China Already Planning Investment In Chaotic Afghanistan
Taliban militants are seen inside the Ghazni city,
The fighting between the Government Forces and the Taliban during last few months has completely shaken the economic foundation of Afghanistan. The infighting has nearly destroyed the transportation system, telecom system, industry and even agriculture.
While other countries are concentrating on evacuation China has already started talking of offering a much-needed economic investment package to help Afghanistan generate self-dependent economic activities. This indicates that China has already done their long turn planning. Earlier Chinese firms were only concentrating on extraction of mineral resources but now they are sensing other opportunities.
Taliban is still talking of taking steps to take control of the Country and thereafter may go in for international recognition. However Chinese state-owned enterprises (SOEs) and private firms are already talking of employing different investment strategies in the war-torn country, with the former trying to exercising extreme caution in carrying out new projects and the latter eager to tap into a market where “a thousand things wait to be done.”
India which has already invested few billion dollars is still employing the wait-and-see approach and weighing up both political and security risks before taking further action, the Chinese strategy of boldness of risk-taking underscores China’s successful tango with the Taliban, which lays the foundation for the safe and smooth operation of Chinese businesses in Afghanistan.
Whereas Chinese private firms have already earmarked huge funds for investment in Afghanistan, knowing fully well that soon Western governments will impose all kinds of sanctions on the Taliban. Chinese are already terming such potential sanctions as malicious moves aimed to stifle China’s economic interests.
The copper mine project in Mes Aynak, is one of the high-profile Chinese investment projects in Afghanistan. The China Metallurgical Group had won the contract for mining in 2007 itself. However the mining project has yet to commence due to two decades of chaos caused. Chinese have blamed it on US military occupation, as well as the necessity to remove landmines, and only a few dozen staff in the local research base to carry out preparation works.
The China Metallurgical Group Corp (MCC Group) has said that the company is already evaluating possible sanctions by US and other G7 countries on the said project. The MCC Group staff member added that he hoped that with the power transition, the new leadership will announce measures to resume and push forward the project.
As per Chinese media, most of The Chinese enterprises that have a presence in Afghanistan have been assessing the Taliban’s new policies and drawing up response plans. As per the Chinese media, this is in contrast to some Western media’s hype of China “exploiting” Afghanistan’s rich mineral deposits after the US withdrawal.
A spokesperson of a state-owned enterprise, who spoke on condition of anonymity, said that their moves in Afghanistan “will be in line with Chinese national strategy,” regarding the impact of a reported Western-led sanction on Taliban. The company has built a highway for Afghanistan and construction was completed two years ago.
While On Sunday, US President Joe Biden said that the decision on sanctions against the Taliban will “depend on their conduct.” The UK is reportedly pushing for sanctions against the Taliban at a G7 meeting that is scheduled to take place on Tuesday.
Chinese businessmen and observers said the possible sanctions may include travel restrictions, limiting the raising, use and flow of funds, international recognition, and dealings with businesses with other countries.
In the worst case scenario, it could cut companies operating in Afghanistan off from the global banking system – as is the case of how the West is sanctioning Iran, which could be the “last straw” forcing big Chinese companies out of the country, analysts said.
“Without policy guidance, investing in Afghanistan is highly risky and not cost-effective. For example, the funds for building the highway project were loaned from the Asia Development Bank, but we didn’t even earn a penny,” the spokesperson noted.
It is interesting to note that a China Town was set up in Kabul in 2019 itself and it is home to dozens of factories producing shoes, clothes, textiles and cables, some of which have been put into trial operation. Chinese businessmen were already informed by Taliban that the new leadership has vowed to protect investors, as “whoever stayed in the country is helping Afghans.”
“We saw Taliban members in every street and block… When they heard about business hurdles in China Town, they would send higher-level officials, asking about the difficulty and how they could help. They say that Chinese people are friends, and should not be afraid to ask if they run into any trouble,” said Yu Minghui, director of the China Arab Economic and Trade Promotion Committee in Afghanistan.
While China’s large-sized state investment in Afghanistan is seeing a freeze amid lingering political instability, Chinese private entrepreneurs are displaying a more moderate attitude, particularly after the Taliban leadership offered an olive branch that has assured small- and medium-sized Chinese investors.
Li Xijing, deputy general manager of the China Town, said that their business plan in the country will not change, “because those projects that the Chinese are involved in are about local people’s livelihood”, and such issues are fundamental for the Taliban.
Li added that that future investment plans in Afghanistan will have to wait until the situation becomes clearer. However current business decisions to expand the company’s investment in Afghanistan as previously planned will not change. “We have benefited a lot from our business plans in Afghanistan in the past five years, and we believe the operation will run more effectively after the situation stabilizes.”
Chinese private businessmen said they are relatively immune to potential Western sanctions and have drawn up backup plans to deal with any possible ensuing impact.
Meanwhile, there is not much Western business presence in the country, so sanction won’t hurt them much. Bloomberg said last week that US has frozen nearly $9.5 billion in assets of the Afghan central bank and banned cash shipments to the nation.
Though The whole world is waiting for Taliban’s future regime structure, its economic policy, and its policy on foreign investment. Though the Taliban’s current priority perforce has to be the stability of the regime and better internal control.
Also, when the Taliban moves toward gaining international recognition and eliminating terrorism, Chinese plan includes to extend the Belt and Road Initiative route from the China-Pakistan Economic Corridor into Afghanistan.
In 2020, Chinese companies had Already contracts for projects worth $110 million in Afghanistan.
