I Geo-Economics & ChokepointsSouth Asia
An eye from New Delhi on Gwadar: China's gamble to bypass Malacca has turned into a commercial and security burden
- Institution
- Lowy Institute (The Interpreter)
- Author
- Jaideep Saikia
- Country · language
- Australia (Indian author) · English
- Affiliation
- Independent think tank (Sydney)
Summary
In a piece published on 25 September in the Lowy Institute's The Interpreter, Jaideep Saikia, a senior fellow at New Delhi's Council for Strategic & Defence Research, argues that Gwadar port, the showcase of the China–Pakistan Economic Corridor (CPEC), has ceased to be a strategic asset and become a financial and security liability. According to the author, the idea of linking Xinjiang to the Arabian Sea runs up against geography: the Karakoram road sits at altitudes above 4,600 metres and is exposed to landslides and avalanches, and along the roughly 3,000 kilometre mountainous route pipelines and overland transport are far more expensive than sea freight; the port therefore does not solve China's Malacca dilemma, and tankers leaving Gwadar still remain in an Indian Ocean dominated by the Indian navy.
Saikia sees a second fault line in the local economy: under a 40-year lease, 91% of port revenue goes to Beijing and 9% to Pakistan, yet the port generates almost no revenue; the special economic zones are empty and international shipping lines prefer Dubai, Salalah and Karachi. In Balochistan, skilled jobs going to Chinese and Punjabi workers, shortages of drinking water and electricity in the city, and the displacement of fishermen by security zones and Chinese trawlers are fuelling suicide attacks on Chinese personnel by the Majeed Brigade of the Balochistan Liberation Army. Citing China's slowing economy and tightening capital controls, the author expects Beijing either to scale the port down to a small, fortified naval resupply point or to restructure the lease agreement.
Blind spot
What the West misses: while the West still mostly reads Gwadar as China's potential naval base in the Indian Ocean, this piece shows that the port's commercial failure may push Beijing towards a small, military-weighted presence, meaning the threat may change form. The weakness of this reading: the author writes from an Indian strategic community with rival corridor interests, and offers no measurable data such as cargo volumes.
Talay assessment
Bottom line
The piece's strength is that it clearly shows Gwadar's energy security promise to be weak because of geography and cost; the fact that the 91% revenue share belongs to a port that generates almost no revenue calls the commercial logic of the investment into question. The most likely direction is not a Chinese withdrawal from the port but a scaling-down of commercial goals and a shift to a security-weighted, low-cost presence; attacks in Balochistan are the main variable that will accelerate that decision.
Likely effects
- Belt and Road financingUncertain1–6 months
Gwadar's empty special economic zones and weak revenue stand out as an example supporting China's shift from high-risk megaprojects to more cautious investment.
- Pakistan's external financingNegative1–6 months
For Pakistan, which receives a small 9% share of revenue and bears the security cost, the corridor is not becoming an income source that reduces reliance on IMF support and Chinese debt rollovers.
- Regional port competitionPositive6 months+
Shipping lines preferring Dubai, Salalah and Karachi indicates that Gulf and Omani ports will keep their transhipment role in the Arabian Sea.
- Türkiye–Pakistan corridor interestNegative6 months+
Given Türkiye's close relationship with Pakistan, the security gap in Balochistan raises the importance of risk assessment in any transport and infrastructure cooperation in the region.
Possibilities, ranked
- 1Quiet downsizing55%
China suspends major new investment and holds the port with a minimal operating and security presence; CPEC continues in official rhetoric.
Watch: A halt in new Chinese loan or project announcements for Gwadar, and statements on port cargo volumes
- 2Restructuring of the lease30%
Beijing and Islamabad renegotiate terms including the 40-year lease and the 91% revenue share, and security cost-sharing comes onto the table.
Watch: An official statement on Gwadar operating terms at high-level China–Pakistan talks
- 3Security-weighted revival15%
China reassesses the port as a resupply point for its naval presence in the Indian Ocean, and investment of a military nature increases.
Watch: Chinese navy ship visits to Gwadar or reports of new military facilities
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Original publication: lowyinstitute.org · 25 September 2026
This page summarises the institution's view and does not reflect the view of Talay Insight. No direct quotation is used.