China Afghan Dilemma: Looking for Reward Amid Ton of Risk
Michael Hughes
March 2, 2024
The Western exit from Afghanistan left the country’s neighbors to deal with the fallout from the Taliban’s grooming of and/or inability to contain transnational terrorist activities. Beijing, likely grasping it does not have the capabilities to reach the growing threat of Afghan-based terrorists targeting China, figures it can at least get something from the high-risk scenario.
However, China is unlikely to see much upside by expending cash and effort to exploit Afghanistan’s minerals, allegedly worth some $1 trillion, as many opponents of the U.S. exit have claimed. At the most, China will likely take pieces off the geopolitical chessboard for relatively EV metal-starved Western powers. At the least, they will rule out for the world the endeavors are academic due to security and cultural issues along with difficulties in doing business with the radical movement.
ECONOMIC & SECURITY UPSIDE LIMITED
China has taken a different approach to Afghanistan than the West, moving quickly to solidify ties with the Taliban after the fall of Kabul primarily by playing to the regime’s financial interests, as opposed to condemning and isolating the radical de facto rulers over rights abuses. Many U.S. analysts have claimed the United States is the big loser after exiting Afghanistan because China has freer access to accumulate resources from the landlocked central/south Asian country. This reasoning has been echoed recently by local experts as well.
“The vast natural resources of Afghanistan, such as copper, lithium, or rare earths, have significant economic potential for China,” Kabul-based Kardan University political science professor Jalal Bazwan told AFP a month ago.
Hopes for boosting trade between the two countries have also been lifted by a 186-mile road being built that will connect Badakhshan to the Chinese border, according to the public works ministry. Khaama Press agency’s Noman Hossain also notes that decrease in involvement of Western nations gives China an opening to exploit Afghan resources. Hossain also warns of the damage China may do to Afghanistan.
“China’s increasing involvement in Afghanistan’s resources underscores its strategic interests in securing vital components for its industrial and technological sectors,” Hossain wrote in a piece earlier this week. “The implications of China’s engagement in Afghanistan’s mineral sector warrant careful scrutiny, considering the potential impacts on the country’s economy and stability.”
Ironically, China is probably hoping their efforts lead to stability in Afghanistan. Beijing above all has security interests at stake in Afghanistan that are much more important than any economic upside China gains from mineral exploitation. Scholars Veena Ramachandran and Amit Kumar explained the core of China’s concerns about terrorist-fueled unrest in its largest political sub-division that borders Afghanistan.
“Beijing seeks to maintain the stability-security paradigm of Xinjiang by neutralizing the Uyghur militants on Afghan soil before they plan operations against the Beijing government and aggravate the already fragile Xinjiang,” the authors wrote in Georgetown’s Journal of International Affairs in January.
The Taliban told Beijing they will not allow Afghanistan to be used for terrorist activity against China. Of course, these pledges will likely mean little to Chinese officials, as the Taliban said the exact same thing to other neighbors, including Pakistan and Iran.
Reality on the ground is much more complex for those thinking China is set to cash in big on Afghan resources, regardless Beijing’s ultimate objectives. As noted in an AOP story last April, China faces steep hurdles in trying to mine for minerals in Afghanistan, as evidenced by the unproductive copper mining ventures. China’s MCC in an interim report last year said “actual progress” still needs to be made on the Aynak Copper Mine Project (let alone profits).
“Normal progress was still affected by delays in matters such as cultural relics excavation and land transfer under the responsibility of the Afghan government. The Company will continue to strive to improve the effectiveness of its investment in the project through contract negotiations and collaboration with the Afghan interim government to make actual progress on the project,” the MCC report said.
The mine has 11 million tons of copper resources which would be worth $92 billion based on current copper prices. Of course, strictly speaking, the value is practically zero if the assets are not projected to generate free cash flow. Moreover, there is little sign of progress on the alleged $10 billion lithium project, which looks dead on arrival. And once green-lighted the benefits will not be derived anytime soon, given it takes about 15 years on average to go from exploration to production. And this does not factor in likely delays due to security concerns. The only real near-term upside might be the intangible benefits from propaganda.
China may at most accomplish benefits toward resource nationalist objectives but not by cornering the market on mineral production and sales, but defensively – by blocking rivals from any opportunities. The world may benefit by seeing the futility of trying to tap Afghanistan’s resources. And they will gain these insights for free and based on China’s significant sunk costs with little returns to show for it.