China Adds Pakistan's Gwadar To 'String Of Pearls'

Pakistan's Defence Minister Ahmad Mukhtar has said China is to take over operation of the strategically positioned port of Gwadar. The announcement has yet to be confirmed by Beijing, but if true it will see yet another addition to China's 'String of Pearls', a group of Indian Ocean ports that China has been developing, ostensibly for commercial use, but which could also have military purposes. CFW believes that a Chinese naval presence in Gwadar would greatly enhance Beijing's ability to project power into the Persian Gulf for the first time in the modern era, and would allow it to guard the western part of its crucial energy supply chain.

Mukhtar made the announcement after accompanying Prime Minister Yusuf Raza Gilani on a visit to China last week. He gave no clear timetable on the possible change of operatorship at Gwadar, located on Pakistan's western coast, which is currently managed by a Singapore's PSA International. PSA's 40-year contract, signed in 2007, is now being challenged in Pakistani courts. China provided 80% of the US$248mn funding for the construction of Gwadar, a former fishing village in the south-western province of Baluchistan. The 14.3m-deep port is Pakistan's deepest. It is located at the mouth of the Persian Gulf and outside the Straits of Hormuz, placing it close to key shipping routes and giving it commercial and strategic significance.

Pakistani officials say Gwadar will be a trade hub for Central Asia and a transit point for Chinese oil imports, most of which are now shipped via the Malacca Strait, making them vulnerable to piracy or naval blockades. China and Pakistan also have discussed plans to build an oil pipeline from Gwadar to north-western China, and two new stretches of railway extending the Pakistani network to Gwadar at one end, and to the Chinese border at the other. From Gwadar, Middle Eastern oil could be transported by the proposed 2,000km rail link to Kashgar in China's Xinjiang province, enabling it to bypass Malacca.

CFW notes that the Indian Ocean is becoming a priority for China, owing to its importance for East-West trade. The main East-West trade route traverses the northern rim of the Indian Ocean. Although this has been the case for centuries, China's growing trade with the rest of the world, not to mention its increasing demand for Middle Eastern oil, means the route is now much more important to the nation than 20 or 30 years ago. Chinese naval planners are particularly keen to safeguard the route to the Middle East (China's energy lifeline), and have consequently been seeking to establish a 'string of pearls' along this route. Kyaukpyu and Sittwe in Myanmar, Chittagong in Bangladesh, Hambantota in Sri Lanka, and Gwadar in Pakistan have emerged as the main ports that China is expanding to accommodate its interests. Other Indian Ocean countries that are attracting Chinese interest include the Maldives, Mauritius and the Seychelles.

China's increasing presence in the region means that the Indian Ocean is rapidly emerging as a zone of 'great power' competition, with China and India set to be the main contenders. Although this rivalry for dominance in the region is unlikely to produce a decisive winner, countries with coasts on the Indian Ocean stand to reap significant geopolitical and economic benefits. The main risk we forecast is for Sino-Indian rivalry to lead to competing alliances and a rise in tensions in the region, jeopardising regional stability. Indian officials have already expressed concern that China plans to use Gwadar as a staging post for naval operations in the Indian Ocean.
Although China has stressed that its involvement in these ports is purely for commercial purposes, it is possible that Beijing sees an opportunity to expand its influence in Pakistan as part of a long-term plan to 'contain' India, and enable its navy to operate further afield, as well as protecting trade routes. Pakistan, too, has stressed that 'the purpose of developing this port is to stimulate economic growth in the western and northern parts of Pakistan'. However, China's involvement in Gwadar could be seen as latest illustration of how Pakistan is now looking to China as a powerful alternative ally and aid source given the possibility of a reduction in US military assistance for Islamabad in the aftermath of Osama bin Laden's killing.

Although CFW notes a risk to China's plan to transport oil from Gwadar in the form of regional instability in Kashmir and the Xinjiang Autonomous Region, for the foreseeable future we see no reason why Sino-Pakistani relations should deteriorate.

This article is tagged to:
Geography: Asia, China, Pakistan

Access all of our latest analysis, data and forecasts - request a trial