China's dilemma in Afghanistan

Beijing prefers to leave security concerns to other nations, as aligning with the US would upset Islamic allies, but its investments are at risk

PUBLISHED : Thursday, 05 December, 2013, 4:37am
UPDATED : Thursday, 05 December, 2013, 4:37am

Yu Minghui recently returned to Beijing for a year, after spending more than a decade in Afghanistan where he has made a fortune in steel.

Yu decided to relocate on account of his new business - trading Afghan gems - and because of the security in the war-torn nation, which could deteriorate as the United States and its Nato allies move to withdraw most of their soldiers and the country prepares to hold a presidential election next year.

"The level of uncertainty is getting more serious," Yu said. "We don't know what will happen next year."

Yu settled in Kabul in 2002 and established himself as one of the leading Chinese businessmen in Afghanistan, operating a steel refinery that used scrapped vehicles and tanks. A tonne of scrap metal that cost US$200 to buy could be turned into reinforcing steel bars that fetched five times the price.

Although profit was good, Yu has had to scale back production, close his office and ask his local partner to manage the factory while he is in Beijing.

Yu said he was not alone in his concerns - the country previously hosted several hundred Chinese businessmen and workers on projects, ranging from telecommunications to energy projects, but fewer than 100 remained now.

"Many have decided to leave because the future is not clear," he said.

Direct Chinese investments in Afghanistan totalled US$200 million in 2011, but the estimated value of Chinese-backed projects is higher. For example, a copper mine project in Aynak backed by state-owned Metallurgical Company of China and Jiangxi Copper Corporation is worth nearly US$3.5 billion. China National Petroleum Corporation also has an energy project in northern Afghanistan.

With that economic toehold, there have been calls for Beijing to deepen its security engagement with Afghanistan to prevent extremists in restive Xinjiang from going to Afghanistan to receive training from the East Turkestan Islamic Movement. China has blamed the movement for a car crash attack that killed five in Tiananmen Square on October 28.

The Aynak copper mine project, located about 40 kilometres southeast of Kabul in Logar province - an area where Taliban ally the Haqqani network has a presence - has been attacked 19 times over the past year.

Raffaello Pantucci, a senior research fellow with the Royal United Services Institute in London, said Beijing should increase its security commitment to Afghanistan to ensure Chinese investments were protected. Beijing's commitment has so far been limited to training just 300 local police.

"That is not commensurate with the level of financial investment that the Chinese have put into the country," Pantucci said. "When it comes to security, the Chinese don't really see or feel that they actually have much control over it."

In a meeting held in Beijing in September, President Xi Jinping told his Afghan counterpart Hamid Karzai that Beijing was ready to deepen political, economic and security support to Kabul, and China would host the ministerial meeting of the Istanbul Conference next year to discuss Afghanistan's future.

Beijing would also provide a 200 million yuan (HK$253 million) grant to the Afghan government this year, and provide further assistance "within the realm of its capabilities".

Andrew Small, a fellow with US' German Marshall Fund States and who observes the Sino-Afghan relationship, said Chinese officials had met Taliban representatives in Pakistan - in a bid to ensure that territory under Taliban control would not become a base for Uygur militants, as well as to protect China's investment against Taliban attacks.

But observers said China's options in Afghanistan were limited, given that Beijing does not want to be involved in the Western-led military effort - as aligning with the United States would upset the Islamic world.

"China has no grand strategy for Central Asia and absolutely no grand strategy for Afghanistan," said Richard Ghiasy, a researcher with the Afghan Institute for Strategic Studies in Kabul. "They would prefer the US presence here to maintain security."

In a meeting with the foreign ministers of India and Russia, Chinese Foreign Minister Wang Yi said China supported the United Nations as an important player in Afghanistan.

"China will feel comfortable with and rather prefer to see some kind of international forces continuing to play a role in the country," Small said.

Ghiasy said other Central Asian countries offered natural resources for Chinese investment, and Beijing would consider cost effectiveness before deciding whether to strengthen its Afghan role. "The benefit does not outweigh the cost," he said.