China, Afghanistan, and Critical Minerals: Options for U.S. Strategic Competition Below the Threshold of War
ABSTRACT
Afghanistan remains relevant to the United States in the context of Great Power Competition. While China assumed a major role in Afghanistan after the U.S. withdrawal, its promises of economic performance on mineral extraction contracts continue to underperform financially. The U.S. has an opportunity to compete for strategic minerals by changing where value is gained in the strategic supply chain.
Introduction
Why Afghanistan matters for the U.S. military today is no longer a question of counterinsurgency, counterterrorism, or nation-building. Instead, Afghanistan has reemerged as a permissive or semi-permissive arena for strategic competition below the threshold of war, where influence is exercised primarily through economic statecraft, infrastructure investment, access to critical minerals, and selective security cooperation. Following the U.S. withdrawal in 2021, the absence of sustained Western engagement created political and economic space for competitors—most notably the People’s Republic of China (PRC)—to expand influence without assuming the costs and risks associated with overt military intervention. This environment highlights a central feature of contemporary great power competition: strategic outcomes are increasingly shaped through non-kinetic means in fragile states rather than decisive battlefield engagements.
For the U.S. military, Afghanistan remains relevant not as a battlefield but as a case study in contemporary campaigning. China’s engagement intersects with three issues central to U.S. military’s relevance in great power competition: persistent competition short of armed conflict, resilience of defense-critical supply chains, and the growing importance of non-military instruments in shaping strategic environments. RAND research emphasizes that future competition will hinge less on episodic combat operations and more on shaping activities conducted over time through diplomatic, economic, informational, and limited security tools. Afghanistan illustrates how competitors exploit governance vacuums, economic distress, and infrastructure deficits to secure strategic advantages without provoking direct confrontation.
Afghanistan’s renewed significance is further amplified by its perceived mineral potential. While early claims that Afghanistan possessed a “$1 trillion” mineral endowment overstated its near-term economic value, the country does contain deposits of iron ore, copper, rare earth elements, lithium, and hydrocarbons that are strategically relevant in an era of tightening global critical mineral markets. As global demand for defense-relevant minerals grows—and as supply chains become more concentrated—the political control of extraction, transit, and processing nodes assumes increasing importance for national security. China’s approach to Afghanistan must therefore be understood not as opportunistic adventurism, but as part of a broader geoeconomic strategy aimed at shaping regional connectivity, managing security risks along its western periphery, and preserving long-term optionality in critical resource access.
It is important to note that extraction of critical minerals and resources is not the end game, but rather the beginning of the supply chain. Removing ore in remote locations can be challenging. Processing those ores into useful mineral concentrations is complicated and requires transporting and processing ores across vast distances in large quantities. Refining and purification leads to production of key materials useful in manufacturing—essential for defense industries worldwide. China currently accounts for 60 percent of the processing of cobalt, lithium, and manganese globally. Furthermore, China controls over 70 percent of graphite extraction globally. These minerals are critical for manufacturing batteries, electromagnets, and other key technologies.
The Current Strategic Environment
Since 2021, Beijing has pursued a deliberately cautious approach in Afghanistan—expanding diplomatic outreach, offering calibrated economic inducements, and engaging in limited security coordination while stopping short of formal recognition of the Taliban regime. China offers the Taliban regime many benefits typically associated with formal state recognition with becoming politically entangled with questions of legitimacy at a time when the regime has yet to demonstrate its sustainability. This posture preserves flexibility and reduces reputational and political risk, a pattern Beijing has adopted with other politically isolated actors. Trilateral mechanisms—principally coordination among China, Pakistan, and Afghanistan—have become the principal vehicle for advancing Chinese interests, with dialogue emphasizing counterterrorism, trade, transit, and plans to link Afghanistan to the China–Pakistan Economic Corridor (CPEC).
Economic measures have accompanied diplomacy: in late 2024, Beijing extended tariff-free access for certain Afghan goods, facilitated limited air links, and allowed Afghan diplomatic operations in Beijing; investments have targeted lower-risk opportunities such as limited oil extraction in the Amu Darya basin, road work, and feasibility studies for rail connectivity.⁸ But these steps have so far been incremental rather than transformational. Many announced projects remain exploratory or pilot efforts; Chinese firms typically prioritize ventures with limited capital exposure and short time horizons, deferring projects that require sustained security guarantees, regulatory certainty, and long-term financing. China is consistent in its avoidance of becoming entangled in unstable areas where security threats persist. This pattern of risk management echoes pre-2021 dynamics—Mes Aynak and other flagship agreements have stalled despite political support—so the widely noted promises of mineral-derived benefits have not materialized at scale. That apparent “promise gap” likely reflects a mix of investor caution, extended project timelines, Afghanistan’s weak regulatory and security capacity, and the technical complexity of modern extraction and processing operations.
The economic consequences are visible: overland infrastructure meant to facilitate China-linked trade has yet to produce sustained commercial flows, and extractive projects have generated only modest revenues and employment. Far from signaling disengagement, however, this pattern is consistent with Beijing’s risk-management approach—maintaining political access and strategic optionality while constraining financial exposure amid instability. The net effect is that China’s economic role in Afghanistan to date has been more conditional and limited than some public statements imply.
Security remains the dominant driver of Chinese calculations. Beijing frames Afghanistan chiefly through spillover risks to Xinjiang, with the Islamic State–Khorasan Province (ISK) and the perceived threat of ETIM informing its posture. Beijing’s skepticism about the Taliban’s capacity to prevent anti-China militancy reinforces its preference for cautious, reversible engagements. Reports of Chinese access to the former U.S. facility at Bagram—while unconfirmed—would, if validated, add tactical value to Beijing’s situational awareness and symbolic weight to perceptions of declining Western influence.
