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Trucks and trains: Why China isn't Afghanistan's economic saviour

Trucks and trains: Why China isn't Afghanistan's economic saviour
Published 10 Apr 2014 

With generally fair elections held in Afghanistan last Saturday, talk will again turn to the country's future. Many see China as potentially playing a constructive role after the withdrawal of NATO-led forces at the end of this year. 

Militarily, Beijing has little to offer Afghanistan; its military aid to the country is miniscule. The big hope for China in Afghanistan is economic. In The Diplomat, Richard Ghiasy and Fraidoon Sekander write

Afghanistan ... boasts an astonishing resource endowment worth nearly $1 trillion. These include massive veins of coal, copper, lithium, gold; deposits of gemstones, and substantial natural gas and oil fields... The cherry on top? Afghanistan has the good fortune of having two manufacturing giants next-door: China and India. Both are captivated by its natural resources endowment. Afghanistan could take advantage of their reemergence and join their economic orbit. Mining and smelting operations will generate significant tax revenues, and employment and spin-off enterprises  and initiate much needed economic growth. 

The Carnegie Endowment for international peace is similarly upbeat, noting:

China has the potential to make important contributions to Afghan stability. State-owned Chinese corporations are uniquely risk-tolerant and can help pave the way for future investments. The Chinese also enjoy a more positive relationship with Afghans, making their investments less likely to be targeted for attack by insurgents. These investments can stimulate economic growth that aid money alone cannot.  

That's all well and good. But one issue seriously hampers Afghanistan's ability to cash in on the Chinese (and for that matter, Indian) market through export-driven growth: logistics. The development of transport infrastructure connecting Afghan resources to markets further afield relies much more on Central Asian nations cooperating with each other than it does on China's purchasing power. [fold]

The precedents for such cooperation are not good. The US-conceived Northern Distribution Network is marred by regional grudges. In February, for instance, reported that the long-planned Turkmenistan-Afghanistan-Tajikistan railway was being threatened by squabbling. The project received Washington's blessing as past of the 'New Silk Road strategy' for Afghanistan, announced in 2011, but it's future is now uncertain. 

Another long-term regional plan, the Central Asia South Asia Regional Electricity Trade Project, has always been 'a few years off'. Designed to transmit surplus electricity from Tajikistan and Kyrgyzstan to Pakistan, the route would pass through Afghanistan. While the Asia Development Bank has committed to fund the project to fruition, analysts aren't optimistic it will ever see the light of day. 

Pakistan could offer an attractive route for Afghan exports to China. Certainly, China sees promise in Pakistan: Beijing has been working with Islamabad for years on upgrading the Karakoram Corridor, which connects Pakistan with Xinjiang. The Karakoram Highway is undergoing a three-fold expansion in capacity, and a railway line and oil and gas pipelines are expected at some point. 

But it's important to remember that, from the Chinese perspective, improving Pakistan's transport infrastructure has always been about boosting its trade and military access to the Arabian Sea.  Concern about connectivity with Afghanistan is of secondary importance. Beijing has thus been relatively reticent on the development of transit route upgrades between Afghanistan and Pakistan.

A transit route between Afghanistan and India across Pakistan would also do much to facilitate an export-led growth strategy for the country, but such a route remains 'a hope'stymied by India-Pakistan political brinkmanship.

Chinese enterprises see potential in Afghanistan, and have staked billions on securing an early resource foothold in the country. But it will remain a foothold so long as regional cooperation on transport infrastructure is elusive.  

Photo by Flickr user United Nations Development Programme.

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