August 2021 was a key date for the Asian continent. That month was marked by the failure of the United States in Afghanistan, which, after 20 years of occupation and the fight against terrorism, had to leave the country in haste, leaving it in the hands of the Taliban, who made a major comeback on the international scene. This led to a reshaping of the strategic stakes in this unstable region, in particular through the loss of American influence and that of Western countries in general. The United States left a power vacuum in Afghanistan, that China was quick to fill. This disengagement was accentuated when the United States, unlike China Russia and Pakistan, refused to take part in the October 2021 talks on Afghanistan in. These three countries, and China in particular, are therefore in a position of strength in Afghanistan.

Beijing’s interest is primarily strategic. In the long term, Afghanistan could become a key player in the Belt and Road Initiative. This is why China is in talks with Pakistan to include Afghanistan in the CPEC (China Pakistan Economic Corridor). At a meeting in Islamabad in May 2023, the three parties issued a joint statement to extend the CPEC to Afghanistan, but implementation is proving to be long and complex. A trilateral agreement would be benefit all three players. It would allow Beijing to expand its sphere of influence in South Asia and form a strong regional bloc to counter neighbouring India. Moreover, the Taliban government, which has been rejected by the international community, especially the West, has been driven into Beijing’s arms. Unlike Western countries, for whom lack of respect for human rights is a major obstacle, China is pragmatic on this issue and does not wish to interfere in the country’s domestic affairs, preferring to focus on its own interests.  China’s view of international relations is very different from that of Western countries. Unlike the West, for which the Taliban’s repressive laws are shocking and unacceptable, China has a realist approach and focuses on its own interests. By not challenging the Taliban’s rule, China has found it easier to expand its influence in Afghanistan despite the Chinese crackdown on the Uighur Muslim community in Xinjiang, which could upset Kabul. But both countries are acting in their own interests. The Taliban need China to stay in power and develop the country, and Beijing needs Afghanistan to further secure its energy supply and increase its control over critical raw materials (CRM).

                The country’s other interest lies in its energy resources. It is rich in copper and rare earths, but also in CRMs such as lithium and cobalt, which are essential for the energy transition. Lithium is particularly abundant, with Afghanistan – dubbed to be the “future Saudi Arabia of lithium” by the Pentagon- potentially holding the world’s largest reserves, according to a USGS study. Although China is the world’s third largest producer of lithium, it lags far behind Australia and Chile. Studies have shown that demand for lithium will increase 40-fold by 2040 as part of the energy transition. We could therefore see a rise in geopolitical risk, with increased competition for access to CRMs and the emergence of a bottleneck. In the long term, therefore, Afghanistan could enable China to further diversify its supplies and become a key player in the energy transition.

               With Chinese production insufficient to meet the explosion in demand, Beijing has had to develop a long-term strategy and diversify its supply of CRMs by buying stakes in mines in Latin America, Australia and, more recently, Africa. However, China is increasingly affected by the deterioration in relations with Australia, and it is vital for it to secure its supply of CRMs such as lithium and cobalt. On the face of it, Afghanistan would appear to be an Eldorado for China, which, through the investment of its mining companies, could provide the financial resources to enable the Taliban regime to mitigate the impact of the international sanctions that are crippling the country’s economy. In return, Beijing could gain access to the country’s many CRMs.

