Via East Asia Forum, commentary on growing unlikelihood that China will rebuild Syria:

A decade since the start of the Syrian civil war, debate on the conflict is shifting toward the rebuilding of the country. China is increasingly being touted as a leading candidate to address Syria’s post-conflict reconstruction at a time when Western powers and Syrian Assad regime allies seem either unwilling or unable to address the issue.

The European Union, the United States and other Western powers have ruled out investing in Syria while the Assad regime remains in power. The Biden administration has suggested that Syria will not be a foreign policy priority for Washington. And neither of Syria’s principal backers, Russia and Iran, are in a position to drive any serious reconstruction initiative.

Iran’s economy has been debilitated by the combination of COVID-19 and international sanctions, limiting its capability to fork out for Syria’s reconstruction bill. With its GDP estimated to contract at least 4.5 per cent over 2020–21, the ramifications of Iran’s economic fallout are projected to endure well into the future. Russian state coffers remain similarly depleted as the country battles deep recession compounded by Western sanctions and the pandemic.

China, in contrast, has managed the pandemic successfully and is bolstering its economy. China’s was the only major economy to record economic growth through the pandemic, expanding by 2.3 per cent in 2020 and increasing through 2021.

UN estimates in 2020 estimated Syria’s economic losses from the war at over US$442 billion, with at least US$117.7 billion in destroyed physical assets. There have been suggestions that Beijing may be looking to elevate Syria’s place in its ambitious Belt and Road Initiative, citing access to the Mediterranean and the lucrative potential of various reconstruction projects. Some note that Beijing’s growing role in the Middle East will eventually encompass Syria and, by extension, its infrastructure needs.

China has on multiple occasions voiced its interest in investing in Syria’s reconstruction process. China’s Foreign Minister Wang Yi stated in 2017 that ‘only by advancing reconstruction steadily can we give the Syrian people hope and provide guarantee for the long-term peace and stability in Syria’. Chinese President Xi Jinping reaffirmed this notion two years later, claiming that ‘China stands ready to participate in Syria’s reconstruction’.

But expressions of interest differ from concrete steps. Apart from minor reconstruction pledges, peripheral aid donations — including most recently a batch of 150,000 Sinopharm vaccine doses — and small-scale investments — such as in Syria’s paltry automobile industry — Beijing has refrained from flexing financial muscle in Syria due to three major factors.

First, Syria remains fragmented. While the war has effectively been turned into a frozen conflict, large-scale military incursions are ongoing — including clashes between regime forces and the Turkish army. The potential for spillovers and sporadic flare-ups are high and likely to deter any Chinese investors interested in bringing capital to Syria. Sanctions are further disincentives, including the US-sponsored Caesar Act aimed at any foreign entities that provide funding or assistance to the Assad regime.

Second, the economic and political situation in Syria is still in sharp decline. Hyperinflation is becoming the norm. The Syrian pound is suffering from record levels of depreciation. In March 2021, it hit the grim milestone of 4000 pounds to the US dollar on the black market — from 47 pounds to the dollar at the outbreak of war. No region is being spared from soaring commodity prices, food insecurity and fuel shortages. Protests in response that call for the downfall of the regime in government-held strongholds, such as in Daraa and Suwayda, are becoming more frequent. Rumours of a transitional military council have been widely circulated within elite circles. China would not want to invest in a country whose political future is still up in the air and whose economic forecasts are dire.

Third, China’s perceived security interests far outweigh economic incentives in Syria. Beijing considers rebel-held territories in the northwest of the country ‘terrorist hotbeds’. It is especially concerned about the ethnic Uyghur fighters who have joined the al-Nusra Front (now Hayat Tahrir al-Sham), the Turkistan Islamic Party and Katibat al-Ghurba al-Turkistan. While the exact number of Uyghur fighters and jihadists is unknown, China’s special envoy to Syria Xie Xiaoyan has claimed the number to be as high as 5000. Beijing would likely rather see these fighters killed in combat; their capture or repatriation could be seen as a potential threat to their domestic national security.

This is a key pillar of China’s Syria policy. Beijing sees the Assad regime as the most reliable fighting force to combat Islamist groups on the ground, but the economic incentives to invest under his government are relatively weak. Beijing has shielded the regime on 10 occasions in the UN Security Council through its veto power and sought to provide legitimacy to Assad — all the while keeping at an arm’s length from the conflict and advocating a political solution based on mediation and dialogue.

For any substantial reconstruction effort, Beijing would need a durable political solution to the conflict. Beijing will have to wait and observe the general peace process, including what the 2021 presidential elections may bring, before taking any steps in that direction, but it is unlikely that much will change.