Posts Tagged ‘OBOR’

Catching up on another late post, this time for the Financial Times Beyond BRICS blog looking in some detail at the question of how the ‘Belt and Road’ has had an impact on Xinjiang-Central Asia trade. Trying to look at this as a case study for the bigger question lots are asking. Am immensely grateful to the excellent Anna Sophia for doing some excellent digging to get the numbers for this. As ever a topic that will get more coverage as we go forwards, and check out China in Central Asia for more on this larger topic.

Xinjiang trade raises doubts over China’s ‘Belt and Road’ plan

  1 comment

The vast Chinese northwestern frontier region of Xinjiang may serve as a useful early indicator of how Beijing’s much-touted “Belt and Road Initiative” (BRI) is supposed to work – and how successful it may become.

The region, which is home to several muslim minority peoples, has been wracked by ethnic turmoil for decades, prompting Beijing to seek to nurture social stability by driving economic development through hefty investments.

But for this strategy to gain traction, Beijing realised that it needed to boost development in the region around Xinjiang by building commercial corridors to neighbouring Central Asian countries such as Kazakhstan, Tajikistan, Kyrgyzstan, Uzbekistan and Turkmenistan. Thus, Xinjiang was key motivator behind the BRI concept.

But so far the results have been underwhelming. In the three years since the forerunner of the BRI was launched, Xinjiang’s trade volume has not increased and it still constitutes an unchanging portion of total Chinese trade with Central Asia (see chart). This discrepancy between action and results raises questions about whether the BRI is a turning point in Chinese economic policy or simply old wine in a new bottle.

The Xinjiang Uighur Autonomous Region government is an active player in the BRI. Under its auspices, Xinjiang’s major energy companies are expanding Chinese energy trade with Central Asia.

Following its promotion as one of seven national centers for the development of Chinese wind power in 2014, the Xinjiang-based wind turbine company Goldwind won contracts to build plants throughout Central Asia in 2015. In addition, the Tebian Electric Apparatus Stock Company, one of China’s major power transformer companies located in Xinjiang, announced in 2015 plans to build a power transformation line in Kyrgyzstan and a power station in Tajikistan.

Xi Jinping, the Chinese president, called the power station in Tajikistan a symbol of the growing “friendship” between China and Tajikistan, highlighting Xinjiang’s importance to the political and economic objectives of the BRI.

In addition to this corporate activity, the Xinjiang Communist party leadership has represented Beijing in Central Asia. Zhang Chunxian, Communist Party Secretary in Xnjiang, has formalised trade partnerships initiated by Mr Xi with Tajikistan and Kazakhstan. These include deals on agriculture, infrastructure and trade with Tajikistan after Mr Xi’s 2013 visit and a $2bn trade deal with Kazakhstan. Thus, Xinjiang is serving to implement the leader’s vision.

These BRI deals, however, do not in fact represent a departure from Xinjiang’s trade history. Special trade relationships with Central Asian states existed before the initiative was announced, and energy and commodities were already important in its regional trade.

The Kashgar Special Economic Zone was established in 2010 and is intended to deal primarily in regional commodities exports. Likewise, plans for the Kazakhstan Khorgos Border Cooperation Center, where duty-free trade between Kazakhstan and Xinjiang could occur, were already announced in 2011, though construction did not begin until 2014. The point being that many of the projects now tagged as BRI are in fact pre-existing projects that are being re-branded.

The lack of change in Xinjiang’s trade volume since the BRI was announced calls the connection between the broader vision and the deals into question. In 2015, Xinjiang’s trade volume with Central Asia declined more rapidly than the national volume, while experiencing a reduction in trade with every Central Asian country aside from Turkmenistan, which was involved in building a new pipeline to the region.

Xinjiang’s textile exports have increased in 2016, according to the Global Trade Review. However, textiles were already a significant part of Xinjiang’s trade to Central Asia, so the rebound may merely be the result of a weak 2015 base.

The discrepancy between Xinjiang’s visibility in the BRI and its steady proportion of China’s total trade with Central Asia suggests that – so far – the initiative is simply publicising trade relations that existed before, instead of changing China’s trade patterns.

If this pattern holds, it will be important for countries that deal with China to look beyond the visionary rhetoric of the BRI and engage instead with concrete and bankable projects. This requires a focus on what made sense before the BRI was announced.

Raffaelo Pantucci is director of international security studies and Anna Sophia Young is a research intern at the Royal United Services Institute (RUSI), a think tank based in London.

And now a longer report with Sarah for our institutional home RUSI looking at the Tbilisi Silk Road Forum a conference we attended last year and are keen to try to engage with more. It sketches out some of the ideas to emerge from the event, and some ideas about how to take the project forwards. More on this general topic to be found on China in Central Asia. Finally, I also co-edited with Aniseh, this longer report looking at Iran’s relations with Syria for RUSI, as seen from a number of different angles. Am not re-posting it in its entirety here, as it was largely authored by others. But I would encourage everyone to read my colleagues excellent work!