Lessons from China’s History of Mineral Extraction in Africa
China’s experience in Africa offers comparative insight where developing nations with weak governance possess rich natural resources. Over two decades, Chinese state-owned and private entities have paired extraction projects with infrastructure financed by Chinese banks; outcomes have varied widely with governance, labor standards, and security conditions. Qualitative studies document substantial local hiring in unskilled roles alongside retention of Chinese managerial and technical staff, while larger cross-national analyses link some Chinese investments to limited local value capture or negative employment effects where oversight is weak.
A consistent business model highlights risk sensitivity: in insecure contexts Chinese firms often delay, reduce, or suspend operations rather than accept persistent security losses or deploy substantial private security forces. This proclivity helps explain slow progress in Afghanistan: investment alone is unlikely to generate transformative change absent improved security and governance. For the United States, however, China’s uneven record creates opportunities to compete indirectly—by shaping incentives, standards, and meam nodes of value capture—rather than by attempting to outbid Beijing for upstream concessions.
Conceptual and Theoretical Lenses
Formal game-theoretic models—particularly generalized Nash equilibrium formulations of asymmetric resource extraction—illuminate how asymmetric actors interact under scarcity and weak governance, demonstrating how first-mover advantages, access constraints, and commitment mechanisms can lock in unequal outcomes. While China entered Afghanistan quickly as the U.S. disengaged, Chinese reluctance to deal with security challenges negatively impacts the potential value of Chinese contracts to the Taliban regime. These models also show how altering payoff structures—through multilateral financing, procurement guarantees, or sanctions calibrations—can change strategic equilibria. Mitigating current sanctions coupled with altering financial structures may offer the U.S. a way to counter Beijing’s early advantage.
Ends–ways–means remains a useful heuristic for aligning political objectives, methods, and resources while explicitly accounting for risk. Blue Ocean Strategy offers an economic complement that leverages Afghanistan’s abundant critical mineral resources: rather than contesting raw-ore extraction where China enjoys structural advantages, the United States can seek uncontested value by investing in processing, certification, recycling, and substitution—nodes where allied cooperation can capture greater value and reduce strategic vulnerability.
A Synthesized Strategic Approach for the United States
Directly contesting China for raw extraction in Afghanistan is neither feasible nor desirable given China’s geographic proximity, regional partnerships, and calibrated engagement. Instead, U.S. strategy should reshape incentives and the structure of competition: deploy commitment devices (multilateral financing facilities, long-term procurement commitments, selective sanctions relief), pursue achievable objectives (prevent monopolization rather than total exclusion), and focus on higher-value supply-chain nodes. Blue Ocean approaches—investment in processing/refining capacity outside Afghanistan but linked contractually to Afghan output, trusted-supplier certification regimes, and secure chain-of-custody systems—can capture value while mitigating security risks. A recent Trump Directive and DoD investments in allied and domestic critical-mineral capacity demonstrate the plausibility of such a path.
Implications for the U.S. Military
Afghanistan’s strategic salience now lies largely in its role within contested supply chains rather than as a theater for conventional operations. The military’s contribution should therefore be enabling and catalytic: provide intelligence fusion and analytic support to interagency mineral-security efforts; offer security-force-assistance teams to advise and enable regional partners on site security and customs integrity (consistent with U.S. policy and authorities); deploy engineering and mobility capabilities to support allied critical-mineral processing hubs located outside Afghanistan; and support information operations that illuminate contract transparency and labor standards. These activities require clarified joint–interagency authorities, pre-positioned enabling capabilities, and measurable indicators (secure site count; contracted processing capacity; reductions in illicit exports) to judge strategic effect.
Prioritized action list
To take advantage of the opportunities presented in Afghanistan through multilateral investments and mineral processing that can shift the value recognition away from China’s offers to extract raw ores, a sample set of high-level tasks that would strengthen U.S. competitive posture in the Afghan environment include the following:
- Near-term (6–12 months). Charter an Interagency Afghanistan Critical Minerals Working Group (State lead; DoW analytic support). Metric: Working group chartered; first quarterly strategic assessment published; negotiations initiated.
- Mid-term (1–3 years). Support one allied processing facility in a stable partner state (financing via Commerce/Treasury and possibly DoW; DoW engineering/logistics support). Metric: Processing capacity contracted; first verified shipments accepted under certified chain-of-custody.
- Long-term (3–5 years). Establish a trusted-supplier certification regime for Afghan-origin minerals with allied buy-in and secure verification. Metric: Certification recognized by three major downstream buyers; measurable share of Afghan minerals processed via certified channels.
Conclusion
China’s expanding role in Afghanistan reflects a broader great power strategy centered on security, connectivity, and access to (if not control of) critical minerals. While Beijing benefits from unrivaled geographic proximity and regional momentum, its economic engagement to date reflects caution and conditionality rather than large-scale commitment that reduce China’s asymmetric advantages. Afghanistan’s mineral wealth will not automatically translate into strategic advantage absent stability, governance, and integration into higher-value supply chains. This presents opportunities for the United States.
For the U.S. military, Afghanistan illustrates how competition below armed conflict increasingly hinges on economic statecraft, institutional design, and interagency coordination rather than force projection. A strategy grounded in ends–ways–means logic, informed by game-theoretic insights, and oriented toward value innovation offers a viable path forward as great power competition intensifies.
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