China's Bid to Fill an Afghan Vacuum

With the imminent withdrawal of NATO forces from Afghanistan and the presumed shift to full Afghan sovereignty, US influence is inevitably going to decrease -- and it looks increasingly like China will fill the vacuum, given the amount of natural wealth that Afghanistan possesses and the dividends it can pay.

This resource wealth has changed the very policies of China towards Afghanistan, from a sort of “inactivity” and “disengagement” to “constructive engagement,” not in the sense of rebuilding the Afghans’ war-torn social fabric but in paving the way to enlivening the Afghan economy through investment in corporate sectors such as mining.

The visible change in China’s policy can be seen in the first visit in five decades of a high Chinese official, the former head of the Political and Legislative Affairs Committee and retired Politburo Standing Committee Zhou Yangkang, who visited Kabul in 2012 (and who is now in apparent disgrace in Beijing). It is for this reason that since the 9/11 attacks, China’s goals in Afghanistan have been almost entirely negative: no victory for the West, or for extremists; no long-term US bases and no terrorist training camps for Uighur separatists.

Most importantly, the Chinese wanted no serious involvement in Afghanistan. With the exception of its large but painfully slow moving Aynak copper-mine project, China has steered clear of anything beyond a token presence in Afghanistan’s economic, security, or political affairs. But the dynamics of Beijing’s interests as well as the Chinese presence in Afghanistan are changing considerably since the announcement of the US withdrawal.

As such, the evolving situation in Afghanistan has made certain questions all the more important. For example, the Chinese are getting seriously concerned with the question of political stability in the post-2014 scenario and its possible impact on the security of its Muslim majority province of Xinjiang.

Broadly, the renewed Chinese policy fundamentally doesn’t run counter to that of the West. It aims to play its part in establishing a “peaceful” Afghanistan, where it could make economic gains. It has already invested US$3.5 billion in the Aynak copper mine, which is estimated to hold 5.52 million tonnes of copper, and it supports the `Afghan-owned and Afghan-led` peace process.

Reluctant though Beijing is to assume responsibility for preventing any of these scenarios, it has accepted that sitting on its hands is no longer an adequate strategy. No wonder that instead of getting more involved directly, Beijing is instead using its economic clout and its leverage over Pakistan and the Taliban to expand its influence in Kabul. China’s relationship with the reclusive head of the Taliban, Mullah Omar, goes back to his rule over Afghanistan in the late 1990s. Among the only non-Muslims to meet with Omar, Chinese officials promised political recognition and support in the shape of telecom projects and other investments.

In return, the Afghan side promised that its territory would not be used by “separatist forces” to launch attacks against China. The 9/11 attacks curtailed the relationship, but the essentials of the deal remain in place. Although Beijing fears the radicalizing consequences of a full resumption of Taliban control, it seems to be in a far more comfortable position than any Western actor in dealing with the group essentially as a political force. Therefore, it is very unlikely that the Chinese, even if civil-war breaks out, would go for military engagement against the Taliban or any other group or even extend any form of support.

As such, in line with its policy of non-intervention, the Chinese have adopted the way of establishing its presence in Afghanistan through extensive economic investment. According to official Chinese figures, given by the former Vice Minister of Foreign Affairs Yang Jiechi, from 2002 to 2010 China’s aid to Afghanistan totaled a modest US$205.3 million and US$19.5 million in debt forgiveness.

In 2011, it also decided to provide Afghanistan with additional free assistance of US$23.7 million and is investing heavily in infrastructural projects such as the state hospital in Kabul and Parvan irrigation project; in human resources training, whereby almost 1,000 Afghan officials have been trained in China; and export tariff privileges. For example, in 2010, China decided to gradually exempt taxes on 95 percent of the commodities imported from Afghanistan.

Chinese companies have also been participating actively in Afghanistan in what looks like a government-directed push. Among all the contracts that Chinese companies won, development of the Aynak mine is the biggest – also the biggest foreign investment in the entire country. Is by a Chinese state-owned conglomerate, China Metallurgical Group, which plans to invest around US$4 billion by the end of 2015. The group also plans a railway network to exploit coal mines, a 400 megawatt coal-fired power plant and a 1 million-tonne steel works.

According to the state-owned Xinhua News Agency, China’s overall Afghan investment has already reached US$10 billion. The Afghan government will earn US$808 million in exploitation rights and about US$60 million per year from taxes over a 30 year period.

