The Chinese firm officially signed a 40-year lease for over 2,000 acres of land in Gwadar, marking a milestone in the implementation phase of the China-Pakistan Economic Corridor (CPEC), a major bilateral initiative to build transportation and other infrastructure along the length of Pakistan, connecting the country’s Arabian Sea coast with the Himalayan border with China. CPEC was unveiled during Chinese President Xi Jinping’s April 2015 state visit to Pakistan, where Gwadar was high on the agenda.Pakistan’s Federal Minister for Planning, Development and Reform Ahsan Iqbal handed over the lease to Wang Xiaodao, the vice chairman of China’s National Development and Reform Commission. Gwadar is a designated free-trade zone by the Pakistani government. The designation will last for 23 years. Additionally, because of Gwadar’s location in the restive southern Pakistani province of Balochistan, the Pakistani government has created a protection force for Chinese workers who will be working on CPEC projects, including at Gwadar.
India is watching, of course. And so is the United States, which has its own complicated relationship with Pakistan. Just as the U.S. and its Pacific allies are working to strengthen collaboration in the South China Sea, so too is Beijing looking for strategic partners and opportunities. The lease’s signing is a concrete step towards China’s goal of building a new Silk Road by land and by sea.As this Bloomberg brief on Beijing’s new five-year plan observes, China expects to rely more and more on maritime trade as domestic demand for refrigerated food and dry goods increases. Gwadar is clearly an important part of the equation.