Mr Karzai also appreciated Prime Minister Narendra Modi for raising the issue of Balochisthan in his Independence Day address, saying Afghanistan understands the problems being faced by the people of Pakistan's southern province.
In an interactive session on Regional Power Play and Rise of Radicalism in Afghanistan, he identified terrorism as the single biggest challenge facing the region and called for a united fight to defeat it.
Mr Karzai, who was president of Afghanistan from 2001-2014, said China has been a good neighbour to Afghanistan and its military and security assistance to his country was very recent. At the same time, he said that Afghanistan's ties with China is not as deep as it is with India.
"But the overall relationship between China and Afghanistan is of course very good," he added.
Asked about criticism in some quarters that India and Pakistan were engaged in a proxy war in his country, Mr Karzai retorted by saying, "India is not engaging in any proxy war in Afghanistan...Training thousands of Afghans is not a proxy war, it is empowerment."
India has supplied four Mi25 helicopters to Afghanistan besides providing training to Afghan security forces.
Welcoming PM Modi's comments on Balochistan, Karzai said, "The issue of Balochisthan is something we understand and therefore we appreciate the remarks of Prime Minister Modi."
In his Independence Day speech on Monday, PM Modi had talked about the situation in Pakistan Occupied Kashmir, Gilgit and Balochistan and said people from there have thanked him for raising their issues. Mr Karzai attacked Pakistan for encouraging spread of radicalism. "Unfortunately, in our region there was use of radicalism to a purpose," he said.
About spread of dreaded terror outfit ISIS, he said ISIS is a "sinister" tool, adding tomorrow it will be against the ones using it. He said Afghanistan and all its neighbouring countries must work together to combat ISIS.
"Today I can use it, tomorrow I can discard it. That's a very dangerous strategy," he said, while asking Pakistan to deal with terror groups firmly.
He said religion and aspirations to be a democratic country have nothing to do with one another. In an apparent reference to Pakistan, he rejected promotion of religion as an "instrument of foreign policy". He also sounded critical of the US for its role in the region.
Mr Karzai appealed to Pakistan to join hands with Afghanistan in addressing various problems "without use of radicalism."
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