By Mirza Abdul Aleem Baig
The global race for strategic dominance is intensifying, with South Asia and its surroundings emerging as a critical theater. Central to this evolving dynamic are the China-Pakistan Economic Corridor (CPEC) 2.0 and the untapped reserves of rare-earth minerals in Pakistan and Afghanistan. This triad of economic ambition and resource competition holds transformative implications for the region and the world.
CPEC 2.0: The New Silk Road or a Debt Trap?
China’s Belt and Road Initiative (BRI) has been a backbone of its global strategy, and CPEC is arguably its most vital artery. In its initial phase, launched in 2015, CPEC prioritized infrastructure – modernizing roads, ports, and power grids in Pakistan. However, the second phase, termed “CPEC 2.0” takes a more nuanced approach, emphasizing industrialization, agricultural modernization, and high-tech cooperation.
This new phase seeks to establish Special Economic Zones (SEZs) across Pakistan, aiming to catalyze local industries and attract foreign investments. The promise of renewable energy projects and advancements in digital connectivity “Digital Silk Road” underscores China’s intent to weave Pakistan deeper into its economic web.
Yet, the optimism around CPEC 2.0 is tempered by significant challenges. Security concerns, especially in Balochistan, where separatist insurgencies pose a persistent threat, remain a stumbling block. In addition, the specter of debt looms large over Pakistan and critics argue that Pakistan risks falling into a “Debt Trap” diplomacy, wherein Beijing’s financial leverage could compromise Islamabad’s sovereignty. Into the bargain, the USA and India, wary of China’s strategic foothold, continue to push back against CPEC’s advances, adding another layer of complexity.
Rare-Earth Minerals: The New Oil of the 21st Century
Rare-earth elements (REEs) have become indispensable to modern technology, from smartphones and electric vehicles to advanced military systems. The global transition to green energy has only amplified their importance. Both Pakistan and Afghanistan possess vast, largely untapped reserves of these critical minerals, placing them squarely in the crosshairs of global powers.
Pakistan’s Potential: Pakistan’s mineral wealth, particularly in Balochistan and Khyber Pakhtunkhwa, includes significant deposits of gold, copper, and rare-earth elements. The Reko Diq mine in Balochistan, one of the world’s largest undeveloped gold and copper mines, is a case in point. While these resources hold immense economic potential, their extraction and processing require substantial investment and technological expertise.
Afghanistan’s Untapped Wealth: Afghanistan’s mineral resources are even more staggering, with estimates ranging between $1 trillion and $3 trillion. These include vast deposits of lithium – a cornerstone for batteries in electric vehicles – as well as other rare-earth elements critical for renewable energy technologies. However, Afghanistan’s political instability and governance challenges pose significant obstacles to tapping this potential.
The withdrawal of American troops from Afghanistan in 2021 created a vacuum that China has been quick to exploit. With the U.S. focusing on disengagement, Beijing has deepened its engagement with the Taliban, forging preliminary agreements to extract mineral resources. This pragmatic relationship, underscored by China’s non-interventionist approach, allows Beijing to sidestep political challenges while securing vital resources. By doing so, China aims to reinforce its dominance in global supply chains for critical minerals, a domain where the US and its allies are playing catch-up.
Afghanistan-Pakistan Relations: A Fractured yet Inextricable Bond
The relationship between Afghanistan and Pakistan remains complex, shaped by historical grievances, shared ethnic ties, and overlapping security concerns. Pakistan has long sought a stable Afghanistan, not just to ensure regional peace but also to facilitate trade and connectivity projects like CPEC. However, the presence of militant groups operating along the border, coupled with Kabul’s accusations of interference in its internal affairs, continues to strain relations.
The Taliban’s return to power in 2021 presented both challenges and opportunities for Pakistan. On the one hand, Islamabad’s influence over the Taliban offers a chance to shape Afghanistan’s trajectory in a direction conducive to regional stability. On the other hand, the resurgence of militant activity along the Durand Line has reignited security concerns.
China’s growing engagement with both Pakistan and Afghanistan adds another layer of complexity. Beijing’s investments in Afghanistan’s mineral sector and its efforts to integrate the country into broader regional projects align with Pakistan’s goals under CPEC. Yet, any divergence in priorities or misalignment of strategies could create friction among the three nations.
