Gwadar Port: China’s big CPEC dream faces growing security, financial and local challenges
Gwadar Port in Pakistan was once seen as one of the most important pieces of China’s Belt and Road Initiative. Beijing hoped the deep-sea port would provide access to the Arabian Sea, open an alternative route towards the Indian Ocean and reduce its dependence on the vulnerable Malacca Strait.
But more than a decade after the launch of the China-Pakistan Economic Corridor (CPEC), the project is facing several challenges. Security threats, limited commercial activity, local opposition and financial concerns have raised questions over how much of China’s original vision for Gwadar can actually be achieved.
Geography remains a major challenge
China’s plan was to connect its western Xinjiang province with the Arabian Sea through Pakistan, creating a land route for trade and energy supplies. However, the route from Xinjiang to Gwadar passes through extremely difficult terrain.
In a paper for the Sydney-based Lowy Institute, Jaideep Saikia, Distinguished Fellow at the New Delhi-based Council for Strategic and Defence Research, said the geography makes Gwadar a difficult alternative to established maritime trade routes.
“Goods moving from Xinjiang to Gwadar must cross the Karakoram highway, navigating altitudes of over 4,600 metres. The area is plagued by frequent landslides, avalanches, and extreme weather, rendering it structurally incapable of handling the high-volume container traffic required to replace maritime shipping,” Saikia wrote.
The security situation adds another major problem.
Gwadar is located in Balochistan, where the Baloch Liberation Army (BLA) and other insurgent groups have repeatedly attacked Chinese citizens and CPEC-related projects. The groups have accused China and Pakistan of benefiting from the region’s resources while failing to provide enough benefits to local people.
Saikia also pointed to the BLA’s Majeed Brigade, which has increasingly used suicide attacks targeting Chinese personnel and interests.
Chinese workers, engineers, convoys and infrastructure have consequently become security targets.
Pakistan has had to deploy dedicated security forces to protect Chinese citizens and CPEC projects. Despite these measures, attacks have continued, increasing the cost of projects that were originally expected to improve connectivity and economic efficiency.
Gwadar has not solved China’s Malacca Strait problem
China’s interest in Gwadar was never limited to developing a commercial port. A key part of Beijing’s strategic thinking was to reduce its dependence on the Malacca Strait, through which a large share of China’s energy imports passes.
The Malacca Strait is a major sea route linking the Indian Ocean and the Pacific. Its heavy traffic, narrow channels and strategic importance have long been viewed as a potential vulnerability for China during a conflict.
However, Gwadar cannot easily replace the existing maritime route.
Moving oil from the Arabian Sea to Xinjiang through pipelines, roads or railways would be far more expensive than transporting it by sea. The proposed overland route would also have to pass through thousands of kilometres of difficult and politically sensitive territory.
A pipeline or railway could create new security risks instead of completely removing the existing ones. Even after reaching Gwadar, oil would still have to travel through the Indian Ocean.
In other words, Gwadar can provide an alternative route, but it cannot completely eliminate China’s dependence on maritime transport.
Commercial activity remains weak
The commercial side of the Gwadar project has also struggled.
For a port to become successful, it needs regular cargo, shipping companies and a strong industrial base around it. Gwadar has yet to develop these on the scale that was originally expected.
Established regional ports such as Dubai, Salalah and Karachi continue to handle much larger volumes of cargo and already have the infrastructure and commercial networks required by international shipping companies.
The Special Economic Zones planned around Gwadar have also failed to generate the level of industrial activity that was initially expected.
According to Saikia, China has invested billions in Gwadar, while under the current 40-year lease, 91% of the port’s revenues are supposed to go to Beijing.
“Because the port generates virtually no revenue, China is extracting no returns while [being] forced to spend heavily to secure its stranded assets,” he wrote.
China has growing concerns over CPEC
The difficulties facing Gwadar are part of the wider problems surrounding CPEC.
Sarral Sharma, an international policy expert writing for the Observer Research Foundation (ORF), said China is frustrated with the pace of the corridor’s development.
CPEC, valued at more than $60 billion, was presented as a major economic partnership between China and Pakistan when it was formally launched in 2015.
However, several projects have faced delays, while the second phase, launched in 2024, has also moved more slowly than expected.
Sharma pointed to Pakistan’s political instability, economic problems, security concerns, corruption issues and technical shortcomings as some of the reasons behind the slowdown.
“Pakistan’s internal political, economic, and security turmoil, along with its poor corruption track record and other technical shortcomings, are among the key reasons behind the slowdown of CPEC,” Sharma wrote.
He added that despite financial losses, delays and problems with debt payments, China continues to rely on Pakistan.
Beijing, however, has not completely walked away from Islamabad. China continues to view Pakistan as strategically important, meaning its involvement cannot be judged only by the commercial returns from individual projects.
At the same time, there are signs that China has become more cautious about putting fresh money into expensive overseas infrastructure projects.
One example is the Main Line-1 railway upgrade, which was once considered one of the most important CPEC projects. China stepped back from financing the project in 2025, after which Pakistan sought Asian Development Bank funding for the Karachi-Rohri section.
The development came amid years of negotiations and Pakistan’s worsening financial position, including arrears owed to Chinese power producers and its repeated reliance on IMF support.
Gwadar residents continue to raise concerns
There is also a strong local dimension to the Gwadar issue.
The port was presented as a project that would transform one of Pakistan’s poorest regions and create jobs and economic opportunities for local residents. But people in Gwadar have repeatedly complained that they have not received the benefits promised under CPEC.
The city has faced shortages of drinking water and electricity, while fishermen have raised concerns over Chinese deep-sea trawlers and restrictions linked to security measures.
This has created a major contradiction around the project: large sums of money have been spent on modern infrastructure, while people living around the port continue to face basic shortages.
The business environment has also faced difficulties.
In May this year, The Express Tribune reported that Chinese company Hangeng Trade Company closed its factory in the Gwadar Free Zone and terminated its employees, citing financial losses and an unfavourable business environment.
The company said “non-commercial factors” and operational problems had made it difficult to continue its operations.
Gwadar could become a long-term burden
China’s investment in Gwadar goes far beyond the port itself. Beijing has also supported the Gwadar Free Zone, the new international airport and various power and water projects, besides plans for industrial and urban development.
This means the financial stakes are much higher.
If commercial activity remains limited, China will be left with not just an underused port but a large network of infrastructure that requires maintenance, security and further investment.
“Gwadar is rapidly approaching a tipping point. Pakistan cannot afford to secure or maintain it, and China is growing weary of sacrificing both capital and the lives of its citizens to defend a commercial failure,” Saikia wrote.
He suggested that Beijing could gradually reduce its operational presence, potentially leaving Gwadar as a smaller and heavily secured facility rather than the busy commercial gateway that was originally planned.
Gwadar was meant to provide China with a shorter route to the Arabian Sea and help address its strategic vulnerability. But difficult geography, continuing security threats and weak commercial activity have made that vision much harder to achieve.
China may continue to see Pakistan as an important strategic partner, but that does not necessarily mean every CPEC project will remain commercially attractive.
For now, Gwadar remains caught between its original ambitions and the realities on the ground — a major strategic investment that China may find increasingly difficult and costly to turn into the commercial gateway it once envisioned.