China is bankrolling the construction of a modern deepwater port in the Pakistani city of Gwadar, located in the southwest region of the country. So far China has shelled out nearly $200 million in loans and grants to develop the port in what was once a sleepy fisherman's village; Pakistan has contributed around $50 million. When complete, the port will give China's growing Xinjang province a port that's only 2,000 kilometers away. In comparison, Shanghai is over 8,000 kilometers away. 

At the peak of construction in 2002, nearly 500 Chinese laborers were kept busy around the clock working on the facilities. As construction winds down with the first three berths to open up for business next year, the Chinese labor force is currently around 250. The port would give China convenient access to Central Asia for the import of oil and other raw materials and also eases Pakistani dependence on the port of Karachi. In 1971, India blockaded Karachi during the India-Pakistani war. 

Natives of the Gwardar area haven't been happy with the Chinese presence. A car bombing killed three Chinese engineers in May and there have skirmishes between locals and Pakistani troops brought into the area to protect the Chinese contingent. Armored personnel carriers now carry Chinese engineers around the city. 

To protect the port, Pakistani is planning to build three new encampments in the Baluchistan province, a poorly developed and sparsely populated area. Since 1947 there have been three armed conflicts between the locals and the Pakistani government, including a large-scale insurgency in the 1970s that lead to thousands of dead. The independent-minded local Balchis fear that this is going to be yet another federal project that exploits the resources of the area with minimal benefit for themselves. While the locals like the idea of jobs in the short-term, they fear an influx of Punjabis that make up 60 percent of Pakistani's population and almost all of the military. "It would not be difficult for the people of Baluchistan to keep the military regime engaged with fighting,'' said one Baluchistan politician. Making life even more interesting, there's about 27 trillion cubic feet of natural gas reserves in the province, something that the Chinese would like to buy and the Pakistani government would like to sell, with locals worried they would lose out on a share of the profits. Doug Mohney

More separatist violence in India's northeast left six dead and nine wounded.