In November 2016, the port of Gwadar symbolized stability, peace, and prosperity for Pakistan, at least for then-Prime Minister Nawaz Sharif.
“Today is the beginning of a new era,” he told the crowd at the opening ceremony, which had gathered to see a line of Chinese trucks arrive to load goods into the first container sent to pass through the port.
It is the official launch of the port’s operations almost a decade after its completion. The rite also marked the start of the prestigious China-Pakistan Economic Corridor (CPEC), which is a component of China’s global package of infrastructure projects and industrial networks known as the Belt and Road Initiative (BRI).
However, today, almost eight years later, this new era has not yet begun. A DW study shows what went wrong.
The concept of CPEC was to link China’s western province of Xinjiang to the sea through Pakistan. This would shorten industrial routes with China and avoid the debatable choke point of the Strait of Malacca, a narrow waterway between Malaysia and Sumatra that links the coasts of India and the Pacific. Meanwhile, Oceans. Pakistan would gain advantages from increased industry, infrastructure and industry along the 2,000-kilometer (1,240-mile) corridor, all funded through China.
In addition to the already established port of Karachi, Gwadar opted to incorporate the lounge into the global maritime network. The small fishing town is close to the Iranian border, about 500 kilometers from Karachi.
The newly built Gwadar Deepwater Port, completed in 2007 and transferred to a Chinese operating company in 2013, would be the hub for CPEC. It would be incorporated into a new special economic zone that would reshape Gwardar and turn it into a bustling port city.
The port has potential, said Azeem Khalid, an assistant professor of foreign relations at Islamabad’s COMSATS University who studies Chinese investments in Pakistan. “It is a natural deep-water harbor that can accommodate ships larger than Karachi. It is at the crossroads of the global oil trade. And it would consolidate China’s regional interests,” he told DW.
On its territory, China has already shown that it can turn sleepy fishing villages into economic powerhouses. Shenzhen, China’s first special economic zone, is a case in point. In just four decades, the city’s population has grown from about 60,000 to more than 17 million today.
“At the time, investors thought Gwadar would be the next Dubai,” Khalid said.
Pakistan is not alone in pursuing this vision. Governments around the world hope to bring their economies to life through new and expanded ports and other infrastructure projects, and Chinese banks are more than willing to provide financing. Chinese corporations also build and operate the ports.
DW has amassed data on at least 38 ports built with Chinese investment since 2000; A further 43 ports are planned or under construction. According to DW, 78 existing ports also have Chinese shareholders.
These deals are lucrative for China, said Jacob Mardell, a former analyst at the Mercator Institute for China Studies, a German tank and journalist who covers the BRI.
“This style acts almost like a subsidy for Chinese corporations,” he told DW. He explained that Chinese banks lend money to governments, which then give it to Chinese corporations and eventually pay off the loan to the bank. The cash almost never leaves China, “while the bill in the end is paid through taxpayers in other countries. “
A not unusual trend is the structure of new ports relatively close to the established ones, as is the case of Gwadar and Karachi. The new ports are intended to supplement or upgrade older, less efficient ports over time.
This is also the case in Cameroon and Nigeria, for example. In Cameroon, the new port of Kribi is expected to upgrade the congested and too shallow port of Douala, while in Nigeria, the port of Lagos is complemented by the newly opened deep-water port. -Lekki Water Port, less than a hundred kilometers away. Both ports were financed and built through Chinese state-owned enterprises.
Similarly, in 2017, the Sri Lankan government granted China a 99-year lease and a majority stake in its new port of Hambantota, which was originally intended to complement the country’s main port, Colombo.
The Port of Lekki gained 26 vessels in 2023, its first year of operation, according to maritime tracking and analysis provider MarineTraffic. This is a modest figure compared to larger ports, but Gwadar, despite being completed in 2007, welcomed only 22 shipments in its most productive year so far. Nor has it been able to attract normal offshore shipping companies.
