CORPORATE WINDOW: BEIJING’S STRATEGIC GWADAR GAMBLE

Gwadar could have played a critical economic role for Pakistan through its association with the China-Pakistan Economic Corridor (CPEC), which the Chinese President Xi Jinping had announced during his state visit to Pakistan in 2015. The multibillion-dollar project aimed to build transportation and other infrastructure connecting the Gwadar port to Kashgar in the Xinjiang region of China. CPEC gave a great boost to bilateral relations, particularly after a Chinese state-run company won the rights to operate the port under a 40-year lease. The idea of an economic corridor came at a crucial time for Pakistan when it was embroiled in internal militancy and rising tensions with neighbouring India.

However, Gwadar is in Balochistan, Pakistan’s poorest province with a history of insurgency. Even though Gwadar was hailed as the crown jewel of CPEC and a game-changer for Pakistan, it has been anything but a success. Although it has been more than a decade since the CPEC announcement, the small town continues to be devoid of any major business or economic enterprises.

Over the years, news has trickled in about slowing CPEC momentum, as Beijing is concerned about the safety of its people working on these schemes in Pakistan. Chinese workers and installations have been repeatedly targeted by the outlawed Baloch Liberation Army (BLA) terrorists since 2018, both within Balochistan and outside the province. As recently as January 31, the BLA launched coordinated terrorist attacks across 12 districts of Balochistan, including Quetta and the Gwadar district.

China’s persistence in Balochistan, despite security challenges and a lack of profitability, reflects its long-term geopolitical thinking

Yet, China continues to finance and build infrastructure in Gwadar. Examples include the $168 million Eastbay Expressway, which connects the main port to the Makran Coastal Highway, and the New Gwadar International Airport built for $320m. Said to be the largest airport in the country, it was inaugurated with much fanfare in January 2025. Oddly, this grand infrastructure remains inactive.

Profit fallacy

Beijing’s persistence in Balochistan, despite security challenges and a lack of profitability, reflects its long-term geopolitical thinking. Aasim Sajjad Akhtar, an Islamabad-based political economy professor and author, argues that this massive capital expenditure represents a deliberate and irreversible footprint. “Beijing has spent extravagantly in Gwadar, and there is a ‘sunk cost’ that they have incurred,” he notes, framing the project as part of “a grand design” to secure vital access to the Straits of Malacca and Hormuz.

This is a part of a broader, systemic Chinese global maritime strategy. For instance, Sri Lanka’s Hambantota port opened in 2010 and was financed by China, but it has since been underused and marred by security concerns and protests. According to a report in The Guardian, Beijing may be planning to host future naval bases at Hambantota, Bata in Equatorial Guinea, and Gwadar “to protect shipping routes and strengthen its ability to resist sanctions from the US and its allies”.

Gwadar serves primarily as geopolitical insurance, a logistics, energy and naval hub optimised for long-term strategic resilience rather than short-term commercial profitability, notes Peter Frankopan, a professor of global history at Oxford University.

Gwadar is strategically situated at the mouth of the Strait of Hormuz. For Beijing, the Gwadar port has evolved over the years into a security-driven partnership, highly influenced by the establishment and China’s strategic interests. Moreover, with the recent US-Iran war, the strait — a key shipping channel through which a fifth of the world’s oil and gas normally passed — has assumed global importance.

High security enclave

In this heavily securitised space, thousands of Chinese workers live and work in isolation, cut off from the local population. Infrastructure development in Gwadar has prioritised areas around the main port, exemplified by the Eastbay Expressway, which has harmed the livelihoods of the fishing communities by preventing them from openly accessing the Arabian Sea.

This expressway has left the locals resentful and deeply mistrustful. In the words of local fishermen, development in the port town is for the Chinese, not for them, which is a sentiment many echo in Gwadar. Nasir Rahim Sohrabi, a local social activist, points out the hollowness behind this so-called development: “If there is torrential rain in Gwadar, the entire town is submerged in water.”

In April, Pakistani officials were thrilled when two cargo ships, the MV HOM Leader and the MV Dolphin 103, docked at Gwadar port. The chairman of the port went so far as to say that it was contributing to increased economic activity, while the mainstream media drummed up news reports suggesting the US-Iran war and the closure of the Strait of Hormuz could prove a boon for Gwadar port.

The US-Iran conflict and the subsequent closure of the Strait of Hormuz provided the harbour with an unexpected benefit. Because Gwadar is situated next to Iran, it offers the shortest maritime transit route to Iran and Central Asia. Capitalising on this opportunity, Pakistan’s Maritime Affairs Minister Junaid Chaudhry announced major tariff reductions at the port to encourage international transit trade.

However, because this situation has emerged solely due to the war and Gulf instability, it highlights shifting regional dynamics, especially Beijing’s growing indirect role in the US-Iran conflict. Ultimately, Gwadar is highly likely to become central to Beijing’s strategic interests and assertions in the Indian Ocean.

The writer is a Dawn staffer

Published in Dawn, The Business and Finance Weekly, September 7th, 2026