The Chinese presence in Afghanistan is growing. But large-scale investing is not yet there

China Town in Kabul! It really exists. Next to a roundabout in Taimani Road, in the northwest of the city, are two interconnected apartment buildings called Etihad Tower. On the right tower is written ‘China Town’ in red capitals, on the left ‘The Belt and Road’. Next to it the same in Chinese characters.

Calling this a Chinese neighborhood is an exaggeration. Yet Etihad Tower does embodies China’s modest, but perhaps promising, presence in Afghanistan. Are the Chinese jumping into the hole the Americans have left? It won’t run that fast. They prefer to look the cat out of the tree. But there are certainly opportunities for closer ties between Beijing and the Taliban.

Chinatown is primarily a guest house and workspace for Chinese businessmen who are temporarily staying in the Afghan capital. “It’s quieter at the moment due to all the happenings,” said Etihad Tower manager Haji Abdul Hadi. “But they will no doubt be back.”

Some Chinese guests are private traders. They come to Afghanistan for the export of Chinese products (anything and everything) or the import to China of a limited number of Afghan goods, mainly dried fruit and precious stones. Most, however, are potential investors. Their interest is mainly in infrastructure. ‘Especially solar systems and electricity,’ says Hadi.

Advance Trading Post

The Chinese enclave has been in existence for two years. An advanced trading post in the rawest part of Central Asia, in a country that just shares a border with China, a few tens of kilometers of the Wakhan corridor, high in the mountains of the Hindu Kush. There isn’t even a Chinese restaurant here in Kabul. There are, however, shops with Chinese goods and food intended for Chinese customers. Belt and Road Mall, it is called somewhat exaggerated.

Belt and Road, also the name of the left tower, refers to China’s plan to significantly increase its role in the global economy, especially through a firmer footprint in Asia, Africa and the Middle East. The Belt and Road Initiative (BRI) dates from 2013 and is an idea of ​​President Xi Jinping himself, it is a cornerstone of his foreign policy.

‘New Silk Road’, the nickname of BRI, evokes memories of the age-old trade routes that connected the Chinese east coast via Central Asia with Europe and the Middle East. The same is again the intention, albeit that the Chinese are now casting their net wider, as far as Africa, and do not see their activities limited to import and export.

In fact, BRI has little to do with international trade,’ says Alexander Wang, a professor at Shanghai International Studies University, correcting a ‘widespread misunderstanding’. China’s main trading partners are the US, Europe, Japan and Southeast Asia. “All developed countries,” Wang said. Africa, Central Asia and the Middle East are of secondary importance to China’s trade. Also Afghanistan: not interesting as a consumer market.

“BRI is primarily concerned with infrastructure projects: roads, bridges, dams, ports, power plants,” says Wang, who is in Afghanistan to investigate the potential of Chinese investments. ‘Afghanistan desperately needs infrastructure. Chinese contractors are very good at that.’

Not a gram of copper from the ground

More than ten years ago, the Chinese already built a road in Afghanistan, to the centrally located city of Bamyan. But the Americans, who had a big finger in the pie in Kabul, were afraid of too much influence from China. The interest of Chinese road builders also waned when some of their engineers were kidnapped near Jalalabad.

Something similar happened with the copper mine Mes Aynak in Logar province. Two Chinese companies had already obtained the lease contract in 2007 for the exploitation of what is believed to be the second largest copper reserves in the world. The project often gave the impression to the outside world that the Chinese ‘are after Afghanistan’s mineral resources’. In addition to copper, the soil also contains iron, gold, silver, chromite, nephrite, bauxite, oil and especially the precious lithium – which can be processed in batteries.

That is greatly exaggerated. So far not a gram of copper has been extracted from the ground, not even a mine has ever been built. Disagreements arose between the government and the Chinese over money and the terms of the contract. In addition, the US objected, said Ainuddin Najman, an Afghan businessman who specializes in trade with China. According to him, the Americans even lured the Taliban to Logar to deter the Chinese. A rumor, but indeed: the Taliban came to the province and the Chinese descended without having dug a shovel into the ground.

Beijing has not recognized the Taliban regime either

The example makes clear why China has no intention of simply filling the vacuum left by the US. The Chinese are well aware that Afghanistan is a wasp’s nest. Since the 19th century, the country has acquired a reputation as a ‘graveyard of great powers’ and China prefers not to join the ranks of Great Britain, the Soviet Union and the US.

Until it is clear where the unstable, unrecognized Taliban regime is headed, the Chinese will not be too eager. The investment climate is extremely uncertain. The fact that China has kept its embassy in Kabul open and that it was the first country to offer aid in September says something of course, but Beijing has not yet recognized the new government either.

This does not alter the fact that China is indeed interested in Afghanistan because of the Belt and Road Initiative. The country is at the heart of the region that connects China to all areas relevant to BRI, such as Iran and Pakistan. Afghanistan would fit in perfectly with the China-Pakistan Economic Corridor, an essential part of BRI. For example, Afghanistan is part of the Five Countries Railway, a Chinese plan for a rail connection between East and West Asia.

A remarkable warm-up for all this is the success of the export of pine nuts to China. It only started four years ago, but by the end of 2019 Afghan traders had already signed contracts with China worth 1.7 billion euros, for a period of five years.

After the chaos of the takeover, both countries were quick to restore the pine nut airlift from Afghanistan to China. When the Afghan foreign minister met his Chinese counterpart in Doha in October, he had a revealing gift with him: a box of pine nuts.

Emerging atmosphere of cooperation

Of course, the kernels are not a magic wand for economic recovery in Afghanistan, and of course it is much less important to China than to Afghanistan. Pine nuts play a, shall we say, modest role in the BRI concept. Nevertheless, they can certainly contribute to the burgeoning atmosphere of cooperation between Kabul and Beijing.

In any case, agriculture should not be underestimated. According to Wang, China can play a role in this. “Afghanistan has enough land,” he says. ‘There are options for cotton, for dried fruit. Only infrastructure is needed: water, fertilizer, seeds, capital. China has a lot of experience with that.’ The Chinese can also help set up a food processing industry.

There is another reason why China has its eye on Afghanistan: extremism. Hundreds of members of the armed Islamic Movement of East Turkestan (ETIM) are located in the northwest of the country. ETIM is made up of Uyghurs from the autonomous Chinese region of Xinjiang, which borders Afghanistan. Beijing is cracking down on separatism in Xinjiang. China wants the Taliban to show ETIM the door and cut all ties.

Even as long as this problem is not solved, China will be hesitant to invest in Afghanistan on a large scale. “China will be our main partner,” Taliban spokesman Zabihullah Mujahid said two weeks after taking power in August. ‘That offers us many opportunities. China is ready to invest and support reconstruction.’

That was entirely from an Afghan perspective. “The future of Afghanistan lies in China,” says businessman Najman. But not the other way around for now.