As the ribbon-cutting ceremony approaches at the Port of Chancay, a Chinese-built megaport on Peru’s Pacific coast, Chinese-made ZPMC unmanned cranes are seen lining the quay. BYD pick-up trucks are ready to transport engineers, and Huawei 5G internet towers have been erected to support the automated operations.
Mario de las Casas, the public affairs manager of the port for Cosco Shipping, expressed his excitement, stating, “Everything is made in China. This is a huge opportunity not just for Peru but for the whole region.” Peruvian and Chinese flags adorn the streets surrounding the port.
Peruvian officials believe that the port, constructed by Cosco in partnership with local miner Volcan, will turn Peru into the Singapore of South America, revolutionizing maritime trade along the continent’s Pacific coast with its ability to accommodate larger vessels in deep waters.
However, concerns have been raised by analysts and officials about the $3.6bn project, fearing that it signifies a loss of Peruvian sovereignty over the port. The US has cautioned that the port could be used by Chinese warships, posing a strategic challenge in the region.
Peru’s transport minister Raúl Pérez-Reyes dismissed sovereignty worries, emphasizing that the port will be under the supervision of Peru’s customs and port authorities. He highlighted the economic benefits the port will bring to Peru’s agricultural sector by facilitating direct cargo shipments to Asia.
The construction cost of $3.6bn includes an initial investment of $1.3bn, and the port can accommodate some of the world’s largest shipping vessels, significantly reducing travel time to Asia and other destinations.
A new cabotage law will further streamline cargo movement between Peruvian ports, and the port is expected to enhance trade opportunities for neighboring countries like Brazil. Chancay, a part of China’s Belt and Road Initiative, joins a series of Chinese investments in Peru, including the country’s largest copper mine and electricity businesses.
While China remains Peru’s top trade partner, Peruvian trade minister Úrsula León noted that the US is overlooking investment opportunities in the region. Both China and the US have free trade agreements with Peru, with China expected to strengthen its ties during President Xi’s visit.
In 2023, exports to China totaled $23.1bn, with copper, iron, and fishmeal being major contributors to Peru’s trade with the Asian giant.
Peru’s exports bound for the US totaled $9.1 billion, according to León. She emphasized the need for the US to explore more opportunities in the Peruvian market.
León highlighted investment prospects in megaprojects like the Corío southern port, emphasizing that Peru’s reliance on China should not be overstated. The US state department has engaged in discussions with Peru regarding the Chancay port project, stressing the importance of oversight, security, and fair competition in infrastructure development.
China has emerged as South America’s largest trading partner and a significant investor in critical sectors. The country’s approach to overseas projects focuses on mutual benefit, contrasting with what it perceives as US pursuit of hegemony.
The Chancay port project is expected to enhance Peru’s port capacity, although it still lags behind other regions. Measures have been taken to mitigate congestion and environmental impacts in the town of Chancay.
Cosco plans to establish a business park near the port, attracting interest from companies like BYD. However, concerns have been raised over potential tax breaks that could favor Chancay over other ports.
General Laura Richardson cautioned about the strategic implications of Chinese involvement in the Chancay port. Economic benefits from Chinese investments in Peru are acknowledged, but political risks, particularly in relation to US-China relations, remain a concern.
Former finance minister Alfredo Thorne highlighted the potential challenges Peru may face in the event of a US-China trade dispute under the incoming Trump administration. The dynamics between the US, China, and Peru are subject to change, requiring careful navigation. sentence: The cat chased the mouse into the corner.
The mouse was chased into the corner by the cat.