The Pakistani military establishment has been collaborating with China to exploit the economic and natural resources of the occupied territory of Gilgit-Baltistan. According to sources, both sides are planning to establish a Special Economic Zone (SEZ) in the region as a new project under the China-Pakistan Economic Corridor (CPEC). The Pakistan Army has been pushing hard to make General Syed Asim Munir’s initiative, the Special Investment Facilitation Council (SIFC), a success through new economic projects, particularly in Pakistan-occupied Kashmir (PoK).(1) China sees increasing opportunities in Pakistan’s desperation to stabilize its dwindling economy. The proposed SEZ in Gilgit-Baltistan would ultimately benefit China, as the balance of power in the bilateral relations remains heavily in Beijing’s favor.


It is noteworthy that China has been trying to expand its presence in Gilgit-Baltistan through private and public investments, an effort that intensified following the announcement of the China-Pakistan Economic Corridor (CPEC). However, the limited financial returns of CPEC over the past 10 years have prompted Beijing and Islamabad to revive the multibillion-dollar project. As a result, both sides recently agreed to commence the second phase of CPEC with new investments in SEZs, agriculture, and other sectors.


Reports indicate that the proposed SEZ in Gilgit-Baltistan will be developed by a Xinjiang-based private logistics company in a joint venture with Pakistani military enterprises. The total financial cost of the project remains unclear. Nonetheless, sources suggest that the Chinese stake in the SEZ is expected to exceed 50 percent. Furthermore, like other CPEC projects in Pakistan, the new SEZ in Gilgit-Baltistan will be built and controlled by Chinese nationals.


Through this project, both countries may attempt to establish a border-free trade zone between the occupied Gilgit-Baltistan and Xinjiang province. The people of Gilgit-Baltistan will not benefit from the SEZ and may end up losing their land and natural resources. The local population in Gilgit-Baltistan faces daily atrocities at the hands of Pakistani state authorities. Their resources—critical minerals, hydropower, and the environment—are being plundered by “outsiders”.(2) Moreover, it appears that China is effectively controlling PoK with the help of a subservient Pakistani military establishment.


Over the years, Pakistan has made efforts to mainstream Gilgit-Baltistan as the fifth province through new hydropower projects, climate-focused initiatives, and calls for foreign investments in the region. Islamabad earns billions in revenue from Gilgit-Baltistan annually through trade and transit, water resource exploitation, trophy hunting, eco-tourism, mineral exploration, and direct and indirect federal taxes. However, most of these earnings are not allocated for the development of the region.


Since Gilgit-Baltistan is not fully integrated into the state of Pakistan, the local population has limited rights and no political representation at the federal level. This means they have very little space or legal recourse to object to the government’s attempts to exploit their natural resources. Moreover, the region is geostrategically and geoeconomically significant for China as the China-Pakistan Economic Corridor (CPEC) passes through it via the Khunjerab Pass.


China is deeply involved in Gilgit-Baltistan due to its geographic proximity and the Karakoram Highway connecting the region to Kashgar in Xinjiang province. In addition to the CPEC route passing through Gilgit-Baltistan, Beijing has an interest in extracting critical minerals from the region through illegal means. According to reports, China and Pakistan initiated a second joint border inspection in 2021, which was supposed to be completed in the second half of 2023. This exercise suggested that China was exploring all possible options to legitimize its gains in the Trans-Karakoram Tract and to protect its investments and geopolitical interests in the region.


Additionally, Gilgit-Baltistan has reported uranium deposits, raising concerns about the possibility of illegal smuggling. Local residents have accused Chinese mining companies of extracting uranium without any restrictions or regulations from the federal or local government.(3) Over 2000 leases of various mountains, rich in precious and industrial minerals including gold, uranium, and molybdenum (used in space technology), have been granted to China for its own national use. (4) This has been done in clear violation of the State Subject Rule and United Nations Commission for India and Pakistan (UNCIP) resolutions. (5)


Several Chinese nationals reportedly stay illegally in various districts of Gilgit-Baltistan for mining purposes, with support from Pakistani authorities. In some cases, local government authorities in Gilgit-Baltistan have found Chinese citizens in illegal possession of precious minerals. The people of Gilgit-Baltistan have been protesting against the presence of foreign miners who are smuggling mineral deposits, particularly from the uranium-rich Karkalti village in the Ghizer district, to China.


In a notable case in 2012, Mohsin Industries was shut down following an uproar in the former Gilgit-Baltistan Legislative Assembly. This company was owned by a Hong Kong national, Wang Zunyu, who had moved to the region in 2009 to start a gemstone mining company. (6)


Furthermore, China and Pakistan are jointly building hydropower projects in Gilgit-Baltistan, including the infamous Diamer-Bhasha Dam. (7) China benefits from all hydroelectric projects in Pakistan, as it is either building or has agreed to build new dams in the country. These projects enable China to send more workers, engineers, and possibly soldiers. Given Gilgit-Baltistan’s strategic significance, China is likely to participate in both small and large projects to expand its physical presence in the region, including the proposed SEZ. If completed, this will only exacerbate the troubles of the local population and allow China to exploit the region's natural resources further.