Tbilisi Silk Road Forum: Next Steps for Georgia and the Silk Road

Raffaello Pantucci and Sarah Lain

RUSI Publications, 2 August 2016

baku-tbilisi_railways

This workshop report provides a number of recommendations which aim to capitalise on the success of the Tbilisi Silk Road Forum and place Georgia at the heart of Eurasian connectivity

The Tbilisi Silk Road Forum which took place 15–16 October 2015 – co-hosted by the Georgian and Chinese governments – was a clear endorsement by Georgia of China’s proposed Belt and Road policy. It also provided an opportunity to showcase Georgia’s position at the heart of a changing Eurasia. At a time when Iran is opening up, there is a surge of Chinese investment following the Belt and Road vision; numerous other proposals for Eurasian connectivity are being advanced by outside powers. As a country with strong connections to the east and west, Georgia is well placed to benefit from this web of connectivity and to offer examples of best practice to those nations that are still formulating their own responses to this regional development. This report details the key findings that emerged from the two-day conference, suggests ways in which it can move beyond being a one-off event and outlines some ideas for how Georgia can establish itself as one of the key hubs of Eurasian trade and commerce.

Some belated posting of which I have a bit to do, this one for the Telegraph about the furore around the Hinkey Power Plant deal and China-UK relations. A difficult topic which is still in a very complex phase. Been trying to finish some very delayed writing projects that is keeping me busy and has some angry editors after me. Apologies to them. A spate of China related material which reflects something there is going to be an increasing amount of over the next period.

How to avoid nuclear fallout and become equal partners with China

Last week’s announcement delaying the decision on the Hinkley C nuclear power plant project has turned into a running commentary on the changing nature of the UK’s relationship with China. While Downing Street has been at pains to highlight that the decision is not linked to Beijing, much has been read into statements through the public news agency Xinhua that seem to foreshadow a veiled warning about the UK’s “golden age” with China being under threat. These proclamations need to be tempered by reality, however, and a realization that China is a pragmatic actor which will continue to seek the best deal it is able to achieve rather than pursuing an entirely quixotic foreign trade and investment agenda.

This is not say that China is not prone to publicly punish countries that have displeased it. Norway has faced a barrage of mostly symbolic sanctions since in 2011 the Nobel Prize Committee gave an award to incarcerated dissident Liu Xiaobo. In the wake of David Cameron’s meeting with the Dalai Lama in 2012, the UK faced a similar slap-down with diplomats’ lives in Beijing made more difficult and the Prime Minister having a number of visits postponed. In 2010, a pair of German researchers undertook a study using UN data from 1991 to 2008 on the “Dalai Lama effect”, whereby they identified an 8.1 per cent drop in exports to China in the two years after a nation’s leader met with the Dalai Lama.

Yet these numbers do not appear to tell the whole tale. During the period of Norwegian “punishment” (which according to some accounts continues today), the majority government owned oil company Statoil was still able to explore shale gas projects in China, and opened a research center in Beijing. In the UK’s case, it is inconclusive whether there was a definitive drop in trade figures during this period, though it is noticeable that in the immediate week after the fateful meeting between the Prime Minister and the Dalai Lama, a deal worth £50 million was signed between the UK and China to export pig offal and trotters for consumption in China.

Some apparent attempts by China to impose economic punishments on countries that have displeased them have backfired. In 2010, there was a spat between China and Japan over a fishing boat captain whose ship crashed into Japanese vessels in disputed waters; China subsequently moved to make the export of rare earth minerals more expensive. It is a matter of speculation whether the point here was to support domestic industry over outsiders or whether this was specifically targeted at Japan, whose high tech industry relies heavily on rare earths which at the time were 97% controlled by China (or some combination of the two). Whatever the case, the result was that other rare earth sources became economically viable, destroying China’s previous market monopoly.

China is in fact a pragmatic actor in international affairs. When its companies have faced pushback due to domestic concerns, often they have continued forwards in other ways. China has quite rigid domestic restrictions about what industries outsiders can invest into, so finds it hard to overtly attack others for doing the same thing. Often the rhetoric does not match the action, and the new government in Downing Street would do well to understand this distinction and calibrate its response appropriately. The decision over a nuclear power plants is an important one with substantial national ramifications for years to come, and it makes sense the new government would want to take time to ensure they are happy with the deal. Going forwards, however, it is important to ensure that a productive relationship is maintained with Beijing, a power that is only going to grow in significance as time goes on.

In order to ensure a smooth engagement with China and Asia more broadly, a number of steps should be taken: first, the UK should be consistent and long-term. Wild oscillations in policy and approach are not appreciated by Beijing (or any other government). We should seek a relationship of working together as partners with China while setting parameters. Concerns over human rights should be raised – as they are already – and pushing back on China’s aggressive cyber activities should continue. As the United States has shown in its relationship with China, these issues can be raised whilst maintaining a productive overall relationship.

Second, it is important to realize why China likes to invest in the UK. As an open market, the UK is an attractive option for Chinese businessmen looking for opportunities overseas. According to figures published by the Mercator Institute for China Studies and the Rhodium Group, between 2000 and 2014 the UK attracted more FDI from China than any other European country. While the status of the UK market’s relationship with the EU is uncertain longer term, for the time being the UK will remain a major financial hub and discussions and deals continue. Reflecting this, the Financial Conduct Authority (FCA) and the China Securities Regulatory Commission (CSRC) met earlier this week to discuss how financial products can work between both jurisdictions.

Third, the UK should seek to engage with China in third markets like Pakistan, Central Asia or parts of Africa where the UK has strong historical economic and political interests and China is increasing its presence. In some countries in this category, Britain and China are competitors, but in others, there is an element of complementarity. Exploring these opportunities will help British business going global, as well as improving the quality and effectiveness of Chinese investments in parts of the developing world.

