Executive Summary
This report assesses Kandahar’s emergence as the primary economic and logistical node for the China–Pakistan Economic Corridor (CPEC) 2.0 extension into Afghanistan as of early 2026.
The assessment considers validated economic indicators, infrastructure advancements, and security concerns associated with this southward redirection.
The report emphasises the strategic importance of Kandahar, as evidenced by the concentration of Chinese capital, Pakistan’s security concerns, and the Taliban’s leadership.
Key Takeaways
- Kandahar has replaced Kabul as the principal decision-making centre for economic engagement with China and Pakistan.
- CPEC-linked infrastructure projects have moved from planning to early operational phases, signalling partial route viability to the Arabian Sea.
- Security risks linked to TTP management and ISKP activity remain the main constraints on sustained foreign investment.
Background Information
As of early 2026, Afghanistan has undergone a marked internal realignment in political and economic authority. While Kabul officially remains the administrative capital under Taliban governance, Kandahar has emerged as the de facto hub for regional diplomatic engagement and economic strategy. Reports from Afghan media reveal a growing interest from Chinese and Indian companies in Kandahar among foreign investors.
On January 20, 2026, hosting a standard coordination conference for the country’s seven zone governors reiterated the city’s significance. Mullah Hibatullah Akhundzada started this meeting, which was subsequently chaired by Mullah Shirin, the Governor of Kandahar. The meeting agenda predominantly featured economic self-sufficiency and inter-regional linkages, while affording minimal attention to domestic administrative issues usually resolved in Kabul.
China has changed its engagement strategy to reflect the altered power dynamics within Afghanistan, encompassing both Kabul and Kandahar factions. Chinese delegations have increased direct contact with the Kandahar Shura, bypassing Kabul-based ministers who lack authority over long-term security commitments.
Beijing’s strategy validates the idea that the Kandahar leadership holds exclusive authority over the sustainability of mining activities and transit routes. However, the presence and investments by Chinese entities in Afghanistan caused apprehension within the Haqqani Network, as they perceived this as a threat to the existing power equilibrium in the region.
Pakistan has mirrored this change. Following border clashes in October 2025 – November 2025, Islamabad reclassified the Chaman–Spin Boldak axis as the major access route for its economic interests in southern Afghanistan. Islamabad’s diplomats and intelligence agencies have primarily directed their efforts at maintaining this corridor.
In August 2025, representatives from China, Pakistan, and Afghanistan convened in Kabul for a trilateral meeting. During this session, the participating nations committed to augmenting their collaborative efforts in counterterrorism, expanding trade relations, streamlining transit procedures, and deepening Afghanistan’s integration into the China-Pakistan Economic Corridor (CPEC).
Infrastructure development associated with the extended CPEC 2.0 has advanced unevenly, yet demonstrably. By February 2026, the Spin Boldak–Chaman link is in its concluding planning and initial preparatory phases, with its strategic aim unequivocally established as the conduit linking Kandahar to the broader CPEC network, ultimately connecting to Gwadar Port. The Shah Wali Kot marble axis is functioning, with the involvement of Chinese and Turkish companies. Its estimated worth is $6.2 million, and it gears towards exports to East Asia markets.
Trade data reinforces this trend. Afghanistan’s total trade volume reached nearly $14 billion in 2025. China and Pakistan remain among the top three trading partners. The local markets in Kandahar are exhibiting a greater supply of Chinese electronic goods alongside Pakistani textiles, cement, and pharmaceuticals. A second Afghan commercial vessel at Gwadar Port in June 2025, transporting 20,000 tons of fertiliser, demonstrates that the Kandahar-to-sea route is operational rather than conceptual.
Why Does It Matter?
The concentration of economic authority in Kandahar alters the balance of power within the Taliban structure and reshapes regional risk calculations.
The southern route presents China with a partial alternative to the northern Afghan corridors, which continue to be susceptible to instability and rival armed groups. Engaging directly with the Kandahar Shura is necessary for predictable enforcement, not bureaucratic mediation. Chinese capital, amounting to $540 million for oil and mining, depends on security goals on the Afghan-Pakistani border and good relations with the Taliban leadership. The escalating tensions between Kabul and Islamabad and recent security incidents at the Tajik-Afghan borders involving attacks on Chinese nationals and the terrorist assault on a Chinese hotel in Kabul underscore the precariousness of the situation for Beijing.
Pakistan’s imperatives are primarily security-driven. Islamabad aims to utilise Hibatullah Akhundzada’s religious influence to restrict the Tehrik-e-Taliban Pakistan (TTP)’s activities. Control over the Chaman–Spin Boldak axis serves as a pressure point in this effort.
Stable borders are necessary for Islamabad’s involvement in CPEC expansion, but recent conflicts highlight how unstable this situation is. Pakistan’s intelligence services might continue to treat Kandahar as the primary interlocutor for managing cross-border militant spillover.
The Taliban leadership in Kandahar faces internal and external constraints. A growing internal rift exists between Kandahar’s hardliners and Kabul’s pragmatists, especially regarding contract transparency and foreign participation. From an external perspective, leaders face the challenge of weighing economic benefits against local anger stemming from unclear deals and feelings of diminished control
The security environment compounds these pressures. The Islamic State Wilayat Khorasan (ISKP), which recently released the Pashto version of Voice of Khorasan after a long period of inactivity, has repositioned its messaging to frame the China–Pakistan–Taliban alignment as a foreign imposition.
Private security contractors from Kandahar have increased their presence because of attacks on Chinese mining staff in northern Afghanistan. These developments raise costs and complicate risk management for all external actors.
Indicators to Monitor
- Frequency and substance of Chinese delegations’ engagements with the Kandahar Shura.
- Security incidents and military clashes between Afghan and Pakistani troops.
- Progress benchmarks on the Spin Boldak–Chaman link and the Kandahar–Herat railway feasibility.
- Trade volumes passing through Kandahar-linked routes to Gwadar Port.
- Public reporting on ISKP activity targeting economic projects.
Outlook
Kandahar currently functions as a testing ground for southern integration under China’s Belt and Road Initiative. Economic indicators suggest modest yet discernible advancement, underpinned by ongoing extractive ventures, nascent transportation infrastructure, and increasing commercial exchanges.
However, the Haqqani-Kandahar rivalry remains the single greatest domestic threat to this transition. Should internal ruptures lead to localized conflict, Chinese investment will likely retreat to safer, albeit less lucrative, Central Asian corridors.
China and Pakistan’s strategic alignment concerning Kandahar is contingent upon border security and the cessation of militant activities.
Internal divisions within the Taliban pose a moderate risk to the continuation of contracts and the coherence of governance. Should the Chaman–Kandahar route attain enduring stability, Kandahar stands poised to surpass Kabul as Afghanistan’s primary economic conduit.
Should security threats or internal ruptures prove unmanageable, Chinese investment may well shift towards Central Asian options that, while possessing lesser resource potential, would entail diminished risks.
