China, which shares 76 kilometer long border with Afghanistan, has maintained a relatively ambiguous position on Afghanistan since the fall of Taliban in 2002. The two countries established diplomatic ties during the reign of King Zahir Shah when the then premier Zhou Enlai and his deputy He Long visited Afghanistan in 1957. It was the first ever visit by top Chinese leadership to Afghanistan in the history of Sino-Afghan relations.
After the soviet invasion of Afghanistan in late 1970s, the relations between the two countries developed strains. It was only in 2002, after the ouster of Taliban and the intervention of international community, that Afghan-Sino ties were revived.
However, as a policy, China maintained relatively low-key presence in Afghanistan, at a time when western countries were actively engaged in rebuilding and reconstruction works in the beleaguered country.
The equation is likely to change now with the change of guard in Kabul. The forthcoming visit of President Ashraf Ghani to Beijing has assumed significance as it would be his first business trip to a foreign country. With the decrease in military presence of western countries in Afghanistan, Afghan-Sino ties are likely to improve further.
The new Afghan president is expected to embark on his visit to China on October 28. He will be accompanied by a delegation of Afghan entrepreneurs with an aim to improve business ties between the two countries.
Unlike the West, China has restricted itself from military involvement in Afghanistan, but has keen interest in Afghanistan’s mineral deposits – two mega copper and oil concessions have already been awarded to Chinese companies.
The new Afghan President is visiting China with the hope and expectation that China will pledge support to the new government in Kabul and help in facilitating peace and stability in Afghanistan
In 2011, China National Petroleum Corp (CNPC) secured the Exploration and Production Sharing contract for three oil blocks in Amu Darya Basin of northern Afghanistan and was the first foreign company to exploit oil reserves in Afghanistan. CNPC has invested around 400 million USD and the project is expected to generate approximately 7 billion USD in revenue for Afghanistan over the period of 25 years.
Besides the oil deal secured by CNPC, concession for the development of Aynak Copper mine, which contains more than five million tons of high-grade copper, was granted to China Metallurgical Group Corporation (MCC) in 2007. According to officials in the Ministry of Mines, besides an initial planned investment of 3 billion USD in the development of this mine, MCC also agreed to build railways, exploit coal mines, and construct a 400-megawatt coal-fired power plant.
However, the progress on the project has been sluggish and the company has recently asked the Afghan government to renegotiate the terms of the contract due to falling copper prices in the global market and lack of security at the project site.
The new Afghan president is expected to raise the issue of copper mine with the Chinese officials during his three day visit to the country. He will also meet his Chinese counterpart Xi Jinping, Head of the Chinese parliament and will participate in a business summit organized for Chinese and Afghan business communities.
Besides that, he will also attend the Heart of Asia Summit in Beijing. The conference provides a platform to discuss regional issues related to security, political and economic cooperation between Afghanistan and its neighbors.
During the election campaign, President Ghani described his foreign policy consisting of five circles – Islamic world, regional economic powers (China and India), West (USA, Canada and Japan), Europe and international financial institutions (IMF and World Bank).
The foreign policy of the new government for the countries in the neighborhood is largely grounded on the principle of inextricable linkages among them. That is, instability in any of the neighboring countries is a threat to the stability of Afghanistan just the way instability in Afghanistan is a threat to them.
The new Afghan President is visiting China with the hope and expectation that China will pledge support to the new government in Kabul and help in facilitating peace and stability in Afghanistan. He also wishes to persuade Chinese firms to invest in mining, energy and other large infrastructure projects inside Afghanistan.
China has aggressive foreign investment policy; it can use the declining presence of the West and its proximity to win major mining and other infrastructure projects in Afghanistan
Bringing peace and stability to Afghanistan is a top priority for the new government and one of the key aims of this visit will be to seek China’s help in facilitating that. China has very close ties with Pakistan, while Pakistan is viewed as the main supporter of the Afghan Taliban – a claim dismissed by Pakistani officials. China can put pressure on Pakistan to cut its ties with the Taliban and force them to negotiate with the Afghan government. The recent increase in terrorist activities in China is a reason for China to play a critical role in supporting Afghan peace process.
