Has Chinese firm HK Sun Corporation stopped work at CPEC project in Gwadar?


The Gwadar Port in Balochistan (Photo: COPHC/Twitter)

Not all's well with Chinese companies working in Pakistan. Reports say that Chinese firm HK Sun Corporation working in the Gwadar Free Zone (GFZ) in the port city of Gwadar has closed down operations and sent its staff back to China.

Pakistani journalists have said that the firm decided to shut down operations after several investors withdrew money.

The Chinese firm's decision comes barely a fortnight after the Chinese language and cultural centre Confucius Institute decided to recall its entire Chinese staff from Pakistan after three of its teachers were killed in a suicide bombing at the Karachi University.

Many local communities across Pakistan accuse their country as well as China of exploiting their natural resources without bringing the benefits of development--jobs, employment, education, health or other basic facilities--to them. People in Khyber Pakhtunkhwa and Balochistan have begun to target CPEC projects as well as Chinese nationals through deadly attacks.

News about HK Sun Corporation's closure has been circulating in the Pakistani social media for nearly a week, prompting the public relations department of the China Overseas Port Holding Company (COPHC) to issue a denial. A statement on Twitter dated May 16 said: "We condemn baseless news and misinformation propaganda circulating on social media networks regarding the closure of HK Sun. HK Sun and all other enterprises in Gwadar Free Zone continue their operations with normalcy".

The original news about HK Sun Corporation's shutting down has been traced to two Pakistani journalists--Adeel Warraich and Behram Baloch. We reproduce Adeel Warraich's original tweet that set off the kerfuffle on Pakistani social media.

HK Sun Corporation was the first company to start manufacturing and processing work in the GFZ, which is a part of the mega China Pakistan Economic Corridor (CPEC) project. In April last year, it had imported scrap metal to begin processing it in Pakistan with a view to exporting it from Gwadar. Pakistani newspapers had reported that more shipments of raw material were enroute to Pakistan and the scrap metals would be used in manufacturing.  

The import-export and manufacturing activities by the HK Sun Corporation in April 2021 were touted to have made the Gwadar port operational for the first time, implying that this would allow for rapid development of other CPEC projects besides making Pakistan an international trade logistics hub.

However, just one year and one month later, reports by Pakistani journalists have created a controversy.

Despite excellent and warm China-Pakistan relations, Chinese companies working on the CPEC projects have faced tough times.

Earlier this month, Chinese Independent Power Producers (IPPs) had told Islamabad that they would close down power plants if Pakistan did not clear their accumulating bills amounting to Rs 300 billion Pakistani rupees. In a meeting with Minister for Planning and Development Ahsan Iqbal the 30 odd Chinese companies listed out multiple problems--non-payment of bills, non-issuances of visas, communication problems with Pakistan authorities--related to CPEC functioning.

That not all is going well with the Gwadar port city became clear last year when Saudi Arabia decided to shift its mammoth $10 billion refinery and petrochemical complex from Gwadar to Karachi. This decision by the Saudis also punctures claims by COPHC that Gwadar is being built into a mega-investment destination for Pakistan that would bring companies, provide employment and fuel exports.

China Pakistan diplomatic relations too have soured over the attacks on Chinese projects and the widespread fear among its engineers working in Pakistan. China has repeatedly pulled up Pakistan over lax security for its nationals and has asked the country to ensure that Pakistan issues the strictest of punishments to the perpetrators of attacks on its nationals.

In November-December 2021, local people launched the Gwadar ko haq do protest had through sit-ins and rallies during which they blocked CPEC projects demanding basic facilities like water and power. They also asked Pakistani security forces to stop humiliating locals at security checkpoints set-up for enhanced safety for Chinese nationals. Another of their demands was to restore local livelihoods which were cut off due to overbearing security for CPEC.