               However, in addition to the international sanctions, Afghanistan suffers from a number of domestic handicaps that make Chinese investment in the country difficult. First, the country’s geography puts it at a disadvantage with no access to the sea and lack of transport infrastructure. The nearest port is Karachi in Pakistan, some 1,400 km from Kabul, while the port of Gwadar, which is part of CPEC and BRI, is some 1,600 km from the Afghan capital city. With an area of 650,000 km² and a population of around 40 million, the country has a road network of only 35,000 km. In addition, the country is very mountainous and its mineral resources are mainly located in the provinces of Konar and Nurestan in the north-east of the country, in very remote areas. The rail network, which is essential for transporting raw materials to China, is virtually non-existent at present. This raises the problem of supplying mineral resources to China in a country where everything has yet to be built, requiring colossal up-front investment for a result that is still uncertain in the long term. This is in stark contrast to other lithium-producing countries such as Chile, Argentina and Australia, where reserves are abundant and easily accessible. In the early 2010s, however,  studies were carried out to turn Afghanistan into a rail hub by building some 5,000 km of track, that would have linked the country to China as well as to Pakistan and Iran via the ports of Gwadar and Chabahar. But the project never materialised. Nevertheless, a tripartite agreement was signed in February 2021 between Uzbekistan, Afghanistan and Pakistan to build a 573 km railway linking the three countries from Termez to Peshawar via Mazar-i-Sharif and Kabul. The project is due to be completed in 2027, and should be able to carry freight from 2030. It will eventually be linked to the CKU rail project, which will connect China to Uzbekistan via Kyrgyzstan. China could then be supplied with raw materials from Afghanistan, provided the  transport infrastructure from the mines to the future rail network is built. Today, however, with the exception of the Aynak copper mine and the Hajigak iron mine, all areas with energy potential still lack water, electricity and roads.  Although China specialises in building infrastructure in emerging countries, Afghanistan represents a real challenge for Beijing.  

               But the main recurring threat in Afghanistan is domestic terrorism, which has a major impact on the country’s security, and foreign investment, particularly from China. The main terrorist threat is the Islamic State of Khorasan Province (ISKP), which opposes the Taliban regime and foreign interests in the country. Since the Taliban’s return to power, there have been several terrorist attacks, including one in a Kabul hotel in December 2022 that injured five Chinese nationals and an attack on the Foreign Ministry that killed around fifty people in January 2023. The terrorist group’s strategy is twofold. It wants to show that it is capable of striking at the heart of the country’s institutions, but also at foreign interests present in the country, thereby increasing the sense of insecurity in the country and illustrating the Taliban government’s inability to protect its citizens and foreign nationals, thus acting as an additional brake on Chinese investments. The ISKP, aims to destabilise the Taliban regime and opposes the foreign countries present in Afghanistan. Its propaganda against China is nothing new. In 2015, the ISKP already used songs in Mandarin to attract Muslim recruits to fight alongside it. In recent months, the terrorist group has focused its propaganda on the Uighur cause in order to attract new recruits. What’s more, the ISKP has been able to increase its power by bringing together groups such as the Islamic Movement of Uzbekistan (IMU) and the East Turkestan Islamic Movement (ETIM). This has allowed the group to increase the number of fighters by bringing Uzbeks and Uighurs into its ranks. ETIM’s merger with the ISKP has had a major impact on China. The ETIM is made up of Uyghurs and is still considered a terrorist group by Beijing, unlike the United States, which removed it from its list in November 2020. China fears attacks on its territory by this group from Xinjiang, which has found refuge in Afghanistan with the help of the ISKP. The Chinese authorities have urged Kabul to use all necessary means to fight terrorism and stabilise the country. But, Beijing is in a delicate position and does not want to play the same role as the United States, which fought terrorism in the country for twenty years but was seen as an occupier and finally had to leave in a hurry. China is unlikely to become fully involved in the fight against terrorist groups in Afghanistan. It does not want to interfere in the country’s domestic affairs and will cbe content to support the Taliban in order to protect its economic and strategic interests in the country. China’s position in Afghanistan is highly complex and security sensitive . It has to strike a subtle balance between preserving its interests and not interfering in the country’s internal affairs.

               The Taliban have promised to protect Chinese interests from the terrorist threat, but can they really? Beyond the security threat, good governance is essential for a stable political and economic environment that encourages foreign investment. In the 2010s, Afghanistan was one of the most corrupt countries in the world during the American presence. In 2021, the country still ranked 174 out of 180 on the Corruption Perception Index. But the Taliban government quickly declared its intention to tackle endemic corruption, and progress was soon visible. Afghanistan climbed 24 places in one year, from 174th in 2021 to 150th in 2022. Despite this progress, corruption remains a serious problem for the Taliban government, which needs to step up its fight against this scourge.

