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China opens new land cargo route to boost Afghanistan’s economy

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Afghanistan’s desire for regional integration has further improved after the first freight train to traverse a new freight line departed China toward Afghanistan.

The train departed from Lanzhou, capital of northwest China’s Gansu province last week and headed for Hairatan in Afghanistan. The freight train is now making the launch of a new cargo route between the two neighboring countries, where the experts extolled the move and labeled it key for boosting the fragile economy of Afghanistan.

The 3,125km route uses both railways and roads and passes through Kyrgyzstan and Uzbekistan until it reaches the Afghan border town of Hairatan.

State news agency Xinhua reported that the first train to leave Lanzhou was carrying $1.5 million of freight, including car parts, furniture, machinery and equipment from Gansu province and other places.

“We hope to normalize the route for Sino-Afghanistan express service and aim to run four times a month,” Li Wei, a marketing manager from New Land-Sea Corridor Operation Co, one of the main firms involved in the shipment, told Xinhua.

China making efforts to improve Afghanistan’s economy

China has been helping Afghanistan in the last over two decades in different fields and Beijing did not stop its cooperation after the takeover of Afghanistan by the Taliban. In August 15 2021, the US troops hastily withdrew from Afghanistan that resulted in the collapse of the former republic government.

However, the regime change also resulted in a cut in a number of routes into the country and most freight and traffic goes via Pakistan right now. Several embassies suspended its activities and many more closed its doors and froze cooperation with the new government under the Taliban leadership. But few embassies, including the Chinese embassy had remained active in Afghanistan and also intensified business engagement with the new government in Afghanistan aimed at bolstering up its economy.

China also invested in several other projects, including the start of the air corridor by shipping pine nuts from Afghanistan to help boost its economy.

“We expect more from China. These projects are important to improve the economy, but it’s not enough. As our neighbor, we expect more business engagement from China,” an Afghan economic pundit, Jawad Naqashbandi said.

Speaking to Harici he said that Beijing can do much more, and this land route is a good start. “If China really wants to help improve the economy, it needs to invest in the extraction of natural resources of Afghanistan which is estimated around three billion dollars,” he added.

Another investment in medical area 

In another development, a Chinese company named TNA said it will invest $10m in Afghanistan’s pharmaceutical sector.

The National and Drug Authority (AFDS) said that TNA announced its willingness to donate $10 million for the construction of a pharmaceutical factory in Afghanistan.

Mohammad Javid Hazheer, a spokesman for NFDA said that the executive director of TNA during his meeting with the Deputy Minister of Food and Drug Authority has shown interest in investing $10 million in a pharmaceutical factory.

During the meeting, the executive director had asked for land to start the construction of the pharmaceutical factory. He also demanded security during the construction process.

Furthermore, in June another Chinese company named Snow Pharma executed an investment of $50 million in the southern province of Kandahar.

The company will produce tablets, capsules and Syrups in Kandahar and it will have the capacity to create 5.6 million pills, 2 million capsules, and 60,000 bottles of syrup within a single eight-hour shift.

Afghanistan’s Drug Manufacturing Companies Union praised the Chinese company for investing in medical areas, and said the level of medical treatment in the country will improve by producing tablets inside the country.

$300 million invested in pharmaceutical manufacturing sector

There has already been more than $300 million invested in Afghanistan’s pharmaceutical manufacturing sector.

Meanwhile, Afghan Mines and Petroleum Minister, Sheikh Shahabuddin Delawar held a meeting with Turkish investors, in which they expressed readiness to invest in Afghanistan’s mineral resources and assured that the investment and processing of Afghanistan’s minerals will make Afghanistan a challenge.

Thanking the Turkish investors for their interest in Afghanistan’s mines, Delawar had promised to cooperate with them by Afghanistan’s mining laws, according to Bakhtar news agency.

Both sides also discussed the economic and basic programs of these ministries, such as the extraction and management of mineral resources and the production of Afghanistan’s agricultural products.

Boosting connectivity between China and Afghanistan

Indeed, with the new route, trade connectivity between China and Afghanistan will further improve. The train route not only boosts connectivity between Beijing and Kabul but also the Central Asian countries.

The train which departed China on 5th of July will take at least 15 days to reach Hairatan, which is much faster compared to other seas and air routes. This will also cost less.

The second important point is that the new land route with China will also diversify Afghanistan’s export markets and reduce its dependence on Pakistan’s ports. It has been reported that China is Afghanistan’s largest trading partner and source of foreign investment.

China’s launch of the cargo train to Afghanistan comes amid Taliban’s claim of fully maintaining security across the country since the withdrawal of US troops.

Afghanistan is part of BRI

Though China did not recognize the Taliban government, it always stressed that Afghanistan is an important country for its Belt and Road Initiative (BRI), a multi-billion transcontinental infrastructure initiative.

The new land route could also be taken as part of the BRI project.

The Taliban had recently said that China is interested in investing in Afghanistan’s oil and gas industries. Afghanistan is rich in gas and oil and the Taliban expected China to help extract them to improve the economy situation of the country.

