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China Is Betting Its Energy Future On This Tiny, Foreign City

No, it's not New York, or London; Moscow, Geneva, Vancouver or even D.C. According to Clarmond House, the most important foreign city - the one which China is making the center of its largest offshore infrastructure project - is the tiny port of Gwadar (population 85,000) which Pakistan purchased from Oman in 1958 for $1 million, and which has become the critical hub of China's future energy policy.

Here is why, courtesy of Clarmond House:

A Postcard From Gwadar

In 1958 Pakistan purchased Gwadar from Oman for 5.5billion rupees. It remained a sleepy outpost for almost 50 years until 2007 when the governments of Pakistan and China jointly agreed to develop it from scratch into a full-scale port city. And in the last 24 months Gwadar’s prospects have improved even more.

China, the world’s largest oil importer, gets the majority of this oil from the Persian Gulf. Just look the world map and consider the journey of an oil tanker to reach Shanghai, only for the oil to then arrive in western China! The journey by sea is 16,000 miles, takes 2-3 months and passes through the Straits of Malacca, which is an area rife with piracy and which could also be shut down by anti-Chinese interests.

Now reconsider Gwadar. It sits just outside the Straits of Hormuz directly in the line of all shipping routes out of the Gulf and, in geographic terms, there is only Pakistan to cross before you reach western China. So China is making Gwadar the centre of one of its largest infrastructure projects in the world.

Over the next 5 years China will invest approximately $46 billion not only in Gwadar port but also in building the China-Pakistan corridor. This latter development is a massive project that will link Gwadar to Kashgar in western China, a distance of over 2,400 kilometres, all of it through Pakistan. The build will include new rail, road, and pipeline infrastructure. It will not only facilitate imports into China but also their exports into the gulf region; it binds Pakistan to its northern neighbour.

The only concern is the USA’s reaction, especially when China leaves a naval warship or submarine parked at their new port. I suppose we cross that (newly built) bridge when we get to it!