Despite expectations, China not rushing to cash in on post-U.S. economic collapse in Afghanistan

Ingrained commercial pragmatism and vulnerability to jihadist violence inhibit Beijing from investing heavily in infrastructure and mineral extraction under Taliban-rule.
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China, Afghanistan
Chinese Foreign Minister Wang Yi meets with Taliban cofounder Abdul Ghani Baradar in Tianjin, China, July 28, 2021.
(Photo by Li Ran/Xinhua via Getty Images)

With Afghanistan's economy reeling in the aftermath of the abrupt U.S. withdrawal from the country in August, the ruling Taliban hopes — and Western democracies fear — that China will come to the regime's economic rescue. Such hopes and fears may prove slow to materialize, however, thanks to Beijing's ingrained economic pragmatism coupled with its apprehensions about Afghanistan-based jihadist support for the Uyghurs, China's oppressed Muslim minority.

The Afghan economy is collapsing. For decades, the country has been largely dependent on foreign aid, most of which has been halted since the Taliban seized control in August. 

The Taliban's U.S. bank accounts have been frozen. Inflation is soaring, as is unemployment. Many workers who have jobs have not received their salary for months. The U.N. Development Programme (UNDP) expects 97% of the population to fall below the poverty line next year. 

Historically, the country has been plagued by drought, corruption, and under-utilization of human capital. Other issues, such as brain drain and capital flight have intensified since the fall of Kabul in August. Widespread sanctions have further complicated the country's economic stability. 

Western nations have expressed a willingness to provide aid, as long as the aid does not pass through Taliban hands. This is nearly impossible, however, as the Taliban control all major institutions, including the military and the educational system.

The Taliban leaders had met with Chinese officials, including Foreign Minister Wang Yi, in China back in July, before the U.S. completed its withdrawal from Kabul. The Chinese government's official stance is that they assume the incumbent rulers of a nation to be the legitimate government. Consequently, the Taliban saw this meeting as an acknowledgement of legitimacy from Beijing. They have expressed their hope for significant Chinese investment and aid to support the country. 

The Taliban have claimed that Beijing is ready to invest in Afghanistan, as long as the Taliban can guarantee the safety of their investments. Afghanistan has also signaled its interest in joining China's Belt and Road Initiative, particularly the portion which passes through Pakistan, the China-Pakistan Economic Corridor (CPEC). So far, however, China has not moved to significantly increase its economic engagement with Afghanistan. The current reality suggests that economic partnership between Afghanistan and China may be far off, or may not take place at all.

China's official stance of noninterference in the internal affairs of other countries has allowed them the freedom to engage economically with so-called "bad actors," regimes shunned as terrorist or dictatorships by the West. China has always traded with the military government of Burma, for example, in spite of international calls for boycotts. They also trade with insurgent armies fighting against the Burmese army, such as the United Wa State Army and Arakan Army. In South Sudan, the CCP supported the Khartoum regime, which the West had accused of human rights violations and genocide. To ensure their oil interests, the CCP covered all of its bases by also providing financial support for the Sudan People's Liberation Movement-in-Opposition . And in India, they have been accused of supporting the Naga separatist movement. 

Chinese investment and trade decisions are typically based on considerations of stability, expediency and safety rather than international morality. In Burma, many of the natural resources China needs and infrastructure projects China has invested in lie in rebel-held territory, where it has simply been easier to pay off the rebels than to choose sides. The situation in Sudan was similar. Afghanistan, however, is a bit more complicated. 

Apart from oil, Afghanistan is sitting on trillions of dollars' worth of minerals, metals, gems, and other raw materials, including defense critical rare earth minerals. All told, Afghanistan's mineral wealth may exceed $3 trillion. Extracting it, however, would be costly and would expose China to numerous risks. 

For some time, the Chinese government has been concerned that Afghanistan could be a safe haven and launching ground for terrorists in China's Xinjiang Uygur Autonomous Region. The CCP has also worried that Uyghurs would seek training with IS, al-Qaeda, or the Taliban abroad. Therefore, they have maintained a large number of troops on the borders around Xinjiang, as well as the borders with Afghanistan and Pakistan. 

Many Muslim groups blame China for their repression of the Uyghurs. As a result, Chinese citizens and investment projects have been over the past 20 years the victims of Islamic terrorist attacks in Xinjiang, Pakistan, Afghanistan, Kyrgyzstan, Mali, Brussels Airport, Cameroon, Jordan, Kenya, Malaysia, Mali, Syria, and Thailand. 

CPEC, China's massive infrastructure investment in Pakistan, has been an obvious target for terrorists. Many of the attacks in Pakistan have come at the hands of the Tehrik-i-Taliban Pakistan, the Pakistan Taliban, which have connections to the Afghanistan Taliban.

Protecting Chinese interest in Pakistan is one of China's main reasons for engaging with the Taliban in Afghanistan. Beijing hoped that by courting the Taliban, they could convince them to protect CPEC. Now that the Americans are out of the way in Afghanistan, it seems to be in the best interests of both the Taliban and the CCP to move forward with Chinese investment in mineral extraction. The Taliban certainly need the money, and China is always hungry for raw materials. But things are not that cut-and-dried. Beijing is still unsure if the Taliban can protect Chinese investment in Afghanistan or in neighboring Pakistan. 

Starting up mining operations in Afghanistan, extracting minerals, and refining them, will necessitate billions of dollars' worth of plant and equipment, as well as Chinese personnel to run the operations. In a country lacking infrastructure, Beijing would have to build roads, power generation stations, airfields, and dormitories for workers, and then establish supply chains to provide them with food, fuel, and other consumables. 

At present, Beijing has no concrete assurances that Chinese investments will not become targets. There is always a chance that the Taliban could take Beijing's projects hostage. Another possibility is that the Taliban government does not have control over all of the local governments and that renegade factions of Taliban could attack or rob Chinese projects. Yet another hazard is that other groups that oppose Taliban rule may attempt to shut down Chinese projects, to deprive the Taliban of much-needed funding. 

For the time being, it appears that Beijing is proceeding cautiously with the Taliban, doling out small aid packages, but not yet ready to take the plunge. For all that, China has time on its side. It is not as if other countries are waiting in the wings to make a better offer to the Taliban.