In January, the Taliban signed an agreement with a Chinese firm to extract oil from the Amu Darya basin and both sides signed the agreement at a ceremony attended by high-ranking officials from the two countries.

Afghanistan’s acting mines and petroleum minister Shahabuddin Delawar during the signing ceremony held in Kabul said that during the initial three-year period, more than $540 million will be invested in exploration.

China has reportedly invested around $2 billion in Afghanistan after the fall of the previous government, according to the Afghan Ministry of Industry and Commerce.

 

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Afraid of the gun; Taliban supreme leader fears of a coup

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Hibatullah Akhundzada, the supreme leader of the Taliban, has ordered the security institutions that without his permission, “no one can distribute or use the military equipment registered by the ministries of defense and interior, the directorate of intelligence and other independent institutions.”

Experts and analysts have considered this move by Hibatullah as last resort to weaken the position of defense minister, Yaqoob Mujahid, interior minister, Sirajuddin Haqqani and the head of Taliban intelligence, Abdul Haq Wasiq in order to prevent a possible internal coup that was initiated by these three top officials.

In the first article of the order, it is mentioned that no person can distribute military equipment registered in the reserves of the ministries of defense, interior and intelligence, or issue an order to distribute it without the order of Hibatullah.

This decree titled “Regarding the distribution, protection and supervision of registered military equipment”, specifies that whenever an Emirate entity (Taliban-related entity) needs weapons, ammunition, night vision cameras, telecommunications and other military equipment” must receive the approval order from the leader of the Taliban.

Also, in the second article of this decree, it is stated that whenever one of the military departments of the Taliban needs military equipment, it must send its request to Hibatullah’s office in Kandahar.

In the third article of the decree, it is emphasized that if the military equipment was distributed or used without the permission of the Taliban leader before the issuance of this decree, they must be returned to the reserves.

Ministries of defense, interior and head of intelligence department are banned from disturbing military weapons.

According to this article, Hibatullah entrusted the ministries of defense and interior, as well as the general directorate of Taliban intelligence, with the responsibility to report the list of available military equipment to the directorate of registration, and protection of military equipment.

This order of the Taliban leader has been considered as another step in the direction of concentrating more power in the hands of Mullah Hibatullah in Kandahar. Many have seen it as a sign of Hibatullah’s increasing distrust of senior Taliban officials in Kabul. Previously, some senior Taliban officials, including Sirajuddin Haqqani, have openly disobeyed Hibatullah’s order to prohibit photography and filming and have not followed the order of their supreme leader.

(R) Defense Minister Mullah Yaqoob Mujahid and (L) Interior Minister Sirajuddin Haqqani.

Previously, several reports have been published about the sale of military equipment left over from the US troops and Afghan security forces during the republic government. Even the US-elected president Donald Trump, repeatedly mentioned this issue during his election campaigns. Not long ago, the government of Pakistan also announced that the Pakistan security forces have discovered and confiscated a car carrying US weapons smuggled from Afghanistan.

Pakistani media reported that this equipment included M4 assault rifles, night vision cameras and thousands of rounds of ammunition, which were transported in a truck carrying vegetables. Pakistani security officials have estimated the total value of weapons smuggled from Afghanistan in this truck to be 126,354 US dollars.

The cost of US’s remaining equipment in Afghanistan estimated over 7 billion US dollars

The Pentagon has already announced that after the withdrawal of US forces from Afghanistan, about 7 billion dollars of military equipment fell into the hands of the Taliban. This equipment reached the hands of the Taliban after the fall of Afghanistan on 15 August, 2021.

It has been reported that when the US forces left Afghanistan, there were 78 US-made aircrafts in the country, whose value reached 1 billion dollars. According to CNN, with the end of the US military presence, a total of more than 9,000 air-to-ground munitions worth more than six and a half million dollars have remained in Afghanistan.

The report also states that out of a total of 96,000 military vehicles, more than 40,000 units, including 12,000 Humvees (armored tanks), fell into the hands of the Taliban. Moreover, out of a total of more than 400,000 weapons that the US gave to the forces of the former Afghan government, about 300,000 remain in the country.

Almost all “communications equipment, including mobile base stations, portable and hand-held commercial and military radio systems, and associated transmitters and encryption devices, all remain in Afghanistan,” according to the report.

The report added that “almost all” of the equipment for night vision cameras, surveillance, biometric and positioning equipment,” a total of nearly 42 thousand pieces of specialized equipment, remained in Afghanistan.

Meanwhile, Five Mi 17 helicopters of the then Afghan army, which were transferred to Ukraine for repair before the collapse of the government, have also returned to Afghanistan and now are used by the Taliban.

It should be noted that the internal rivalries in the Taliban, especially among the different factions of this group, is one of the important reasons for Mullah Hibatullah’s distrust of some Taliban officials. Some officials, including interior minister Sirajuddin Haqqani and defense minister Mohammad Yaqub Mujahid, gained a lot of power, especially during the Taliban’s war against foreign forces, and Mullah Hibatullah may be worried that these officials are trying to expand their power, which is a clear threat to his position as the Taliban leader.

