How important is Gwadar port for China?

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China’s hydrocarbon use has more than doubled in the past two decades and will double again in the next decade.

 
In 2000, China’s total energy consumption was half of that of the United States; in 2010, China surpassed the United States to become the world’s biggest energy consumer, a milestone that testifies both to the massive size of China’s population and the speed with which its economy has grown. China’s hydrocarbon use has more than doubled in the past two decades and will double again in the next decade. As much as 85 percent of that oil and natural gas will pass through the Indian Ocean and the Malacca Straight en route to China’s Pacific Ocean ports. This is what former Chinese President Hu Jintao refered to as China’s “Malacca Dilemma” the fear that China’s dependence on the flow of energy resources through narrow transport sea lines is a weakness that adversaries can exploit. China has taken two steps to mitigate this dilemma: bolstering its naval presence in the Indian Ocean and developing overland trade and energy corridors through Central Asia. Pakistan could be key to both of these plans. 
 
With regard to the Indian Ocean, in 2001 China agreed to help finance the construction of a port at Gwadar. The port, which was inaugurated in 2008, is deep enough to accommodate submarines and aircraft carriers and can function as a “listening post” to monitor US naval activity in the Indian Ocean and Persian Gulf. Many analysts describe Gwadar as one of China’s “string of pearls” a chain of Chinese naval bases traversing the shorelines between the Middle East and East Asia.
 
Even if China are to turn Gwadar into a naval base, however, the United States and India would continue to dominate the Indian Ocean. 

India’s navy has seven bases and three listening posts along the shores of the Indian Ocean, and the US navy maintains a large naval presence at Diego Garcia, an island in the southern Indian Ocean. Chinese vessels based at Gwadar would therefore be surrounded by American and Indian ships and isolated from the rest of the Chinese fleet. Perhaps for this reason, China has shown little interest in deploying naval assets to Gwadar, which is currently a commercial port operated by the state run Chinese firm – China Overseas Port Holding Company (COPHC). 
 
The other option for China would be to link Gwadar to Xinjiang over land with railways and oil pipelines. Pakistan has drawn up plans to build a railway between Havellian, a Pakistani city close to Islamabad, and Kashgar in Xinjiang. This railway would roughly parallel the Karakoram Highway, the main link between the two countries. In 2006, Pakistan awarded a $1.2 million contract to an international consortium to carry out a feasibility study for establishing this rail link as well as plans for a 3,300 km oil pipeline between Gwadar and Xinjiang. In June 2006, and again in 2008, Pakistani leaders broached the idea with the than Chinese President Hu Jintao, but with no apparent results to date.
 
In fact, many Chinese analysts argue that such overland projects are simply unfeasible. Chinese workers have been kidnapped and killed in at least three separate incidents in the regions that would be traversed by the proposed pipelines and railways. These corridors would also transit a part of Kashmir that, while controlled by Pakistan, is claimed by India, thus raising the specter of geopolitical conflict. In addition, the railways and pipelines would have to be constructed over some of the world’s most treacherous terrain, and oil would have to be transported or pumped from sea level at Gwadar to 15,000 feet over the Khunjerab Pass, an operation that would require massive amounts of energy. By one assessment, if a Chinese oil company chose to move 250,000 barrels of oil per day overland through Pakistan, it might lose as much as a billion dollars a year compared to moving the oil by sea.
 
Most important, the railways and pipelines between Gwadar and China would not significantly reduce China’s dependency on seaborne trade. According to the government of Pakistan, the proposed Gwadar-Xinjiang pipeline would carry twelve million tons of oil every year. This is equivalent to only 2-3 percent of China’s current annual oil consumption. Moreover, off-loading seaborne crude in Pakistan would be problematic because it is far from China’s mainland economic and military centers. In fact, James Holmes of the US Naval War College claims that it would be easier for the United States to prevent the unloading of oil at Gwadar than to blockade the Strait of Malacca.
 
For all these reasons, it appears that, China’s attempt to reduce its dependence on seaborne trade is a “pipe dream.” Many Chinese analysts agree and argue that China should focus on fostering multilateral management of oil transport in the Indian Ocean rather than developing overland energy corridors through Pakistan.

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