021.

China’s engagement in Afghanistan needs to be seen in the context of its long-term strategy to secure access to strategic resources, including land and food and, increasingly, its global rivalry with the US. Afghanistan is not an unimportant piece on this chessboard. Given its wealth in minerals, gas and oil, the country has long-term potential for Chinese companies, small or large, private or state-owned, particularly if it remains relatively stable under the Emirate. However, only two years after the Taleban’s second takeover, it is probably too early to say whether China and its (state-run or state-owned subsidiary) companies have now, in contrast to the two decades of the Islamic Republic, really started to work, including on such mega projects as the Ainak copper mine in Logar province.

This report brings together available details on the deals and highlights some contradictions and question marks in the media coverage. It also considers China’s engagement under the Islamic Republic of Afghanistan in order to provide context, and finds that although, at first glance, the Chinese players involved have changed, there is, in fact, some continuity.

Edited by Roxanna Shapour and Rachel Reid

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China Economy Mining Taleban Taliban

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