This means that Gwadar is virtually not responsible for any revenue-generating shipments for Pakistan or, for that matter, for the Chinese shipping company. And it’s no wonder: Gwadar oconsistent travels with a very limited capacity. The port’s 3 berths, where loading and unloading, can handle 137,000 popular 20-foot sea boxes per year. By contrast, Karachi and its 33 berths can handle the equivalent of 4. 2 million 20-foot sea boxes per year.
Although ports such as Kribi or Lekki are small, they overshadow Gwadar, the new centerpiece of Central and South Asian trade.
Khalid told DW that while Gwadar has a chance of overtaking Karachi at some point, a lack of investment is holding him back. A $1. 6 billion (€1. 5 billion) expansion was promised in 2015, but little progress appears to have been made at the port since then. Much of the supporting infrastructure, including roads and railways needed to ship goods to and from Gwadar, is also missing.
Publicly, investors such as the China Pakistan Investment Corporation still claim that the port of Gwadar “is a focal point for industry and investment in the region. “But the empty port suggests otherwise.
Mardell and Khalid said that in the scenes, both Pakistan and China were disappointed with the project.
“The promises in terms of employment have been kept. Industrial promises have been fulfilled. Business opportunities for Pakistanis have been fulfilled,” Khalid said. “They [China] promised nine special economic zones. None of them are fully functional to date. “
Gwadar’s advance largely mirrors the scenario of the rest of the China-Pakistan Economic Corridor. “The CPEC has had disorders since its inception,” Mardell said.
Some of these disorders are expressed in the border region of Balochistan, where Gwadar is located. It is one of Pakistan’s poorest regions and is home to tough separatist militias that launch attacks, some of which target Chinese citizens in particular. They were violently suppressed by the Pakistani army.
Domestically, Pakistan has been experiencing a severe economic crisis for years, and the country is still struggling to stabilize politically after the ouster of former Prime Minister Imran Khan in 2022.
“As the political and security situation in Pakistan has deteriorated more recently, this has further hampered CPEC,” Mardell said.
On the Chinese side, Mardell believes that the decision-makers may have miscalculated.
“When it comes to investment decisions, it’s well known that the Chinese are not risk-averse,” he told DW. He argues that “fundamentally unlimited” state aid for state-owned investments and enterprises, coupled with the political will to accentuate the festival with Western economies, has led China to finance even high-risk projects in the world’s least solid countries.
“I just don’t think they fully understood the scenario in Pakistan at first,” Mardell said, though he believes this could replace other projects to come. “I think they’ve learned from their mistakes with the BIS and CPEC, and they’re probably more reluctant to devote capital those days. “
In recent years, and especially during the COVID-19 pandemic, Chinese spending on BRI projects has slowed. But while the country is now more selective in the projects it funds, it is starting to invest more again, with a total amount of investment in the BRI reaching pre-pandemic levels.
However, countries such as Pakistan are now forced to repay huge sums of debt to Chinese lenders. “Pakistan has to repay billions of dollars in loans because of irresponsible investments under CPEC,” Khalid said.
Similar cases have already led to complaints that China is pursuing debt-trap diplomacy, allowing partner countries to take on unsustainable debts to gain political leverage.
In addition, a portion of the profits from new projects also goes to China.
“China takes most of everything,” Khalid said, referring to CPEC’s investments. In the case of the port of Gwadar, for example, 90% of the revenues, which are limited, go to the Chinese operating company. The Pakistani government receives 10%, while nothing passes to the Baloch regional government.
Mardell said CPEC and the port of Gwadar will most likely continue despite all their problems.
“There is no doubt that China will waste face and admit that this is a disaster. And fleeing CPEC and leaving Pakistan is not an option now. They are too committed and Pakistan is too much of an ally,” he said.
Instead, he believes that China will most likely continue to drag its feet on primary investments in Pakistan, while continuing to make token efforts to keep the task on track.
You can locate the knowledge and code this research in this github repository. Other knowledge-based journalism articles can be found here.