Fourth, the UK should raise its game and attention to East Asian security issues like the disputes in the South and East China Seas, or the ongoing difficulties with North Korea. Currently, Britain is seen as a part-time player, second fiddle to the US in this sphere. Establishing a distinct and comprehensive understanding of these questions, the relevant relationships, as well as expressing informed views about regional problems and backing them with diplomatic heft would go a long way towards balancing the UK’s approach to the region.

Handled badly, Britain’s relationship with China could suffer in the wake of the delay to the Hinkley Point deal. However, if care is paid to engaging China in ways that are of interest to Beijing and that advance British interests, it is possible to find a way forwards in which the UK can express its concerns while continuing to attract Chinese investment and trade. Beijing is seeking partners as much as the UK is, and in the current state of global uncertainty it would seem unwise to cut off relations with another G7 power. The trick will be to establish the contours of the relationship and make sure that both sides are telegraphing each other’s intent with clarity and with a view to the long-term.

Catching up on some old posting, going to put out a few things at the same time. All looking at China in Eurasia, a topic that continues to be a major focus. Of course, all of my work on this is stored on the China in Central Asia site, and this particular piece is something that was undertaken with my excellent RUSI colleague Sarah Lain.
Proceedings of a workshop held in New Delhi in March 2016 to explore the challenges that China’s strategic Belt and Road vision to connect Central Asia hopes to address.

In March 2016, RUSI, in collaboration with the Vivekananda International Foundation (VIF) hosted a workshop in New Delhi to discuss the challenges of connectivity facing China’s strategic Belt and Road vision, which aims to connect Central Asia  and develop strategic economic corridors across the region.

The workshop covered the different economic corridor concepts initiated by China and India and their aim of enhanced connectivity in Central and South Asia, how such visions will be realised and how they could enhance the security and economic development of the region.

The report summarises these discussions and provides insights into co-operation between China and its regional partners.

Re-publishing a paper from a little back that I did for the new Durham Global Security Institute looking at China-Afghanistan relations. It builds on a presentation on the topic, focusing mostly on the fact that China continues to play a fairly noncommittal game in the country. A topic which there is more to come and about which much more can be found on my co-edited site China in Central Asia. Beyond regional geopolitics, spoke to the Daily Mail about the threat from terrorists and weapons from Libya, NBC about threats to the Tour de France, and my book was quoted in the Independent.

Karzai-Yuanchao

China’s Big Hedge

In November of last year, Chinese Vice President Li Yuanchao visited Kabul to celebrate 60 years of diplomatic relations between Afghanistan and China.[1] The most senior level visit to Kabul by a Chinese official since the now-defenestrated former Politburo member and security minister Zhou Yongkang visited in 2012[2] the visit showed China’s continuing commitment to Afghanistan, whilst also highlighting its limits. Sitting awkwardly in President Xi Jinping’s ‘Belt and Road’ vision, Afghanistan remains a foreign policy conundrum to China who continues to see the potential risks from the neighbouring country, but that Beijing understands it has a particularly central potential role to play and whose proximity negates a completely detached approach. The result has been a hedging policy in which China continues to show some level of commitment towards Afghanistan whilst not going so far as to taking on the mantle of leadership.

The Belt and Road

One of the central topics of conversation during Vice President Li’s visit to Kabul was the ‘Belt and Road’ concept. In official read-outs from the meetings, both sides agreed to work on cooperatively to help develop Afghanistan’s role in the vision and thereby deepen the link between China and Afghanistan.[3] ‘Belt and Road’ is the term used to describe the vision laid out by President Xi Jinping that is on its way to becoming his defining foreign policy legacy. First publicly raised during a visit to Astana, Kazakhstan in September 2013 when President Xi coined the term ‘Silk Road Economic Belt’ to describe the trade, infrastructure and economic corridor emanating from China’s westernmost region of Xinjiang through Central Asia ultimately to European markets.[4] The next month during a speech at the Indonesian Parliament he built on this characterization to announce the 21st Century Maritime Silk Road that recreated the land model advanced across Eurasia out from China’s ports to the seas.[5] Over the next few months these trade corridors proliferated as a China-Pakistan Economic Corridor (CPEC), Bangladesh-China-India-Myanmar (BCIM) corridor, China-Mongolia-Russia corridor and a New Eurasian Landbridge were all increasingly discussed. In fact, the Pakistan corridor was one that had been agreed prior to the September speech and had been raised during a visit by Premier Li Keqiang’s visit to Pakistan in May 2013 and signed in MoU form on a return visit by President Nawaz Sharif in July 2013.[6] But the corridor was only later identified and absorbed under the logic of the grander vision. The logic of these various routes was largely the same and drew from the same structure as the Silk Road Economic Belt laid out in Astana, but over time was increasingly all captured under the rubric of the ‘One Belt and One Road’ (OBOR) and is now abbreviated to the ‘Belt and Road.’

