China is lavishing vast amounts of aid on a small Pakistani fishing town to win over locals and build a commercial deep-water port that the United States and India suspect may also one day serve the Chinese navy.
Beijing has built a school, sent doctors and pledged about $500 million in grants for an airport, hospital, college and badly-needed water infrastructure for Gwadar, a dusty town whose harbour juts out into the Arabian Sea, overlooking some of the world’s busiest oil and gas shipping lanes.
The grants include $230 million for a new international airport, one of the largest such disbursements China has made abroad, according to researchers and Pakistani officials.
The handouts for the Gwadar project is a departure from Beijing’s usual approach in other countries. China has traditionally derided Western-style aid in favour of infrastructure projects for which it normally provides loans through Chinese state-owned commercial and development banks.
“China largely doesn’t do aid or grants, and when it has done them, they have tended to be modest,” said Andrew Small, an author of a book on China-Pakistan relations and a Washington-based researcher at the German Marshall Fund think tank.
Pakistan has welcomed the aid with open hands. However, Beijing’s unusual largesse has also fuelled suspicions in the United States and India that Gwadar is part of China’s future geostrategic plans to challenge US naval dominance.
“It all suggests that Gwadar, for a lot of people in China, is not just a commercial proposition over the longer term,” Small said.
The Chinese Foreign Ministry did not respond to a request for comment from Reuters.
Beijing and Islamabad see Gwadar as the future jewel in the crown of the China-Pakistan Economic Corridor (CPEC), a flagship of Beijing’s Belt and Road initiative to build a new “Silk Road” of land and maritime trade routes across more than 60 countries in Asia, Europe and Africa.
The plan is to turn Gwadar into a trans-shipment hub and megaport to be built alongside special economic zones from which export-focused industries will ship goods worldwide. A web of energy pipelines, roads and rail links will connect Gwadar to China’s western regions.
Port trade is expected to grow from 1.2 million tonnes in 2018 to about 13 million tonnes by 2022, Pakistani officials say. At the harbour, three new cranes have been installed and dredging will next year deepen the port depth to 20 metres at five berths.
But the challenges are stark. Gwadar has no access to drinking water, power blackouts are common and separatist insurgents threaten attacks against Chinese projects in Gwadar and the rest of Baluchistan, a mineral-rich province that is still Pakistan’s poorest region.
Hearts and minds
There are early signs China’s efforts to win hearts and minds are beginning to bear fruit in Gwadar.
“Baluchistan is backward and underdeveloped, but we are seeing development after China’s arrival,” said Salam Dashti, 45, a grocer whose two children attend the new Chinese-built primary school.
But there are major pitfalls ahead.
Tens of thousands of people living by the port will have to be relocated.
Indigenous residents’ fear of becoming a minority is inevitable with Gwadar’s population expected to jump more than 15-fold in coming decades.
Analysts say China is aware that previous efforts to develop Gwadar port failed partly due to the security threat posed by Baloch separatists, so Beijing is trying to counter the insurgents’ narrative that China wants to exploit Baluchistan.
Chinese officials, meanwhile, are promoting the infrastructure development they are funding.
For its investment in Gwadar, China will receive 91% of revenues until the port is returned to Pakistan in four decades’ time. The operator, China Overseas Ports Holding Company, will also be exempt from major taxes for more than 20 years.
Pakistan’s maritime affairs minister, Hasil Bizenjo, said the arrival of the Chinese in the region contrasted with the experience of the past two centuries, when Russia and Britain, and later the United States and the Soviet Union, vied for control of the warm water ports of the Persian Gulf.
“The Chinese have come very smoothly, they have reached the warm waters,” Bizenjo told Reuters. “What they are investing is less than a peanut for access to warm waters.”
When a US Pentagon report in June suggested Gwadar could become a military base for China, a concern that India has also expressed, Beijing dismissed the idea.
“Talk that China is building a military base in Pakistan is pure guesswork,” said a Chinese Defence Ministry spokesman, Wu Qian.
Bizenjo and other Pakistani officials say Beijing has not asked to use Gwadar for naval purposes.
“This port, they will use it mostly for their commercial interests, but it depends on the next 20 years where the world goes,” Bizenjo said.