Geopolitical Rivalry: The Dragon vs. the Eagle
The rare-earth mineral rush and CPEC’s expansion have injected fresh energy into the broader geopolitical contest between China and the United States. Both nations view the region as a strategic chessboard where influence over resources, trade routes, and alliances can shape the global balance of power.
China’s Playbook: For China, CPEC is more than an economic initiative; it is a strategic masterstroke. By developing Gwadar Port and connecting it to its western provinces, China gains direct access to the Arabian Sea, bypassing chokepoints like the Strait of Malacca. This not only secures its energy supplies but also provides a launchpad for projecting influence in the Indian Ocean.
China’s engagement with Pakistan’s rare-earth sector and its overtures to the Taliban underscore its broader strategy. By locking in access to critical minerals in Pakistan and Afghanistan, Beijing aims to consolidate its position as the global leader in REE production and processing. The growing China-Afghanistan relationship, forged in the wake of the U.S. withdrawal, represents a new frontier in Beijing’s strategic calculus. By partnering with the Taliban, China secures not just mineral wealth but also a foothold in a region long dominated by Western interests.
America’s Countermoves: The United States, meanwhile, is recalibrating its approach to counter China’s growing footprint. Through initiatives like the Quad (comprising the US, India, Japan, and Australia) and the AUKUS alliance, Washington is strengthening its partnerships to check Beijing’s ambitions.
In the sphere of rare-earth minerals, the US is investing in alternative supply chains and technologies to reduce dependence on China. Efforts to deepen ties with Central Asian countries, rich in resources and strategically located, are also gaining traction. Additionally, Washington’s engagement with Pakistan, while cautious, reflects an understanding of Islamabad’s strategic importance.
Implications for Pakistan and Afghanistan
Pakistan’s Balancing Act: Pakistan finds itself in a precarious yet potentially advantageous position. While its partnership with China under CPEC offers economic benefits, over-reliance on Beijing could limit its strategic autonomy. Islamabad must navigate this relationship carefully, leveraging Chinese investments while keeping channels open with the US and other Western nations. Striking this balance is crucial to ensuring sustainable development without compromising national interests.
Afghanistan’s Resource Curse: For Afghanistan, mineral wealth could be a double-edged sword. While it offers a pathway to economic recovery, the absence of stable governance and infrastructure makes it vulnerable to exploitation. The Taliban’s willingness to engage China reflects a pragmatic approach, but it also risks locking Afghanistan into unfavorable agreements. On top of that, fostering better ties with Pakistan and addressing cross-border security concerns are essential for Afghanistan to fully realize its economic potential. The international community, particularly the US and its allies must play a proactive role in ensuring that Afghanistan’s resources are developed responsibly and inclusively.
The Global Stakes
The geopolitical contest over CPEC, rare-earth minerals, and regional influence is not merely a South Asian issue; it has global ramifications. The outcome of this competition will shape the future of green energy, technological innovation, and military power.
For the United States and its allies, the challenge lies in countering China’s strategic maneuvers without escalating tensions to unsustainable levels. This requires a multi-pronged approach, combining economic investments, strategic partnerships, and robust diplomacy.
For China, the stakes are equally high. Its success in South Asia and its control over critical mineral supply chains are central to its ambition of becoming the world’s leading superpower. However, Beijing must tread carefully to avoid overextension and backlash from regional and global actors.
The interplay between CPEC 2.0, rare-earth minerals, and Sino-American rivalry is reshaping the geopolitics of South Asia and beyond. For Pakistan and Afghanistan, this is a moment of both opportunity and peril. Wise policymaking, strategic alliances, and inclusive development are essential to navigate this complex landscape.
As the world transitions to a green economy and engages with technological and strategic challenges, the battle for resources and influence in South Asia will remain a defining feature of the 21st century geopolitical order. The question is not just who will win this contest, but whether the region can emerge as a beneficiary rather than a casualty of this great power rivalry.
Author: Mirza Abdul Aleem Baig – An independent observer of global dynamics, the intricacies of geopolitics and the interplay between international relations, foreign policy and strategic alliances that are shaping the new world order.
(The opinions expressed in this article are solely those of the author and do not necessarily reflect the views of World Geostrategic Insights).