By announcing the initiative in Central Asia President Xi was adding his stamp onto something that had in fact been taking place for over a decade.[7] Since 2001 and the formal founding of the Shanghai Cooperation Organization (SCO) China has increasingly been developing its presence in Central Asia, something that was spurred on even further in the wake of riots in China’s westernmost region of Xinjiang in July 2009.[8] The rioting took place as a result of deep tensions between the minority Uighur population (a community that is close in language, culture and ethnicity to the Turkic speaking populations of Central Asia) in the region and the growing Han Chinese population who have moved west over the past century. These two populations have lived uncomfortably next to each other for some time, with Uighurs increasingly feeling alienated from their own country. This has led to a push back which has expressed itself in a number of forms: people lashing out against the state in anger for real or perceived individual slights or in more organized fashion through terrorist groups and plots. In the first instance much of the violence was isolated in Xinjiang, and in particular in the southern predominantly Uighur corridor. But over time, it has increasingly spread around the country with violent incidents in Kunming and Beijing, an attack outside the country in Bangkok, Thailand and a persistent minority of Uighurs leaving China to seek to connect with extremist groups in Afghanistan, Syria, Iraq and Southeast Asia.[9]

For China, the key to ameliorating the situation in Xinjiang is an economic solution.[10] Seeing economic development as the answer to these problems means a great deal of internal investment, but for this investment to work, Xinjiang needs to have trading partners. Sitting in landlocked Xinjiang, it is easier to look across the Eurasian landmass to Europe and see a quicker route to markets than going to China’s eastern seaboard ports. Consequently, this investment has to spill into Central Asia where Chinese infrastructure companies, banks, and traders have all worked to develop trade corridors to open up Central Asian markets and routes to Xinjiang and Chinese traders. This has happened at every level with small time shuttle traders going back and forth with bags of goods, as well as more entrepreneurial individuals establishing brands and opening factories. Over time, this has led to a steady increase in Chinese presence in the region which has led to not only a re-wiring of the regions infrastructure so that all roads lead to Urumqi (Xinjiang’s capital), but also meant that increasingly China has displaced Russia to become the most consequential actor on the ground.

But all of this has been taking place now for over a decade. Meaning that the nomenclature of the Silk Road Economic Belt (SREB) is a case of President Xi placing his stamp of authority on something that was already underway – the development of an economic and trade corridor sweeping out from China’s west through Central Asia, ultimately to European markets. Seeing it as a successful model deploying foreign policy tools that Beijing could understand how to control (the deployment of capital through linked loans for Chinese firms to go forth and implement infrastructure projects), and based on some theoretical assumptions that are comprehensible. It also has the effect of helping keep the Chinese economy moving as the domestic economy slows down.[11]

But the important thing to remember about the SREB is that it is not a single path, but rather a latticework of routes out of China across Eurasia. There are roads going from Urumqi through Kazakhstan, Kyrgyzstan and onwards through other Central Asian countries, across the Caspian, Russia or Iran to Europe. The China Pakistan Economic Corridor (CPEC) essentially turns Pakistan into a corridor for goods to travel through Pakistan from the ports of Gwadar and Karachi to Kashgar, Xinjiang.[12] Whilst identified under a slightly different nomenclature, the CPEC is very much considered a part of the SREB vision, something exemplified by the fact that one of the first projects taken on by the specially created $40 billion Silk Road Fund established by Beijing was an energy project associated with the CPEC vision.[13] In total, billions have been promised and poured into these two routes (the SREB and CPEC) – with Pakistan alone attracting promises of around $46 billion over a number of years,[14] while President Nazarbayev of Kazakhstan announced some $23 billion worth of deals during his last visit to Beijing in September 2015.[15]

Afghanistan in the middle

Problematically for Afghanistan, however, it is not entirely clear how the country fits into these ‘Belt and Road’ visions for the Eurasian continent. Whilst the central planning authority of China, the National Development and Reform Commission (NDRC), has not actually published a formal route for the ‘Belt and Road’ vision, numerous maps have been printed in the Chinese state press. One thing that is common to most of these is that when they show routes emanating from China going westwards into Central or South Asia, they tend to go around Afghanistan. The SREB and the CPEC are clear corridors of investment and potential trade that China is pushing but they do not need in their current incarnations to necessarily touch down in Afghanistan. In fact, they can for the most part quite comfortably go around the country, following the natural regional geography that favours such routes. From Kashgar through Tashkurgan, down the Khunjerab Pass through Pakistan to Gwadar or Karachi ports, or through the Irkeshtam or Torugart crossings into Kyrgyzstan or the Dzungarian Pass or Khorogos into Kazakhstan and onto Central Asia. Sitting at the end of the Wakhan Corridor, the China-Afghan border is small and surrounded by mountainous areas meaning that the direct link to the ‘Belt and Road’s is not going to be the same as the one in neighbouring Central and South Asia, unless a very specific corridor is developed.

And while this navigation around Afghanistan has not been acknowledged by Beijing – and in some ways is contradicted by the repeated references to the ‘Belt and Road’ during VP Li and other formal China-Afghan interactions – it is visible in the on-the-ground investments and projects undertaken by China in Afghanistan. Currently, China’s projects in Afghanistan are dominated by a series of aid contributions, like the $79 million that VP Li offered during his visit to Afghanistan to build housing in the capital,[16] some similar contributions to Afghanistan’s security through equipment and training (most recently in declarations during a visit by Fang Fenghui, PLA Chief of General Staff [17]), and a few state owned enterprise (SOE) projects. Some smaller Chinese enterprises have sought to invest in the country, but find themselves hamstrung by a hesitant government and a difficult operating environment.

