A third country in South Asia has a Chinese-built airport. As Pakistan rejoices in its largest international airport, built by its all-weather ally China, the question remains if it can evade the fate that Chinese-funded and built airports in Nepal and Sri Lanka met.
Mattala Rajapaksa International Airport (MRIA) in Sri Lanka was opened in 2013 and funded by China EXIM Bank. Due to its low number of flights, environmentally sensitive location, and persistent financial losses, it has earned the moniker of “the world’s emptiest airport.”
Sri Lanka spiraled into a debt trap, and the airport management was handed over to two Indian and Russian companies in 2024.
Another neighboring country of India, the Himalayan nation of Nepal, also had a similar experience. China funded and constructed an international airport in Pokhara. Only one or two flights from China would operate from the airport.
In 2024, the Nepal government had to formally ask for relief from a US$216 million debt it incurred for the construction of the Pokhara airport.
On January 21 this year, Pakistan inaugurated the Gwadar International Airport in Balochistan after pushing back the opening several times due to security reasons. The Chinese investments in the region have been coming under attack from separatist militant attacks in southwestern Balochistan.
The state-owned Global Times described the project as a “grant.” However, it will do Pakistan good if it looks the gift horse in the mouth. The first commercial flight, Pakistan International Airlines (PIA) PK 503, carrying 46 passengers, including high-ranking officials, landed at the airport marking the opening.
The airport, the largest in Pakistan, is spread over 430 acres of area and is located 26 kilometers from Gwadar city at Gurandani. Its runway can accommodate large aircraft, including the Airbus A380 and Boeing 747.
The airport construction was completed in December 2024 at an estimated cost of Pakistan Rupees 50 billion (US$180 million). It was inaugurated symbolically by Prime Minister Shehbaz Sharif on October 14, 2024, but it was operationalized for domestic and international flights on January 21.
Prime Minister Shehbaz Sharif hailed the airport’s operationalization as a significant milestone in transforming Gwadar into a vital hub linking Central and Eastern Asia, the Middle East, and Gulf countries. He asserted that the airport will enhance regional connectivity and bolster Pakistan’s global trade and infrastructure development.
The total investment in the China-Pakistan Economic Corridor (CPEC), of which Gwadar airport is a significant part, is to the tune of US$62 billion, out of which about US$30 billion has been invested so far.
The power projects worth US$28 billion have been made operational, as per the statistics of the Ministry of Planning, Development, and Special Initiatives, Government of Pakistan.
According to World Bank reports, China has become Pakistan’s largest creditor, with US$29 billion in debt. Pakistan’s total external debt reached US$130.85 billion in 2023. Pakistan is facing a rising debt-to-GDP ratio beyond 50 percent. According to the report, China had the single largest share of debt to Pakistan, with a 22 percent share (about US$28.786 billion).
The International Debt Report 2023 (IDR2023) of the World Bank signaled debt crisis risks posing enormous challenges to many Low-and Middle-Income Countries (LMICs). The Chinese strategy is to lend funds to the countries under the Belt and Road Initiatives (BRI). It is expanding its hold over the countries by exploiting the vulnerabilities of the LMIC.
Under the pretext of reconstruction and development, it offers loans and lures these countries into agreements. The vertical accumulation of interest due to nonpayment of loans develops a debt trap.
Besides the airport and highway projects, China is investing in Gwadar deep seaport.
“This achievement brings us closer to fulfilling the shared commitment of Chinese President Xi Jinping and former Prime Minister Nawaz Sharif for the development of Pakistan and the region through CPEC,” Prime Minister Sharif said.
Gwadar is of geo-strategic importance to both China and Pakistan. So far, airports, deep sea ports, power plants, economic zones, mineral economic processing zones, industrial zones, and the East-Bay Expressway have been inaugurated under the CPEC.
Pakistani government data indicates that CPEC has so far created 200,000 jobs, built more than 1,400 kilometers (897 miles) of highways and roads, and added 8,000 megawatts of electricity to the national grid.
In 2024, Pakistan initiated talks on reprofiling its power sector debt to China, alongside negotiations on structural reforms suggested by the IMF.
Chinese financing for CPEC projects has come in the form of commercial loans with relatively high interest rates. One of the most concerning aspects of these loans is that these projects are required to hire Chinese contractors. This means that a significant portion of the funds lent to Pakistan flows back to China as payments for Chinese goods, services, and labor. This structure minimizes Pakistan’s financial benefits while maximizing the returns for Chinese companies.
Gwadar port gives China access to the warm water of the Arabian Sea, and its location on the mouth of the Strait of Hormuz, where oil supply from the OPEC countries is routed, gives China a strategic advantage. It would help Beijing overcome the chokeholds in the Strait of Malacca by connecting Gwadar with Kashgar in Xinjiang, a backward province of China.
Gwadar is crucial for China in securing its energy lines. Pakistan is expecting to become the gateway to Central Asia through this project. Islamabad hopes that Gwadar Port will become a regional hub of transit trade activities and become the backbone of Pakistan’s imploding economy. On top of that, Gwadar can also be used as a maritime base against India.
It is already facing competition from Chabahar port in Iran, which is being developed in collaboration with India. To add to Pakistan’s woes, the CPEC passes through Gilgit Baltistan (which lies in Pakistan-occupied Kashmir), and in Balochistan, the rebels have been up in arms against the Chinese investment.
The Flight Of Chinese Debt Trap in South Asia
The World Bank data reveals that 97 countries across the globe are under Chinese debt. In the South Asian region, the external debt obligation to China has risen nearly sevenfold between 2012 and 2022.
South Asian countries – Sri Lanka, Pakistan, Nepal, and Maldives are neck deep in Chinese debt. At the end of 2024, Maldives owed 19 percent of its external bilateral debt to China. Maldives has already gotten a warning from the International Monetary Fund (IMF) about looming “debt distress.”
Countries such as Pakistan, Sri Lanka, Maldives, and Nepal are under severe stress because of the debt trap set against them by China and its BRI formulations.
In May 2022, Sri Lanka defaulted on its sovereign debt, and Pakistan’s economy is already in tatters. By 2023, Pakistan was dedicating nearly 8 percent of its GDP to service its debt to China. This amount is concerning since it represents funds that could be used for infrastructure development, healthcare, and education, among other vital services.
Brahma Chellaney, the Indian strategic thinker who wrote about “Debt Trap Diplomacy” in 2017, contended that through the strategic use of debt, Beijing compelled debtor nations to make concessions, including the acquisition of vital assets and natural resources, thereby extending the influence of China’s military. This has been evidenced by Beijing’s takeover of Hambantota port in Sri Lanka for a lease of 99 years, apart from infrastructural assets across African countries.
Hence, one of the most concerning features of Pakistan’s debt scenario is the possibility that it would lose control of vital national resources, including Gwadar Port. The port has already been leased to the Chinese state-run company COPHC for 40 years, with Pakistan holding a 9 percent share of revenue collection from gross revenue of terminal and marine operations.
Even while the specifics of these loans are frequently kept under wraps, there is a real chance that China will try to buy shares in important assets if Pakistan defaults on its debts. Gwadar Port is especially vulnerable because of its advantageous location close to the Strait of Hormuz.