               The poor state of the Afghan economy may also be an obstacle for China. In addition to international sanctions, the US government decided in February 2022 to freeze $7 billion of the central bank of Afghanistan’s assets in the United States, causing a serious humanitarian crisis in the country. European countries joined with the US government in freezing $2.1 billion dollars. In 2022, Afghanistan’s GDP fell by 3.6%. However, this sanctions strategy could backfire on Western countries in the future, especially as China has not supported Western sanctions and has repeatedly called for them to be lifted.

               Uncertainty also surrounds  the valuation of Afghanistan’s natural resources. Estimated  between $1 and $3 trillion , they seem colossal, but the cost of exploiting them is also likely to be colossal for the reasons we ehave outlined. So far, Chinese investment in Afghanistan has not been profitable . In November 2007, China Metallurgic Group won the right to operate and develop the Mes Aynak copper mine in Logar province. But so far, the expected profits have been slow to materialise due to security problems and commercial disagreements with the government of the day. The situation changed with the return of the Taliban. Negotiations for production at the site resumed in 2021, but uncertainty remains and no date has been set. On the other hand, the first energy contract signed by the Taliban with a foreign country was with China. In January 2023, an agreement was signed between Kabul and Beijing to exploit oil in the Amu Darya basin in the north of the country. Xinjiang Central Asia Petroleum and Gas Co will be in charge of the project, which  is expected to invest around $150 million  a year and employ 3,000 local workers. Another contract was signed in July 2023, under which the Fan China Afghan Mining Processing and Trading Company (FAMPTC) will invest $350 million in Afghanistan over the next few months in various sectors, including power generation, the construction of a cement plant and healthcare.

               China’s main interest in Afghanistan is lithium, and Beijing is prepared to invest massively in the country through the Gochin company, which in April 2023 expressed an interest in investing $10 billion in the country. But the Chinese strategy is not limited to the financial aspect. It would also involve the construction of infrastructure and the recruitment of thousands of people, which could help revive the Afghan economy in the long term. In particular, Gochin has pledged to build roads and tunnels and to rehabilitate the Salang Pass, a key communications hub between Kabul and the north-east of the country. What’s more, the Chinese company estimates that the project will create 120,000 direct jobs and around 100,000 indirect jobs. This desire to create jobs and infrastructure would certainly be beneficial for Afghanistan, but it is an essential strategy for China, which needs a stable political and economic environment to prosper.

               Can China build a lasting economic presence in Afghanistan? Beijing has big ambitions for the country, but its major projects will be difficult to implement in the short term because security problems and political instability still make it difficult to invest. But unlike Western countries, which have a short-term vision, China’s strategy is not limited to a few years, but to several decades. The Chinese authorities are aware that it will take at least fifteen or even twenty years to exploit Afghanistan’s resources. In the meantime, much infrastructure will have to be built and the regime will need continued support to significantly reduce the problem of domestic terrorism and prevent the spillover of security risks into neighbouring Xinjiang.

               Diplomatically, Beijing is unlikely to try to influence the Taliban’s policy of freedom. Indeed, it is in the interests of the Chinese authorities that Afghanistan should remain both diplomatically isolated and rejected by Western countries in order to maintain its influence in the country. A democratisation of the Taliban regime would increase the number of foreign economic players in the country, which is clearly not in China’s interest.

               In the short term, therefore, Afghanistan is not an Eldorado for China. It will take many years to make the country more stable politically, economically and in terms of security. But the outcome remains uncertain, at a colossal financial cost. Beijing has been able to take advantage of the power vacuum created by the departure of the Taliban regime and the subsequent sanctions imposed by Western countries, but China will have to strike a balance between remaining a privileged partner of the current regime and not being seen as an occupier. In addition, other countries, notably India, are keen to expand their regional influence by establishing a presence in Afghanistan. But, even if Afghanistan is not Beijing’s current priority for CRM supplies, the Chinese authorities have an asset that could prove strategic in a context of growing demand for these strategic minerals, which are essential for the energy transition and the Fourth Industrial Revolution. China’s gamble on Afghanistan is a risky one, but one that could pay off in the long run.