Another blow to Pakistan: Chinese company withdraws business from Gwadar, raising concerns over CPEC

 Islamabad. After the United Arab Emirates (UAE) , Pakistan has now suffered a major setback from China . Hangeng Trade, a Chinese company operating in the Gwadar Free Zone, has announced it will permanently cease operations effective May 1, 2026. This decision has raised new concerns about the future of the China-Pakistan Economic Corridor (CPEC).

In a statement issued on International Labour Day, the company said the closure was due to a poor business environment, policy uncertainty, administrative hurdles, and export disruptions . It said it had been suffering significant financial losses for the past three months.

Exports stalled, losses widened

The company alleged that despite meeting international standards, its shipments were repeatedly stuck. Contacts were made with Pakistani authorities to resolve the problem, but to no avail.

Before closing the factory, the company claimed to have paid employees’ salaries for three months, electricity bills, and other liabilities . It also announced the termination of all employees.

Warning to investors

The company advised prospective investors to be cautious about investing in Gwadar, saying a clear and stable policy environment is essential for operating in the region.

What did the company do?

The company was running a large-scale donkey processing unit in the Gwadar North Free Zone and was part of the Gwadar Port ecosystem being developed under CPEC.

A double challenge for Pakistan

Even before this development, the United Arab Emirates had withdrawn over $3 billion in loans from Pakistan . The Chinese company’s withdrawal from the strategic Gwadar region is being seen as a setback both economically and diplomatically.

Impact on Shehbaz Sharif’s visit

This incident comes at a time when Prime Minister Shahbaz Sharif is preparing to visit China. This development could raise questions about the confidence of foreign investors and the investment climate in Pakistan.

Regional tensions also increased

Meanwhile, tensions remain high in West Asia between Iran and the United States . Reports suggest that efforts to negotiate between the two countries are ongoing, but the US has imposed new economic sanctions on Iran under its “Economic Fury” initiative.

The US Treasury Department has targeted Iran’s foreign exchange network and its associated companies. It is alleged that these networks convert oil revenues into other currencies and use them for government and military activities. The Chinese company’s withdrawal from Gwadar, the UAE’s debt recovery measures, and regional geopolitical tensions are all exacerbating Pakistan’s economic and strategic challenges.