Paw Tracker newsletter (Week of Mar 18)

Gwadar Port, the flagship project of the China Pakistan Economic Corridor was attacked by militants again last week, raising the question of long term security for this key infrastructure piece. Over the past years, the project was not only the target of terrorist attacks but also protests by the local communities frustrated by the disruption to their livelihoods and lack of public facilities. How to Integrate the port better with local economic and human development will be a test of the BRI’s evolving developmental philosophy.

In Egypt, a country troubled by the crises in Gaza and the Red Sea, China has pledged to increase investments, with new foreign aid projects announced in the Suez Canal Economic Zone.

Talk of the Town

On the evening of Wednesday 20 March, the Gwadar Port Authority, a priority, geographically important and highly symbolic component of the China-Pakistan Economic Corridor (CPEC), was attacked by militants from the Balochistan Liberation Army (BLA). The attack was thwarted, no civilians died and no major damage was incurred to the port project, but as the events unfolded two Pakistani soldiers and 8 militants were left dead. The attack is the third major terrorist incident in Gwadar in the last year, begging the question how effectively long-standing security concerns along the CPEC are being addressed.

Asked about the incident at the daily foreign ministry press conference, spokesperson Lin Jian was brief. “We strongly condemn the terrorist attack and mourn for the Pakistani personnel killed in the attack…We firmly support Pakistan’s efforts to fight terrorism and defend national security and stability.”

But the issue has been a long standing thorn in the side of China-Pakistan cooperation and one that China has consistently requested the Pakistani side to address. It is also an issue that directly affects Chinese personnel and assets. Last week’s attack appeared to be targeted at Gwadar port infrastructure, and last August saw an attack on a convoy of 23 Chinese engineers traveling through the city. 

At the last official visit of Pakistan's prime minister (in the form of temporary care-taker prime minister, Anwaar ul Haq Kakar) to China in Oct 2023, the two sides agreed: 

• “To further enhance counter-terrorism cooperation”

• “The Pakistani side reiterated its commitment to ensuring the safety and security of all Chinese personnel, projects and institutions in Pakistan”

• “To hold accountable the perpetrators of the terrorist attacks targeting Chinese personnel.”

The readout also stated: “Both sides expressed complete satisfaction over ongoing bilateral security cooperation”. 

Meanwhile, the message from Pakistan is that the state will counteract terrorist threats “with no mercy.” But attacks across Pakistan are becoming more frequent. February alone saw 87 militant attacks, resulting in 87 fatalities and over 100 injured. The BLA operates across southern Pakistan and Afghanistan, introducing a tricky cross-border element to attempts to clamp down on their activities.

This week’s highlight project

Egypt: China-supported occupational training center agreed

A new occupational training center will be built in the Suez Canal Economic Zone east of Cairo, as part of Chinese foreign aid to Egypt. On Mar 20, representatives from China’s Ministry of Commerce (MoFCOM), which leads the implementation of the project on the China side, signed the agreement with the Administrator General of the economic zone. 

The project includes the construction of the training center, canteens, dormitories and other facilities. The Suez Canal Economic Zone, also known as the TEDA zone, as it was originally built by Chinese developer TEDA, was first set up in 2008 as one of the pioneering industrial zones of Chinese companies in Africa. The state of the zone was famously depicted in Peter Hessler’s non-fiction work The Buried: An Archeology of the Egyptian Revolution. 

Why it gets our attention: Egypt’s recent economic troubles are the subject of discussion for China’s overseas development watchers. People are taking note of the country’s high inflation (a whopping 35.7% in February) and the rapid depreciation of its currency. The ongoing Red Sea Crisis is hitting shipping through the Suez Canal particularly hard, reducing a main source of revenue for the Egyptian authority. China appears to be maintaining its level of involvement in the Egyptian economy despite the troubles. During his visit to Egypt in late February, MoFCOM Minister Wang Wentao told his Egyptian counterpart that China is interested in increasing investment in the country, including setting up a new high-tech industrial park that faces European and American markets. In 2023, Chinese investments in Egypt concentrated heavily in renewable energy and building construction.

Other project and corporate updates

Thailand: CEEC contracted to build waste incinerator

A waste-to-energy power plant will be constructed in Sa Kaeo, Thailand by a subsidiary of CEEC. The incinerator will have capacity to burn 400 tons of urban waste on a daily basis. The Thai developer Thachang Green Energy, which specializes in municipal solid waste power generation, aims for the project to “improve local environmental quality and raise scientific awareness.”

Why it gets our attention: Waste-to-energy incinerators appear to be following the steps of coal-fired power plants in becoming a major item of Chinese infrastructure export. The technology has been highly controversial domestically and was resisted by multiple NIMBY movements in Chinese cities in the early 2010s. But the construction of waste incinerators accelerated in recent years to the point of saturation (over 900 incinerators are currently operating across China). Now Chinese companies that have honed their skills in constructing such projects are actively seeking opportunities to build them overseas given the lack of space for further expansion inside China.