Taliban & China Discuss Banking Co-operation
The Taliban’s governor of the Afghan central bank, Hidayatullah Badri, engaged in discussions with Chinese envoy Wang Yu this week to explore banking ties and business opportunities, according to a spokesperson from the bank. The meeting focused on various topics, including the economy, banking relations, and related matters, as stated by Badri. This development comes as Afghanistan grapples with an ongoing economic crisis.
Despite lacking formal diplomatic relations with the Taliban government, China has maintained a diplomatic presence in Kabul since the Taliban regained control of the country following the US’ tumultuous withdrawal in 2021. In fact, the Taliban spokesperson, Zabihullah Mujahid, previously expressed that China would be their primary partner in the reconstruction efforts after the 20-year US occupation. This meeting signifies China’s continued interest in fostering ties with Afghanistan.
China’s engagement with Afghanistan extends beyond banking cooperation. The country is also keen on involving Afghanistan in its ambitious Belt and Road Initiative (BRI), which aims to enhance connectivity and trade across various regions. By including Afghanistan in the BRI, China seeks to tap into the nation’s potential and contribute to its development.
The economic challenges faced by Afghanistan are exacerbated by US sanctions and banking restrictions, which have severely impacted the country’s banking system. These policies have cut off Afghanistan from the global financial system, leading to a shortage of liquidity in the central bank and hindering its ability to print money. Additionally, approximately $10 billion in foreign reserves, $7 billion of which are held at the Federal Bank of New York, have been frozen illegally, further exacerbating the economic crisis.
China’s growing economic interest in Afghanistan is evident as it seeks investment opportunities in the Islamic Emirate of Afghanistan (IEA), particularly in the mining sector. In April, the Taliban announced that a Chinese firm expressed interest in investing $10 billion in lithium extraction, a project that could potentially provide employment to over 120,000 Afghans. The Taliban’s minister for mining, Shahabuddin Delawar, expressed the Afghan people’s eagerness to exploit their mining deposits for their own benefit.
