google-cloud-go: pubsub client does not work inside a docker container

I have this compose file

version: "3.3"
services:
  dev:
    build:
      context: .
      dockerfile: docker/dev.dockerfile
    ports:
      - '3000:3000'
    environment:
      - PUBSUB_EMULATOR_HOST=http://pubsub:8085
      - PUBSUB_PROJECT_ID=marwan-test
    depends_on:
      - pubsub
  pubsub:
    image: google/cloud-sdk
    ports:
      - '8085:8085'
    command: ["gcloud", "beta", "emulators", "pubsub", "start", "--host-port", "0.0.0.0:8085"]

My dev container is a golang:1.9.1 image with the following main.go file:

func main()
	ctx, cancel := context.WithTimeout(context.Background(), time.Second*10)
	defer cancel()

	cl, err := pubsub.NewClient(ctx, "marwan-test")
	if err != nil {
                panic(err)
	}

	t, err := cl.CreateTopic(ctx, "email")
	if err != nil {
		panic(err) // if this program is running inside a docker image, it will panic, otherwise -- create topic succeeds.
	}
}

if the above file is running inside a container, then cl.CreateTopic will be stuck indefinitely until context is timed out. However, if I run this file from the host machine and just connect to localhost:8085 instead of pubsub:8085 – then it works.

I tried debugging why CreateTopic gets stuck infinitely, and it seems that grpc.Dial is settings its client connection to TRANSIENT_FAILURE.