At the SOE level, the two main extractive projects being undertaken by Chinese firms are the exploitation of copper mines at Mes Aynak in Logar province and CNPC’s oil extraction project in Amu Darya.[18] The Mes Aynak project in particular is one that has become something of an epigram for Chinese efforts in Afghanistan – with a pair of Chinese companies, MCC and Jiangxi Copper, outbidding a number of others to win the contract in 2007, only for them to then sit on the project since then. Underestimating the security costs and overpromising in terms of additional infrastructure that they would produce around the site, the mine has been left unexploited and the company is now attempting to renegotiate the contract as well as backing away from some of the earlier promised infrastructure (that made the bid so attractive to Kabul in the first place[19]). The company head has met with senior Afghan officials and have been reported as complaining to others that it was pressured into undertaking the project by the central authorities in Beijing. Whilst it is undoubtedly true that the security situation around the area of the mine has gotten worse over time (and global copper prices have dropped), the project has nevertheless become hugely symbolic to many Afghans showing the high levels of Chinese promises that have gone unfulfilled.

The project in Amu Darya has faced fewer difficulties and actually been able to extract some hydrocarbons from the ground, though by choosing a partner in the Watan Group, CNPC failed to engage with the proper local actors when they invested in the project. This led to some difficulties with other power brokers in the north, and led to the project’s delay. Beyond this, CNPC had promised to build a refinery in the north of the country, but this has not been undertaken yet and it remains unclear to what degree the project has actually managed to move forwards.[20] Always seen as a relatively small investment for the company, the belief was that CNPC’s greater interest was to establish a foothold in the north of Afghanistan so that when future fields in the region were to open up they would be in an optimal position to win the contracts. CNPC is particularly bullish about these prospects given its substantial investment across the border in Turkmenistan in what is the same hydrocarbon basin.

Looking beyond extractives, Chinese firms have also bid and won contracts to undertake infrastructure development in Afghanistan. In particular, Xinjiang Beixin won a contract from the Asian Development Bank (ADB) to undertake the rehabilitation of a part of the road from Kabul to Jalalabad. However, the company has encountered difficulties in doing the project and it is unclear at what stage they are at the moment. The company is one that is active across the region implementing ADB projects in difficult environments, but it is unclear they still have an appetite to complete the Afghan project.[21] Atop all of these difficulties at a state owned enterprise level, smaller traders and businessmen spoken to speak of lower level issues, from problems around visa issuances to Afghan businessmen wanting to travel to China, to standards imposed by China to the exports of Afghan goods, to a reticence by China to actively support its traders to go to Afghanistan. And none of this is to speak of the security situation in the country which intimidates even the most fearless Chinese traders.

China the Peacebroker

Amid much fanfare in July 2014 China created its first Special Envoy for Afghanistan appointing a prominent and popular former Ambassador to Kabul, Sun Yuxi, to the role.[22] Coming at a time when the west was clarifying its decreasing role in Afghanistan, the appointment was one that reflected an effort by Beijing to show its commitment to the country. As time progressed, it also became clear that one of Ambassador Sun’s key roles was to help facilitate a ramping up of China’s efforts to act as a peacebroker between the Taliban and the government in Kabul. With the election of President Ghani in October 2014, he immediately signalled the importance he placed on the relationship with China by making Beijing the first capital he visited in his new role on a formal trip.[23] During this visit he not only attended the ‘Heart of Asia’ process meeting hosted by China, but also laid the groundwork for the formal peace talk negotiations with the Taliban at a behind closed doors meeting hosted by the Chinese government.

By early the next year stories emerged that China was playing a more forward role in brokering peace talks and in conversations in Beijing, and officials spoken to at the time highlighted that they were willing to act as hosts for any future peace talks.[24] By May 2015, senior Taliban figures were meeting with representatives from the Afghan High Peace Council in Urumqi.[25] In July another round of talks was held in Pakistan at which Chinese participants also played a role.[26] A further mulitlaterla track two engagement took place in Norway in which both Afghan representatives and Taliban counterparts attended.[27]

In sum, it appeared as though the Chinese supported peace track was one that was bearing fruit, until abruptly in late July 2015 the news was leaked that the Taliban leader Mullah Omar had in fact died back in 2013. This action immediately scuttled the discussions as it set the Taliban in disarray as an internal leadership struggle surfaced as to who would be Mullah Omar’s successor. It also complicated China’s contribution as it abruptly meant it was not clear who exactly the relevant partner to engage with on the Taliban side would be and so therefore where China could play a role. Accusations of blame were passed between Islamabad and Kabul, but the net result was an uptick in violence that made it harder for the Afghan official side to negotiate in full confidence.

Chinese experts and officials spoken to at this time almost immediately fell back into pointing that it was up to the United States to step up and play a stronger role in supporting the Afghan government and national security forces.[28] They further pointed to the fact that until there was greater clarity on the Taliban side about who was being negotiated with, it was unlikely that talks were going to bear immediate fruit. This did not stop Chinese efforts, and while Special Envoy Sun Yuxi stepped down from his role, he was replaced by the recent former Ambassador to Kabul Deng Xijun who seemed set to continue to play a key supporting role in any peace talks.