Another huge project which the Chinese company won in Afghanistan entails exploiting oil and natural gas reserves in Afghanistan’s northeastern provinces of Sari Pul and Faryab. Under the deal, signed in December 2011, Afghanistan will receive 70 percent of the sale profits. The deal is estimated to earn Afghanistan as much as US$7 billion over 25 years. If the project succeeds; it will bring an end to Afghanistan’s current total dependence upon imported oil and gas.

Apart from making investments in Afghanistan, China has also been paving the way for Afghanistan’s integration into certain regional arrangements. The shifting trilateral ties among China, Afghanistan, and Pakistan over the last year are one of the clearest signs of Beijing’s willingness to play an enlarged political role. Afghanistan’s most immediate reward has been its systematic upgrade in China’s regional diplomacy.

The Shanghai Cooperation Organization, an a six nation Eurasian political pact sometimes described as China's NATO, and the Central Asian security and economic bloc that China founded in 2001,admitted Afghanistan as an observer at its June summit in Beijing. Afghan President Hamid Karzai signed a new strategic partnership agreement with China on the same trip. In February 2012, Beijing also finally green-lighted the trilateral meeting process with Pakistan and Afghanistan, which will increase its role in mediating between the two sides—hence, enhanced political role.

Trade between China and Afghanistan remains modest at US$234 million, albeit increasing from barely US$25 million in 2000. China previously saw economic activities, especially those on a large scale, as providing ballast against a long-term US presence in the country and therefore best pursued slowly or not at all.

Now, with 2014 approaching, the spigots are starting to open. The US has been asking China for years to do more to incorporate Afghanistan into the region’s political and economic order. Now that US troops are heading for the exits, China has finally decided to accede. But unlike the far-off US, once China commits serious political and economic resources to the country, no one expects it to leave, especially given Beijing's friendly relations with Islamabad.

However, there are serious challenges which China will have to tackle. The presence of NATO forces meant for China a source of security and stability. It hoped that the Taliban or other fighting groups would refrain from attacking or jeopardizing China’s interests and would rather remain focused on attacking the allied forces. But, as the date of the US withdrawal from Afghanistan approaches near, this security dynamic is going to change fundamentally.

While China does worry about the threat of Islamist Uighur groups striking from their Afghan bases, this concern is relatively marginal because the bigger problem is the potentially negative repercussions for the rising number of investments from China in Afghanistan and its surrounding region. These investments are part of China’s policy of a broader ingress into Central Asia that is deeply linked with the effort of developing China’s historically underdeveloped province of Xinjiang, which borders Afghanistan.

The prospect of an Afghanistan returning to chaos is therefore not in Beijing’s interest in any way. Resumption of civil war and its possible spillover would bring instability directly to China’s doorstep. And this instability could, by all means, potentially expand northward into Central Asia or southward into Pakistan. China, in both the cases, would suffer from further chaos in either direction.

The solution to this problem is complex. China is neither interested nor expected to invest heavily in security efforts or rebuilding Afghanistan’s security apparatus, though a more substantial contribution in this direction than the offer to train a nominal 300 policemen that China made last year in Kabul would be helpful.

The best available option for China is investment. However, it has its own kind of challenges. Chinese companies often find that they lack a full understanding of the Afghan environment in which they are trying to invest. Orchestrators of the projects that begin with the best of intentions and large investments, like the Aynak mine, find themselves burdened with a local government response that is confused.

For example, the local Afghan government initially believed that MCC and Jiangxi Copper would build a rail line to the south. But the companies claim the contract only stipulated they would conduct a feasibility study. They also claim that the security situation has driven Chinese workers to refuse to work on the site, though reports about whether these stoppages are actually occurring are unclear.

Although large scale investment in Afghanistan can pay huge dividends both for the investor and the state, it has to be recognized that no country can single-handedly boost up Afghanistan’s war torn economy. Although China has started very ambitious projects, even if they were all successful, Chinese investment alone would not transform Afghanistan into a stable and prosperous state.

Above all, the sociopolitical challenges plus the security environment are still far from conducive enough for furthering and trickling down the benefits of foreign investment. The question of the Taliban’s possible return to power has also added to the prevailing uncertainty due to the illusions surrounding the US’s intentions about withdrawing and the question of possible residual forces.

However, notwithstanding these crucial aspects, it obvious that China is most probably going to lead all other countries, especially potential investors, in terms of investment, not only because of its interests in the region but also because of another advantage it has vis-à-vis other regional investors such as India and Russia, that is geographical proximity. Additionally, imperatives of developing its region bordering with Afghanistan links Chinese investment to its domestic priorities as well, which gives it additional logic for turning more towards Afghanistan.

(Salman Rafi Sheikh is a Pakistan-based academic.)