Due to limited domestic revenue and decline in foreign aid, the Afghan government cannot implement mega infrastructure projects, thus it relies on the regional economic powers – China and India – to invest in mining, energy and other infrastructure projects.
President Ghani will use this opportunity to woo potential Chinese investors. In order to encourage Chinese investments, the Afghan government has to address the problem of insecurity and needs to offer favorable business terms. China’s investment is critical for Afghanistan as it helps to develop the infrastructure and provide access to international market.
The active role of China, an emerging economic giant, in Afghanistan is of huge strategic importance. The Afghan government is presently dependent on the West, America in particular, as it funds majority of the military expenditure and the development projects inside Afghanistan. Thus, by promoting ties with China, Kabul aims to reduce its strategic reliance on Washington.
For China, there are a number of reasons to help Afghanistan. Insecure and unstable Afghanistan is also a security threat for China and its foreign economic interests.
The East Turkistan Islamic Movement is the most dangerous threat to the stability and security of the Xinjiang province of China. The Chinese government has labeled the movement as a network of international terror, with funding from the Middle East, training in Pakistan and combat experience in Chechnya and Afghanistan.
The group has been responsible for some of the deadly attacks in western China, including the recent knife attack on a train station, which left 33 dead and 130 injured. A failed Afghan state, governed by Taliban or like-minded groups, will motivate the East Turkistan movement to further launch attacks in China.
China has aggressive foreign investment policy. It can use the declining presence of the West and its proximity to win major mining and other infrastructure projects in Afghanistan. The increasing investment of China could also encourage its political role in Afghanistan.
According to experts, the aggressive role of China in Afghanistan is likely to upset the U.S. administration. The U.S. government has invested billions of dollars in Afghanistan over the years and thousands of American soldiers have laid down their lives in combat operations. An Afghanistan, which could potentially serve the foreign Chinese interests, will not be welcomed by the U.S.
However, some other experts disagree. In economic terms, Afghanistan is a burden on the U.S. as it pays majority of Afghan government’s bills and supports any initiative that increases Afghan government’s revenue. Thus, they believe, the U.S. will not oppose the increasing role of China in Afghanistan.
Another country which would be keenly watching China’s role in Afghanistan is India. India has more interests in Afghanistan than China due to its rivalry with Pakistan. Thus, it wants to remain an active player in Afghanistan. However, Afghanistan appears to pursue a regional cooperation policy for the stability of the region, and will preserve a degree of relative balance in relations with China and India.
Consequently, President Ghani’s trip to China is an attempt of an active diplomacy to unlock China’s potential in bringing peace to Afghanistan. There is a hope that Afghanistan’s geopolitical specific characteristics can open a new chapter of relations with China provided the new government adopts principled and institutionalized measures in managing its diplomacy with China.
For economic mobility of Afghanistan, President Ghani will encourage China’s investors to invest in big development projects inside Afghanistan. Such investment will not only boost economic prosperity of Afghanistan but will strengthen regional cooperation and stability. Also, the Afghan government can massively benefit from China’s good lessons learned and experiences in private sector development and assisting entrepreneurs, but, as a less told story, it is important for Afghan policy-makers to take into account the potential negative impact of inbound investment on the local Afghan industries, SMEs in particular.
About the Authors: Wali Khan has a postgraduate degree in Business Management from the Australian National University (ANU). He has been working with Afghan government in broadening and enhancing individual and institutional capacities, including mining sector institutional and regulatory reforms. Follow him on Twitter @walikhanmg
Ziauddin “Wahaj” has a postgraduate degree in Economics from University of Adelaide and has been working with the Afghan government in change management and institutional capacity building areas. Follow him on twitter @wahajzia