Keeping Options Open

Beijing has managed to continue to play this role by maintaining contacts with all sides. Its longstanding contact with the Taliban are believed to continue behind closed doors, while Vice President Li’s public calls in Kabul on President Ghani, Chief Executive Office Abdullah and former President Karzai show that they are eager to maintain links to all of the key official players in Afghanistan’s future. This is further reflected on the international stage where China has not only engaged with Afghanistan on a bilateral basis, but also through multilateral vehicles like the Shanghai Cooperation Organization (where China has played a championing role for the country. It was during Chinese Presidency’s that the Afghan contact group was created and later the country was made into an Observer), as well as through multilateral formats like an India-China bilateral where Afghanistan is discussed, an Afghan-Pakistan-China trilateral, and a willingness to engage with the United States to undertake joint training projects in Afghanistan. Most recently, during PLA Chief Fang Fenghui’s visit to Kabul, he spoke about the creation of a sub-regional security discussion between China, Pakistan, Afghanistan and Tajikistan to create a regional alliance against terrorism.[29]

China is choosing not to take sides and using this as a way to guarantee its interests. While it is not clear that Afghanistan needs to fit into the ‘Belt and Road’ vision, it is also equally clear that an unstable Afghanistan has the potential to be a major spoiler for the routes through Central Asia and Pakistan. Instability in Afghanistan is likely to have an impact and cause trouble across the border in both directions and this will have a clearer impact on China’s larger project, and ultimately on Xinjiang. Consequently, China has an interest in stability in Afghanistan and this helps explain its substantial and multifaceted approach towards the country.

In many ways, this is reflective of China’s broader approach in the ‘Belt and Road’ vision where as a result of the increased external economic push Beijing is finding itself playing an ever more influential role in its immediate neighbourhood. Yet Beijing policymakers have not yet apparently entirely understood what exactly what this means for their larger political role in these countries. Nowhere is this more than in Afghanistan where they are finding themselves drawn into an ever more significant role, but are instead electing to hedge. President Ghani’s open lobbying of Beijing from early in his administration shows Kabul’s eagerness to engage with Beijing, something that is being done with Western agreement and support (the US has undertaken joint training programmes with China in Afghanistan, and European capitals are working to engage with China to encourage greater efforts in Afghanistan). But while Beijing is continuing to play a positive role, it is not demonstrating a willingness to step into a strong leadership role, choosing to instead play a significant support role.

This is ultimately unfortunate for Kabul as China has many significant cards to play in Afghanistan – be this in terms of their strong relationship with Islamabad, the massive investment they could pour in and the industry they could mobilize to rebuild the country, or the potential opening up of Iran that they could take advantage of across Afghanistan. Whilst security remains something that China is not able to provide in adequate measure outside its borders, across Central Asia, China’s security presence and efforts are growing highlighting that this is an evolving reaction from Beijing. China’s recently passed counter-terrorism legislation offers a formal framework for Chinese security forces to go deploy outside the country to counter terrorist threats. But Beijing remains a hesitant player in Afghanistan, willing to play a significant role, but continuing to make sure that it has kept its cards close to its chest and left itself a deniable exit in the case of things going in a negative direction. China continues to be Kabul’s closest hesitant friend.

[1] ‘Li Yuanchao Attends Reception for the 60th Anniversary of China-Afghanistan Diplomatic Ties,’ Chinese Ministry of Foreign Affairs, November 4, 2015 http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1311792.shtml ; ‘China promises to continue to playing constructive role in Afghan peace process,’ Xinhua, November 4, 2015 http://news.xinhuanet.com/english/2015-11/04/c_134780948.htm

[2] ‘Top Chinese security official makes surprise visit to Afghanistan,’ Xinhua, September 23, 2012 http://europe.chinadaily.com.cn/china/2012-09/23/content_15776032.htm ; Rob Taylor, ‘Top Official visits Afghanistan, signs security deal,’ Reuters, September 23, 2012 http://in.reuters.com/article/afghanistan-china-idINDEE88M03620120923

[3] ‘Afghan President Ashraf Ghani met with Li Yuanchao,’ Chinese Ministry of Foreign Affairs, November 4, 2015 http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1311790.shtml

[4] ‘Chinese President delivers speech at Nazarbayev University,’ Xinhua, September 8, 2013 http://news.xinhuanet.com/english/photo/2013-09/08/c_132701546.htm

[5] ‘Speech by Chinese President Xi Jinping to Indonesian Parliament,’ October 3, 2015 http://www.asean-china-center.org/english/2013-10/03/c_133062675.htm

[6] ‘Chinese premier raises five-point proposal for boosting cooperation with Pakistan,’ Xinhua, May 23, 2013 http://news.xinhuanet.com/english/china/2013-05/23/c_124750134.htm ; ‘Pakistan, China sign eight agreements, MoUs,’ The News, July 6, 2013 http://www.awaztoday.tv/News_Pakistan-China-sign-eight-agreements-MoUs_1_34980_Political-News.aspx

[7] For a good book summarizing the history of China’s relations with Central Asia, please see Marlene Laruelle and Sebastien Peyrouse The Chinese Question in Central Asia: Domestic Order, Social Change, and the Chinese Factor, (UK: Hurst, October 2012; US: Oxford University Press, December 2012)

[8] Edward Wong, ‘Riots in Western China amid ethnic tension,’ New York Times, July 5, 2009 http://www.nytimes.com/2009/07/06/world/asia/06china.html?_r=0

[9] It is worth also pointing out that a great deal more Uighurs leave the country in unhappiness at their situation there. Seeking a better life abroad, they are economic migrants or people fleeing persecution who are simply trying to build new lives outside China. The majority appear to gravitate towards Turkey, with substantial diaspora communities also found in parts of Europe, as well as across Central Asia. The point being not every Uighur who leaves China unhappy becomes involved in terrorist activity. According to one prominent Chinese expert spoken to in early 2016, about 9 out of 10 Uighurs who left were seeking better lives. Author interview Beijing, January 2016.

