A Chinese firm has shut down its Gwadar Free Zone plant, laying off all workers amid mounting losses, while Iran has submitted a fresh proposal via Pakistan to the US to end the West Asia conflict, even as Washington escalates sanctions under “Economic Fury.”

This dual development underscores both the fragility of foreign investment in Pakistan and the intensifying geopolitical-economic contest involving Iran, China, and the US.

The Hangeng Trade Company announced the closure of its Gwadar facility on International Labour Day, citing “non-commercial factors” and operational hurdles that made continued business impossible. 

Despite meeting international export standards, its shipments remained stuck, leading to sustained losses. The firm said it had engaged with Pakistani authorities for three months but no resolution emerged. Before shutting down, it cleared all dues, including three months’ salaries, penalties, electricity bills, and container demurrage charges.

The company emphasised that Pakistan and China remain close partners, noting Gwadar’s role as a flagship project under the China-Pakistan Economic Corridor (CPEC). However, it stressed that a “clear and workable policy environment” is essential for businesses to survive.

It thanked the Government of Pakistan and the Ministry of Planning for supporting Pak-China cooperation but cautioned prospective investors to carefully evaluate uncertainties linked to Gwadar. 

This closure comes just ahead of Prime Minister Shehbaz Sharif’s scheduled visit to China for a business-to-business forum, raising concerns about investor confidence and the viability of foreign-backed ventures in Pakistan’s strategic port city.

Gwadar itself has faced persistent challenges: low cargo volumes, infrastructure deficits, and local discontent. Security threats from Baloch insurgents have repeatedly targeted Chinese projects, adding to investor unease.

Reports also suggest bureaucratic delays, including disputes over export approvals, have compounded operational difficulties for foreign firms.

Meanwhile, Iran has submitted a new proposal through Pakistan to the US, seeking to advance negotiations to end the ongoing conflict. The proposal, handed over on 30 April, prioritises reopening the Strait of Hormuz and deferring nuclear talks to a later stage.

This marks a shift in Tehran’s approach, focusing on immediate de-escalation and maritime access before addressing nuclear issues. Analysts view this as an attempt to break the deadlock after failed talks in Islamabad and weeks of fragile ceasefire.

The US response has been sceptical. On 1 May, Washington announced sweeping sanctions targeting Iran’s financial and energy networks. Under the “Economic Fury” campaign, the Treasury designated three Iranian currency exchange houses and affiliated front companies accused of laundering billions of dollars.

These networks convert Iran’s oil revenues, largely settled in Chinese yuan, into usable currencies for Tehran’s military and proxies. Treasury Secretary Scott Bessent described Iran as “the head of the snake for global terrorism” and vowed relentless pressure.

The sanctions come amid a prolonged closure of the Strait of Hormuz, which has disrupted nearly 20% of global oil and gas flows, driving prices above $100 per barrel. While Iran insists it does not seek war, it has maintained its blockade in response to US naval pressure.

The economic fallout is severe: Iran faces inflation exceeding 100%, collapsing purchasing power, and rising unemployment, while global markets remain jittery.

Pakistan’s role as mediator is under strain. The abrupt departure of Iran’s delegation from Islamabad on 25 April left its claims of brokering peace in tatters. With Gwadar’s investment climate deteriorating and Iran-US talks faltering, Islamabad’s ambitions to position itself as a regional stabiliser face mounting challenges.

ANI