Taliban and China Discuss Banking Cooperation

Via The Cradle,

The Taliban’s governor of the Afghan central bank Hidayatullah Badri met with Chinese envoy Wang Yu this week to discuss banking ties and business, the bank’s spokesperson informed Reuters on Friday. “In this meeting, economy, banking relations, business and some related topics were discussed,” said Badri.

Although Beijing does not have formal diplomatic ties with the Taliban government, China is among the few countries that have maintained a diplomatic presence in Kabul since the Taliban took back the country following the US’ disastrous withdrawal in 2021.

Following the withdrawal, Taliban spokesman Zabihullah Mujahid told Italian news outlet La Repubblica that China would be its principal partner in rebuilding Afghanistan after a 20-year US occupation.

China is also interested in bringing the West Asian nation to join Beijing’s Belt and Road Initiative (BRI).

US sanctions and banking restrictions have dealt heavy damage to Afghanistan’s banking system, which has been cut off from the global financial system. These policies have served as the primary cause of the country’s ongoing economic crisis.

Afghanistan’s central bank has been unable to supply adequate liquidity to banks due to its inability to print money and the illegal freeze of nearly $10 billion in foreign reserves, $7 billion of which are held at the Federal Bank of New York.

China has recently shown an economic interest in its neighbor, and is seeking investment opportunities in the Islamic Emirate of Afghanistan (IEA) – particularly in mining.

In April, the Taliban said that a Chinese firm was interested in investing $10 billion in lithium extraction as part of a project that would allegedly employ over 120,000 Afghans.

“Afghans are looking forward to exploiting their lithium and other mining deposits for their benefit,” Shahabuddin Delawar, the Taliban’s minister for mining, said.

At the start of the year, the Taliban signed an oil extraction deal with Chinese firms Xinjiang Central Asia Petroleum and Gas Co. (CAPEIC).