[10] Most clearly laid out in 2010 at a work conference held in the wake of the riots. ‘Chinese central authorities outline roadmap for Xinjiang’s leapfrog development, lasting stability,’ Xinhua, May 20, 2010 http://news.xinhuanet.com/english2010/china/2010-05/20/c_13306534.htm

[11] ‘China eyes ‘Belt and Road’ to reverse trade slowdown,’ Global Times, May 28, 2015 http://www.globaltimes.cn/content/924034.shtml

[12] For the most recent maps showing the ambition and routes of the CPEC, please see the Pakistani Ministry of Planning, Development and Reforms dedicated webpage: http://www.pc.gov.pk/?page_id=2731

[13] ‘Silk Road Fund’s debut investment in $1.65b Pakistan power project,’ People’s Bank of China press release, April 21, 2015 http://www.pbc.gov.cn/english/130721/2811777/index.html

[14] ‘China’s Xi Jinping agrees $46bn superhighway to Pakistan,’ BBC News, April 20, 2015 http://www.bbc.co.uk/news/world-asia-32377088

[15] ‘Kazakh leader says $23 billion in economic deals agreed with China,’ Reuters, September 1, 2015 http://www.reuters.com/article/kazakhstan-china-idUSL5N1172H620150901

[16] Michael Martina and Mirwais Harooni, ‘China’s vice president pledges support in rare Afghanistan visit,’ November 3, 2015 http://www.reuters.com/article/us-afghanistan-china-idUSKCN0SS1MN20151103

[17] ‘Afghanistan to give China military equipment wish list,’ Khaaama News, March 4, 2016 https://www.khaama.com/afghanistan-to-give-china-military-equipment-wish-list-0241

[18] Raffaello Pantucci, ‘Guest Post: China in Afghanistan: A Tale of Two Mines,’ Financial Times Beyond BRICS, December 4, 2012 http://blogs.ft.com/beyond-brics/2012/12/04/guest-post-china-in-afghanistan-a-tale-of-two-mines/

[19] There have also been rumours of corruption around the deal that have not been publicly verified.

[20] The most recently publicly accessible report from July 2014 indicated the project was suspended. Jessica Donati, ‘From New York heroin dealer to Afghanistan’s biggest oil man,’ Reuters, July 9, 2014 http://articles.chicagotribune.com/2014-07-09/news/sns-rt-us-afghanistan-energy-20140707_1_cnpc-security-firm-afghanistan

[21] Michael Martina and Mirwais Harooni, ‘Slow road from Kabul highlights China’s challenge in Afghanistan,’ Reuters, November 22, 2015 http://uk.reuters.com/article/uk-afghanistan-china-road-idUKKBN0TB0X720151122

[22] ‘Ministry appoints special envoy for Afghan affairs,’ Xinhua, July 18, 2014 http://news.xinhuanet.com/english/china/2014-07/18/c_133494661.htm

[23] ‘Afghanistan’s new president starts landmark China visit,’ BBC News, October 28, 2014 http://www.bbc.co.uk/news/world-asia-29803768

[24] Nathan Hodge, Habib Khan Totakhil & Josh Chin, ‘China Creates New Avenue for Afghan Peace Talks,’ Wall Street Journal, January 6, 2015 http://www.wsj.com/articles/china-creates-new-avenue-for-afghan-peace-talks-1420564492 ; further confirmed by author interviews in Beijing. ‘China favours role in Afghan peace talks, appreciates Pakistan’s efforts,’ Dawn, August 15, 2015 http://www.dawn.com/news/1200627

[25] Edward Wong and Mujib Mashal, ‘Taliban and Afghan Peace Officials Have Secret Talks in China,’ New York Times, May 25, 2015 http://www.nytimes.com/2015/05/26/world/asia/taliban-and-afghan-peace-officials-have-secret-talks-in-china.html

[26] Jon Boone, ‘Afghanistan and Taliban peace talks end with promise to meet again,’ Guardian, July 8, 2015 http://www.theguardian.com/world/2015/jul/08/afghanistan-and-taliban-peace-talks-end-with-promise-to-meet-again

[27] ‘Afghan, Taliban delegates attend Oslo talks on ending conflicts,’ Reuters, June 16, 2015 http://www.reuters.com/article/us-norway-afghanistan-idUSKBN0OW17B20150616

[28] Author interview in Beijing, July 2015

[29] Ibrahim Nasar and Jafar Haand, ‘Afghanistan welcomes Chinese anti-terror proposal,’ Voice of America, March 1, 2016 http://www.voanews.com/content/afghanistan-welcomes-chinese-anti-terror-proposal/3215160.html

A new piece with a Chinese friend looking again at China-Afghanistan relations and trying to establish how Beijing might play a more positive role in the country. Something that looks increasingly complicated nowadays with the current chaos, but I think still remains an important project for Beijing to undertake. Much more on this topic to come as ever.

