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Can China’s Mega Port in Peru shadow America’s Domination in South America?

Construction of the new Chancay Multipurpose Port Terminal in Peru. It is located in the coastal city of Huaral in the Bay of Chancay, 50 miles north of Lima. It is being developed by the Peruvian subsidiary of China's Cosco Shipping Ports. (Photo: peru-retail.com)

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By Aakansha Malia

June 17, 2024
4:33 pm
Los Angeles, CA

The already strained relations between China and the U.S. are poised to reach a new nadir. Tensions between the two nations are set to escalate further as Beijing solidifies its presence in Peru with critical infrastructure projects, positioned in close proximity to the United States border. China’s construction of a deep-water port in Peru’s resource-rich and tranquil coastal town of Chancay is a focal point. According to reports from the Wall Street Journal, Chinese President Xi Jinping is slated to inaugurate the port, which stands at 70% completion, later this year. Beijing strategically selected this location for investment. The $3.5 billion Port of Chancay, primarily financed by China is situated near one of Peru’s largest lithium reserves. Peruvian President Dina Boluarte is scheduled to meet her counterpart, Xi Jinping,

Peruvian President Dina Boluarte is scheduled to meet her counterpart, Xi Jinping, later this month, and is also expected to convene with executives from Cosco Shipping Ports.

General Laura Richardson, head of the U.S. Southern Command, remarked, “The port will be the first on South America’s Pacific coast capable of receiving megaships and lies 4,500 miles from San Francisco, placing it on America’s 20-yard-line.” This development reduces shipping duration from 35 days to approximately 11, thereby lowering business costs for China. Observers anticipate that this could render Peru financially dependent on China, thus exposing it to potential Chinese coercion.

The expansion of Chinese influence in Peru poses a significant threat to U.S. interests. Led by the state-owned enterprise Cosco Shipping Ports, this development project has raised alarms in Washington as Beijing extends its global influence and tightens its grip over South America’s resources. The U.S. suspects that Beijing’s motives include geopolitical aims such as isolating Taiwan from the world. Of particular concern to the United States is China’s intention to integrate the Chancay port into its Belt and Road Initiative (BRI), a move vehemently opposed by Washington. Beyond concerns of economic competition with the BRI, the U.S. views the initiative as promoting authoritarianism and fostering dependency, leverage, and control.

The CCP’s mouthpiece, the Global Times, boasts of China’s status as Peru’s largest trading partner. This growing Chinese influence in the Latin American country is evident in robust trade ties and industrial and technological metals supply chains. Chinese companies currently control seven out of forty-seven mining initiatives in Peru, representing nearly 20% of projected investment. Moreover, China’s grip on Peru’s electric sector is tightening, raising further concerns. China aims to dominate the solar value chain by acquiring local suppliers in Latin America. As part of its strategy to enhance South-South cooperation, China focuses on bolstering its soft power and cultivating political goodwill with leaders in Latin America.

China’s assertiveness in Peru, historically within the sphere of U.S. influence, poses national security risks for the United States. However, the United States appears to be distracted from its overarching strategy to counter China. The lack of a cohesive response has emboldened Chinese expansion closer to the U.S. border. Presently, the United States’ engagement with Peru primarily revolves around managing Peruvian migration away from its borders. While the U.S. collaborates with the Peruvian government to address the root causes of irregular migration and implement humane migration management policies, more assertive actions are warranted. The U.S. government should prioritize pushing back against Chinese influence by exploring new trade and investment avenues to bolster U.S. leadership in Latin America.

Using China as a foil now Peru is pitching an investment to the United States to mend its ways. The new port, Corio is almost 700 miles from Chanmay. The Corio area is also close to the Matarani port, which is already a key copper export hub. According to Bloomberg, Corio port project is being pitched to the US to attract private investors. U.S. goods and services trade with Peru totaled an estimated $27.6 billion in 2022. Peru being a key trading partner of U.S., its foreign direct investment in Peru was $9.1 billion in 2022, a 26.0 percent increase from 2021. U.S. direct investment in Peru is led by mining, wholesale trade, and manufacturing.