In a major blow to Pakistan’s ambitious project, the China-Pakistan Economic Corridor (CPEC), a Chinese Trade Company, Han Geng, has announced the shutdown of its operations in Gwadar, highlighting deepening challenges over bureaucratic hurdles, security issues, and policy uncertainties in the strategically vital Balochistan region.
The development underscores Pakistan’s mounting difficulties in sustaining Chinese investments despite repeated promises of iron-clad friendship.
A blow to China-Pakistan ‘all-weather’ ties
Hangeng Group, which had set up operations in Gwadar, issued a strongly worded statement on May 1, 2026, announcing the immediate closure of its facility.
The company stated it could no longer sustain operations due to “ongoing non-market factors and operational barriers.”
Despite meeting Chinese customs standards and international Hazard Analysis and Critical Control Points (HACCP) food safety requirements, the firm claimed its exports remained blocked.
It had incurred heavy financial losses over three months, including employee salaries, penalties, and demurrage charges, while awaiting approvals.
The company expressed disappointment that challenges went “beyond what any enterprise can resolve on its own,” even in the flagship CPEC project.
According to the statement released by Hangeng, Pakistan’s Prime Minister Shehbaz Sharif will be visiting China later this month to participate in the B2B investment forum.
It urged caution to other Chinese firms considering investments in Pakistan ahead of planned B2B forums, effectively warning about policy execution gaps and institutional uncertainties.
This exit comes against a backdrop of repeated security incidents in Balochistan, where insurgent groups like the Baloch Liberation Army (BLA) have frequently targeted Chinese personnel and projects, viewing them as exploitative.
Islamabad’s US closeness drifts China away?
With the exit of the Chinese trade company, concerns are being raised about whether Pakistan’s military leadership, with its balancing relations between China and the United States, is potentially at the cost of CPEC progress.
Pakistan has sought closer ties with the US in recent times for economic and security support, even as it remains heavily dependent on Chinese funding.
This tightrope walk is backfiring and eroding trust with Beijing.
Gwadar Port, envisioned as a game-changer for trade and energy routes, has struggled with low cargo volumes, infrastructure gaps, and local discontent. Persistent instability in Balochistan and Pakistan’s internal challenges further expose the risks of mega connectivity initiatives, like the CPEC.