As is usual, however, most discussions with the media were terrorism related, including conversations with AFP, Radio France International and France 24 about the Thalys incident, and separately the New York Times about the death of British jihadi hacker Junaid Hussain and the Independent on Sunday about British women taking their children to join ISIS.

Can China Assert Itself in Afghanistan?

Beijing needs to play a stronger leadership role in Afghanistan.

By Raffaello Pantucci and Kane Luo for The Diplomat

Ghani Xi signing

Confirmation of Mullah Omar’s death has confused an already difficult picture in Afghanistan. Precarious relations between Afghanistan and Pakistan have been pushed even closer to breaking point, and the one bright spot, that of increased regional support, seems to have slipped onto the back burner. Beijing in particular needs to wake up and play a stronger leadership role in Afghanistan.

Afghan President Ashraf Ghani attended the Shanghai Cooperation Organization (SCO) Summit in Ufa with high hopes of again bringing the support of regional powers to bear on helping resolve his country’s ongoing civil war and the growing emergence of ISIS related terrorism within his country. On the face of it, the SCO would appear to be a very promising lead. Now expanding to include both India and Pakistan, the multilateral organization is one that manages to bring together almost all of the regional elements that are likely to be needed if we are to see a genuine local push to resolve Afghanistan’s problems. Its security architecture further offers a set of existing regional structures to discuss and implement some sort of regional response to Afghanistan’s perennial security threats. But thus far the organization has singularly failed to deliver much in terms of action on Afghanistan. The reality is that the real driver of a regional shift on Afghanistan is going to come from Beijing.

Looking solely within an SCO context, Afghanistan has only ever really been a focus under Chinese leadership. It was under Chinese stewardship that the SCO-Afghanistan contact group was created – when Beijing held the chairmanship in 2006. Six years later, it was at the 2012 Summit in Beijing at which the country was more formally accorded ‘Observer’ status. But very little activity has flowed from these shifts, and where we have seen action on Afghanistan from SCO members it largely appears to be at a bilateral level.

This includes China, which while it continues to act in Afghanistan through multilateral formats (for instance, through hosting of the trilateral discussions with Afghan and Pakistani officials), expends most of its attention on bilateral efforts. Yet these efforts have still not crossed the threshold to be decisive, and China still appears to be playing a hedging role in the country. Even in the peace talks that China is currently supporting (although the nature of its role in the wake of the Mullah Omar announcement seems unclear), it seems as though China remains an observer rather than a decisive actor.

Key to advancing China’s potential as a positive force in Afghanistan is to push the current slate of economic projects forward, as well as finding ways to ensure that the peace talks move towards some sort of resolution. Both are clearly difficult, but the first is far easier for the Chinese government move forward.

In late May the Afghan government revealed that Ghani had held talks with a Chinese construction firm to advance construction of the Jalalabad-Kabul road. The Chinese worries about the project were, understandably, primarily focused around security concerns, something that they saw as the remit of the Afghan authorities. This may indeed be the case, but the Chinese government could play a greater role in trying to offer training to Afghan forces to help improve their capacity to protect the Chinese project. Currently, China plays a somewhat marginal role in Afghan security, offering training to a few hundred police over many years, whilst also contributing some equipment to the ANSF. Whilst there are undoubtedly some logistical issues around training (linguistic differences for example), China could step up its equipment and financial support rather than only offering limited amounts of in-kind support.

More substantially in some ways than this, however, is the potential game changer that China could play in Afghanistan’s economy were some of the larger economic projects to come to fruition. At the moment, China is one of the biggest players with unrealized potential in Afghanistan. While CNPC has had some success in developing its field in the north, the Mes Aynak copper project continues to fester unfinished. During Xi Jinping’s head of state encounter with Ghani, discussion was made of the establishment of an intergovernmental committee to help the project move forwards. But there has been little movement since then, and it is unclear that we are going to see anything more in the near term future. This is hugely problematic as the project sits in a region that would benefit enormously from the investment.

At a more geostrategic level, Afghanistan also does not quite see where it fits into Xi Jinping’s great regional vision the Silk Road Economic Belt (SREB). Repeated conversations with Afghans have underscored that they have not understood where they fit into this grand vision for regional connectivity. The discussion around Afghanistan’s involvement appears to focus on how it might develop into an extension or part of the China-Pakistan Economic Corridor (CPEC) – the strategy for Pakistan to essentially become a corridor for goods going from Kashgar in Xinjiang to Gwadar Port in Baluchistan. Looking towards Central Asia, there has been discussion of some connections from Tajikistan extending into Afghanistan, but it is unclear that these are much of a focus for Chinese strategists and builders who are much more focused on developing routes through Central Asia to Russian and European markets. China needs to tell Afghanistan how it fits into the SREB.

China has set itself up to be a major player in Afghanistan’s future and expectations are being raised. It now needs to find ways of asserting itself both politically and economically to play the role that increasingly is being expected of it. Beijing may still shy from such ambitious aims, but at the same time, it is now too late to back away from them. China needs to find its feet and move forward in a more certain manner in Afghanistan.

Raffaello Pantucci is Director of International Security Studies at the Royal United Services Institute (RUSI) and Kane Luo is Vice President of Wakhan Abresham Consulting Service.