Both attacks were claimed to be the work of the Baloch Liberation Army.

The group’s official spokesman threatened “even harsher” attacks and demanded China withdraw from projects in Balochistan, where insurgents have fought for years for independence and control of local resources.

The BLA, which Pakistan designated a terrorist group, also took responsibility for killing seven Pakistanis at the Chinese consulate in Karachi in November.

Pakistan terror attack highlights risks Chinese firms face

The security situation in Pakistan has hamstrung China’s operation of the Gwadar deep-sea port by the Arabian Sea.

The project is a “central pillar” of the China-Pakistan Economic Corridor (CPEC), a US$62 billion network of roads, railways and pipelines linking Gwadar to northwest China’s Xinjiang region.

Analysts say security risks threatening Chinese interests in Pakistan – including jihadist groups targeting China for its mass detention and mistreatment of ethnic Uygur Muslims in Xinjiang – cannot be readily resolved in the near-term.

But they stress that finding a solution to the violence is critical to the economic corridor’s continuing viability.

CPEC is considered a linchpin of Beijing’s investment behemoth, the “Belt and Road Initiative”, a trade and infrastructure plan that spans Europe, Africa and Asia, reviving the ancient Silk Road trade route.

Beijing-based military observer Zhou Chenming said both the flagging Pakistan economy – hampered by high inflation, weak growth and limited foreign currency reserves – and security concerns cast doubt on the Gwadar port’s commercial viability.

It is very difficult, he said, for Chinese people to conduct business in the region, where open roads can be blocked by bandits and other bad actors.

“Gwadar wants to be in the shipping business, but it has failed to do so,” he said.

“Pakistan’s economy is not very good, and this port has become very wasteful … under these circumstances, including with the hotel attack, how can China conduct its business? The roads and traffic cannot even be maintained.”

Following the Gwadar hotel attack, Pakistan’s Prime Minister Imran Khan condemned attempts, particularly in Balochistan, to “sabotage our economic projects and prosperity”.

China’s foreign ministry said it believed in the Pakistani government and military’s ability to maintain the country’s national security and stability, and thanked Pakistani security forces for safeguarding Gwadar.

“The risks in Pakistan are still grave,” Zhao Lijian, deputy chief of commission at the Chinese embassy in Islamabad, said in a text message. “China will continue to strengthen its security cooperation with Pakistan.”

Islamabad has taken measures to ensure the security of CPEC projects and workers, including setting up a 15,000-strong special security force in 2016.

But while belt and road investments are strategically important to Beijing, observers say China would be unlikely to put its own military personnel in Pakistan to protect CPEC projects, since doing so would exacerbate tensions domestically and with New Delhi.

India has objected to the economic corridor on territorial sovereignty grounds for running through Kashmir, a disputed region that both Delhi and Islamabad claim.

Ejaz Hussein, a political and military analyst at Iqra University in Islamabad, said the Pakistani government should bolster security for the Gwadar port and other CPEC projects, including enhancing intelligence networks in the area in collaboration with China.

But posting Chinese military personnel in Pakistan would be counterproductive, as it would trigger both “unimaginable attention” and “severe criticism”, he said.

“It may not be prudent on the part of the Chinese government and its private and public companies to develop an interest in taking over CPEC in governance and security terms,” Hussain said.

“Nor will it be a suitable and affordable policy on the part of Pakistan in the context of internal and external security challenges, ethnic divide, increasing intolerance, political instability and the contested character of the corridor.”

Gwadar has long been recognised for its strategic location, which the US Geological Survey identified in 1954 as suitable for a deep-sea port.

The Gwadar port was developed decades later in the early 2000s, and began operation in 2007 under the Port of Singapore Authority.

But after Pakistan failed to “meet contractual obligations and resolve land issues”, it allowed Singapore to quit its 40-year operating contract for the port, and handed over control to China.

Now the takeover of the port by China Overseas Port Holding Company (COPHC), a state-owned enterprise, has stoked fears in neighbouring India that Beijing could use the port as a naval outpost to secure access to key shipping lanes in the Indian Ocean, as part of a “string of pearls” strategy.

Geeta Kochhar, a Chinese foreign policy specialist at Jawaharlal Nehru University in New Delhi, said security has been a major factor for CPEC, given the extreme scale of Chinese financing and labour costs that have broader implications for China’s western borders.

“Making Gwadar port useful for Chinese military purposes may be China’s long-term plan, but the situation as of now demands that China places greater pressure on Pakistan to deal with the issues at home,” she said.

“In case China really wants to make the port commercially viable, it will need to engage with other actors of the region, including India, to find solutions to deal with terrorist threats.”

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CPEC has also faced a backlash over a perceived lack of transparency in its projects, the disproportionate benefits for Chinese firms and wealthier areas of Pakistan, and for harbouring Chinese geopolitical intentions.

But officials have pushed back against criticism. A joint statement from China and Pakistan after Khan’s trip to Beijing in November dismissed the “growing negative propaganda against CPEC and expressed determination to safeguard the CPEC project from all threats”.

Zhang Baozhong, chairman and chief executive of COPHC, told Pakistani media Geo TV that the company felt “safe and secure” in Pakistan, despite the recent terror attacks.

Although the Gwadar port had been plagued previously by run-down roads, poor water and sewage systems, and limited business activities, he said the port now generated US$100 million in revenue each year.

“The enemies of China and Pakistan are hell-bent on unleashing extremism and terrorism to sabotage public-centric projects, but the Gwadar Port and the CPEC are on track to achieve their targets … We stand unthreatened. We feel safe and secure in Pakistan.”

Zhang and COPHC did not respond to requests for further comment.

Nawabzada Zaheer Barakzai, chairman of the logistics provider Mega Movers Pakistan, which maintains a private container terminal facility for Gwadar Port operations in partnership with COPHC, urged the Khan administration to take more serious measures to secure the CPEC and bring stakeholders to the negotiating table. The Pakistan army had already increased its security to the Gwadar port after the hotel attack, he said.

“The development of the port will not be compromised or stopped in any condition,” said Zaheer, who is also chief of the Barakzai tribe in Balochistan.

He said he was working with the relevant agencies to increase security and also on a joint strategy to stop such attacks, which unsettle foreign investors, from happening again.

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A Chinese businessman based in Islamabad said he would be more aware of security issues in the future, but had not faced any “substantive problems” with safety thus far.

“We know there are some incidents targeting Chinese, so we will be more careful in our company’s security measures,” the businessman said, declining to be identified out of privacy concerns.

“Our office has security guards, surveillance equipment and an antitheft system. The security situation is better for us since we are in the Pakistani capital, but we cannot ignore the fact that there are terrorists and extremists, with the channels and methods to come in.”

Hussein said it was natural for Beijing and Chinese businesses to raise security concerns after the latest attack, but no deaths of Chinese nationals directly related to CPEC had been reported.

“Pakistan and China ought to [work] together to think innovatively to enhance security of CPEC logistics and workforce,” he said. “Both CPEC and the belt and road are inherently interdependent. Any harmful occurrence to one would impact the other in negative terms.”

Additional reporting by Minnie Chan and Mimi Lau