A Chinese company, Hangeng Group, has shut down its factory operations in both Pakistan and China, effective May 1, 2026, citing what it described as “systemic uncertainties” and ongoing operational challenges linked to its project under the China-Pakistan Economic Corridor (CPEC).
The firm was operating within the Gwadar Port ecosystem, a key component of CPEC, which is part of China’s broader Belt and Road Initiative.
Why the Company Shut Down Operations
According to the company, the decision was driven by multiple issues, including:
- Delays in export approvals despite meeting compliance requirements
- Regulatory bottlenecks and inconsistent policy execution
- Financial losses due to wages, electricity costs, penalties, and logistics charges
- Non-market and administrative hurdles affecting business viability
The company said it had complied with China Customs requirements and international food safety standards, but approvals for exports were still delayed, making continued operations unsustainable.
Concerns Over Investment Climate
Hangeng Group highlighted concerns about policy consistency and execution in Pakistan, particularly in relation to large infrastructure projects under CPEC. It noted that predictable regulations are essential for sustaining foreign investment.
The company also acknowledged support from Pakistan’s Ministry of Planning, but said structural issues remained unresolved.
Wider Implications for CPEC
The shutdown is being seen as another challenge for CPEC-linked projects, especially in Gwadar, where infrastructure development has faced delays and operational difficulties.
Analysts and sources cited in the report suggest the development reflects deeper issues such as:
- Bureaucratic inefficiencies
- Regulatory uncertainty
- Security concerns in certain regions, including Balochistan
Strategic Context
CPEC is a major China-Pakistan infrastructure initiative aimed at improving trade connectivity through roads, ports, and energy projects. However, repeated delays and withdrawals by companies have raised questions about long-term investment stability.
Bottom Line
The exit of Hangeng Group highlights ongoing concerns about execution challenges in large-scale infrastructure projects in Pakistan, adding pressure on efforts to attract and retain foreign investment under CPEC.