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China’s BYD prepares to launch latest SUV, the Sealion 07, in Europe despite EU tariffs

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BYD, the world’s largest electric vehicle (EV) maker, is set to launch its latest SUV, the Sealion 07, in Europe, undeterred by recent tariff increases on Chinese-made electric vehicles. This strategic move highlights BYD’s commitment to expanding overseas sales despite economic barriers.

Deliveries of the Sealion 07 are scheduled to begin in 2025, marking BYD’s seventh all-electric model in the European market, the company announced on Wednesday. Additionally, BYD plans to enter the South Korean market next year, adding to its existing presence in 95 countries worldwide.

This European expansion comes on the heels of the European Union’s decision last month to impose new tariffs—ranging from 17% to 35.3%—on Chinese electric vehicles following an anti-subsidy investigation. BYD’s EVs are subject to a 17% tariff, in addition to the standard 10% tariff applied to all pure electric cars imported from China. These tariffs, which took effect last month, will remain in place for five years. Meanwhile, U.S. tariffs on Chinese-made EVs increased from 25% to 100% as of September, citing similar concerns.

Despite the added costs, BYD’s vehicles continue to hold strong appeal in export markets. “BYD’s vehicles remain attractive even after the additional tariffs, so it’s not really a big problem for the company,” said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, a leading industry consultancy. “The Sealion 07 exemplifies how BYD’s cost advantage enables it to counteract such trade barriers in key export markets.”

Shenzhen-based BYD has yet to disclose the European pricing for the Sealion 07. On the mainland, the SUV—featuring a range of 450 kilometers—starts at 189,800 yuan (approximately US$26,272), with deliveries beginning in May.

According to a report last year from UBS analysts, BYD has a sustainable cost advantage of 25% over traditional European brands.

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Singles’ day promotions target overseas Chinese as China’s domestic demand slows

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After last year’s Singles’ Day shopping festival in China was dubbed the “quietest in history,” China’s e-commerce platforms focused on a new strategy this year.

For this year’s Singles’ Day event, major e-commerce companies such as Alibaba, JD.com, and Pinduoduo invested heavily in expanding overseas markets, targeting the estimated 100 million Chinese living abroad with offers like discounts and free or low-cost shipping.

The central question, however, is not whether these efforts will succeed in the short term, but rather if this shift can help platforms grow their user bases as online sales growth in China reaches a bottleneck.

“Domestic consumption is quite weak right now, and every company is certainly considering new ways to drive growth for Singles’ Day,” said an executive at a leading online retailer, who requested anonymity. “The overseas market is widely seen as a promising source for additional growth,” he added in an interview with Nikkei Asia.

Singles’ Day, a one-day sales event launched by Alibaba in 2009 as a celebration for singles, has since evolved into a month-long campaign with special offers and deep discounts, culminating on or around November 11.

This year, China aimed to revitalize its retail sector with the event. Total consumer goods sales rose by 3.3% year-on-year in the first three quarters of 2024, though high-end consumer spending remained stagnant. Cosmetics sales fell by 1%, while gold and silver jewelry sales declined by 3.1% year-on-year.

Last month, Alibaba’s Taobao launched a significant marketing campaign in Hong Kong and Taiwan, flooding subway stations with advertisements for “free shipping on orders over 99 yuan,” among other offers. According to the company, the campaign cost 2 billion New Taiwan dollars ($61.7 million) in Taiwan and 1 billion yuan ($138 million) in Hong Kong.

Following Alibaba’s move, JD.com announced it had invested 1.5 billion yuan to offer discounted product prices and cheaper shipping to Hong Kong shoppers. Bargain platform Pinduoduo took it a step further, offering free shipping via courier SF Express for Hong Kong shoppers, regardless of the item’s price. All products on these platforms are shipped from mainland China.

A spokesperson from Alibaba’s International Digital Commerce Group noted that since the overseas initiative launched in October, Taobao Hong Kong has achieved double-digit growth in both orders and gross merchandise value (GMV)—a metric that excludes canceled orders—on both a monthly and year-on-year basis.

The platforms are also targeting Chinese shoppers in Malaysia, Thailand, and Singapore.

This year, unlike in previous years, shoppers could combine online discounts with a subsidy program introduced by the Chinese government to boost domestic consumption, primarily for home appliances and household products. Analysts suggest these incentives will likely boost sales for JD.com, which is known for selling high-quality large appliances and offering after-sales services.

While JD.com has yet to release sales or GMV figures for home appliances during the shopping festival, it is expected to share its June-September results, along with Alibaba, later this week.

Last year, data provider Syntun estimated that total GMV on major e-commerce platforms grew by only 2.1% to 1.14 trillion yuan, falling short of the 2.9% growth forecast for 2022. Similarly, consultancy Bain predicted that Singles’ Day sales would reach 1.15 trillion yuan in 2023.

On Tuesday morning, Alibaba announced “strong GMV growth” and a “record number” of active shoppers for this year’s Singles’ Day event.

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