China has agreed to invest $3.5 billion in Karachi, according to Pakistani and Chinese officials. In a separate announcement earlier, Saudi Arabia said it is moving its planned $10 billion petrochemical complex from Gwadar to Karachi. These announcements have triggered speculation that the focus of development of China Pakistan Economic Corridor (CPEC) is moving from Gwadar to Karachi.
|Karachi Port, Pakistan|
The Karachi project dubbed "Karachi Coastal Comprehensive Development Zone project" or KCCDZ includes additional new berths to Karachi port, development of a new fisheries port and a 640-hectare special economic zone near the port. The project also envisages building a harbor bridge connecting the port with the nearby Manora islands, according to Nikkei Asia.
Saudi decision to shift the $10 billion petrochemical plant from Gwadar to Karachi was triggered by the fact that there is no oil pipeline nor a rail line planned to support it at Gwadar. Karachi already has well-developed roads, rails, telecommunications and pipeline infrastructure for connectivity with the rest of the country.
|Gwadar East Bay Expressway, Pakistan|
China already has a lot invested in Gwadar. Krzysztof Iwanek, head of the Asia Research Center at Warsaw's War Studies University, told Nikkei that the challenges of developing a major port in an underdeveloped area like Gwadar must have been factored in by China from the outset. "[I]t may be assumed that Chinese involvement in Gwadar may be at least partially strategic. Karachi, in turn, is Pakistan's most important port, and, hence, Chinese involvement there may be of purely economic nature," Iwanek said.
My own view is that Gwadar remains very important to China for strategic reasons. Gwadar sits very close to the strategic Strait of Hormuz that is used by tankers carrying the bulk of China's and the world's energy imports. Karachi is the fastest and most economical route to making CPEC operational but it does not diminish the long-term importance of Gwadar for China.
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