China Expands Footprint in Taliban’s Afghanistan: Signs $540 Million Energy Deal

TCSS Security Commentaries #032

Strategically, the vacuum created by the withdrawal of the West after decades of its hegemonic presence is a timely opportunity for China to strengthen its foothold in the region.

Rebecca Chohwanglim, Visiting Scholar, TCSS.

An estimated $540 million energy deal between Chinese company Xinjiang Central Asia Petroleum and Gas Co and Taliban’s Afghanistan in January 2023 is being promoted by the latter as its first crucial economic engagement since it took over power in August 2021. Per the deal, the Chinese company will extract oil from the Amu Darya basin and develop an oil reserve in the country’s northern Sar-e Pul province during the 25-year contract. The signing of this deal indicates Beijing’s policy of regional engagement with the Taliban Afghan Government, a significance of China’s economic involvement in the region. China’s approach towards Afghanistan is no longer cautious, although Beijing has not formally recognized the Taliban-led Afghanistan.

Beijing’s strategy to expand the economic stability of Afghanistan is practical and a geopolitical gain, as it can reduce China’s own security vulnerabilities as a disturbance in Afghanistan negatively affects China’s sensitive western province and its aspirations to build trade routes globally through BRI. Two of China’s fundamental BRI corridors run adjacent to Afghanistan, and forging good relations with the new regime is strategically more beneficial than lukewarm engagement. Meanwhile, the Taliban regime is desperate to legitimize its authority. It needs an operating economy to run the state and cater to the needs of its several other networks. The Taliban supposedly wants to restore peace and stability, unlike the previous regime. Therefore, it is receptive to China’s economic ambitions in the region, as prolonged economic turmoil will challenge its authority.

Strategically, the vacuum created by the withdrawal of the West after decades of its hegemonic presence is a timely opportunity for China to strengthen its foothold in the region. Taliban’s receptiveness towards Beijing is partly credited to Beijing’s “non-interference” diplomatic policy, which is just about right for a regime mired in years of turmoil. Therefore, the Taliban is open to engaging with China. Its apathetic attitude towards human rights concerns gives the Taliban-led Afghanistan more negotiating power and fewer international rules to adhere to. Additionally, China can contribute to the stability of Afghanistan, which will improve its image as a responsible leader. This growing engagement between Beijing and Kabul might be a “win-win” situation for both parties.

However, beyond the rhetorics of stability and political enthusiasm, the deal’s implementation and productivity will be of major concern. China’s critical objective in Afghanistan and Central Asia is to keep the West from penetrating into its region, but Russia’s invasion of Ukraine has made the region more susceptible for the US to re-engage. Therefore China will face constraints as it aims to unilaterally engage with the region independent of the US influence.

China’s Afghanistan policy is driven by changing geopolitical environment as well as critical domestic concerns. China is focused on resisting Islamic radicalism domestically, especially the East Turkestan Islamic Movement (ETIM) and the Islamic State-Khorasan Province (ISKP). Secondly, it wants to maintain regional stability to facilitate its BRI projects with SCO countries, excluding India. Thirdly, Beijing wants a monopoly over Afghanistan’s untapped natural resources.

China’s actions are predominantly guided by its “core interests” of “sovereignty and territorial integrity.” Unsurprisingly, as Western countries withdrew their links with Afghanistan, China was readily inclined to assert its economic presence. Although traditionally, Afghanistan was not a diplomatic priority for China, it now sees opportunities. China’s Afghanistan policy is part of its “Shared Future for Mankind.” It is fundamentally based on a trilogy of core interests- security, development, and energy – that resonates with Beijing’s “new security diplomacy,” stressing ‘cooperation,’ ‘multilateralism’ and ‘regionalism.’ Beijing has often resorted to selective engagements and compromise regarding maintaining domestic stability and, most importantly, the Party’s legitimacy. Therefore, despite China’s economic, energy, and security interest in Afghanistan, Beijing will continue to be cautious of its proximity when engaging with Afghanistan. Given the instability and turmoil that Afghanistan is embroiled in, extending economic relations will prevent Islamic extremists spillover among China’s Uyghurs.

We can expect a more aggressive China in the coming months, an exertion that China was not shy of displaying as it conducted military exercises threatening the status quo of the Taiwan Strait, defying the sensitive median line. As relations between China and the US are deteriorating to an all-time low, China will likely assert itself more rigorously in the region. China is critical of QUAD and India-US growing proximity over sharing technology, signing an initiative on Critical and Emerging Technology (iCET), etc. These developments give China more reason to engage in the region actively, limit engagements between New Delhi and Kabul, and prevent the West’s re-intervention. Whether or not the unpredictability of Afghanistan’s stability would deter significant exploration in the mineral fields is a question that time will answer. Still, the development of China-Afghanistan relations and China’s regional influence highly depend on how the recently signed deal materializes.

Rebecca Chohwanglim is a doctoral candidate in International Studies at Jawaharlal Nehru University, Delhi, and a Visiting Scholar at TCSS.