Chinese megaport in Peru promises to transform trade in the Pacific and stirs tensions over sovereignty and influence in Latin America
The new mega-port of Chancay, opened during the APEC summit in Peru, symbolizes the country’s transformation into a strategic hub for trade between Asia and Latin America, but also presents geopolitical and social challenges. With the financial support and majority control of COSCO, a Chinese state-owned company, the port promises to reduce transportation times and costs, attract investment and generate local jobs. However, this partnership has generated debates about Chinese influence in strategic sectors in Peru, the impact on local communities and the possible dependence on an external actor with its own objectives. In a context of immediate economic benefits and long-term risks, Peru will have to face the implications of a project that could transform not only its economy, but also its role in Pacific trade dynamics.
This week, during the APEC summit in Lima, the newly renamed Port of Chancay will be officially opened. The summit will be attended by high-level figures, including executives from large international corporations, banking conglomerates, technology leaders and political representatives, including Chinese President Xi Jinping. The national expectation surrounding the event led the Peruvian government to declare holidays for APEC, extending this measure to the province where the new port is located.
It’s no surprise that the event is generating quite a stir. The Port of Chancay, located about 80 kilometers north of Lima, has become one of the most ambitious infrastructure projects in Peru’s recent history. Although the project was conceived in 2007, it gained significant attention in 2019 when Chinese state-owned COSCO Shipping Ports acquired a 60% stake in Terminales Portuarios Chancay for US$225 million, forming a partnership with Peruvian mining company Volcan, which holds the remaining 40%. Chancay will become the first port in the Western Hemisphere entirely under the control of the Chinese shipping giant, unlike the Port of Seattle in the USA, where COSCO’s operations are limited to a single terminal.
The port’s financing is largely supported by Chinese capital, highlighting China’s growing presence in the Peruvian economy. Peru found in China a partner willing to invest and bet on the Andean coast, something that, according to experts, is “not of interest” to other great powers such as the United States, Brazil or members of the European Union.
“The Chinese model consists of building a global distribution point in a new subcontinent that does not have this structure,” explains Omar Narrea, researcher at the Center for China and Asia-Pacific Studies at the Universidad del Pacifico in Peru, citing the investment history of China in Africa as an example of the Beijing model.
“We have ports with similar depths and geographic capabilities, but not with this technology. This technology comes from investor and company interest in having an efficient point for global distribution networks. It’s not just production and consumption, but also distribution,” says Narrea.
This partnership generated both expectations and concerns, as the large Chinese investment sparked debates about economic sovereignty and the balance of power in the region. The investment covers not only the construction of cargo terminals, but also the modernization of road and rail infrastructure that will connect the port to Lima and other important cities.
COSCO has committed to carrying out the work in several stages, with the first focusing on the construction of docks, storage areas and automated crane systems. As the port approaches completion, it is expected to become a focal point in the trade network between Asia and South America, attracting investment and generating local jobs.
The port of Chancay is not just an economic project; it also represents a piece on the global geopolitical chessboard, where China has consolidated its influence by financing strategic infrastructure.
Through the Belt and Road Initiative, China has developed a network of projects in several countries with the aim of developing infrastructure while increasing its economic and political influence. This soft power allows China to deepen its relations with participating nations, offering investments in key sectors such as transport, energy and telecommunications, often in exchange for privileged access to markets and resources.
China’s presence in Latin America has grown exponentially in recent decades. In countries like Ecuador, for example, China financed and built the Coca Codo Sinclair hydroelectric plant, the largest in the country. Although initially seen as a development opportunity, the project faced transparency issues, technical failures and additional costs, generating tensions between the Ecuadorian government and its Chinese partners, demonstrating the risks of relying excessively on external financing.
In Argentina, the construction of a Chinese space monitoring base in the province of Neuquén generated controversy due to suspicions of its use for military or intelligence purposes, raising warnings about the loss of control over strategic infrastructures.
The Chancay port project could follow a similar dynamic. As COSCO is a Chinese state-owned company, decisions regarding the operation of the port may be linked to the interests of the Chinese government. This asymmetric relationship raises concerns about Peru’s sovereignty and the risk of the country relying on a foreign actor to operate vital infrastructure.
While Chinese investment will bring tangible benefits, some analysts fear that China could use its influence over the port to pressure Peru on foreign policy or trade issues, cementing its role as the region’s main partner to the detriment of other global players.
“COSCO continues to apply this logic of transforming global maritime transport networks, as it is one of the main companies in this sector. They realize that [Chancay] It is an important point in commerce in this area, which will increase consumption, and they see this from a commercial point of view”, adds Narrea.
In this sense, Chancay is not just a port, but another piece in China’s global strategy to position itself as a commercial and political leader in regions traditionally under the influence of other powers, such as the United States and Europe. It remains to be seen whether Peru will be able to balance the economic benefits of the port with the geopolitical challenges arising from its partnership with China.
When discussing the management and control of the port, concerns grow about whether it could be used for purposes other than commercial. The general assumption is that decisions are made unilaterally, ignoring Peru’s business and investment regulations, as well as Peruvian laws on the use of commercial ports, which indicate that any entry other than for commercial purposes requires congressional approval. and the Executive Branch.
“The main objective of the port at the moment is to open a logistics market for Peru and expand China’s economic access to the region. How countries navigate and ensure that their national interests are prioritized will depend on their leadership and how they respond to the needs of their respective business, industrial and citizen sectors,” says Victoria Chonn-Ching, researcher at the Adrienne Arsht Center for Latin America at the Atlantic Council.
Chancay is not just a port, but another piece in China’s global strategy to position itself as a commercial and political leader in regions traditionally under the influence of other powers, such as the United States and Europe.
Despite optimism in various commercial sectors, the construction of the mega-port was not free from problems and irregularities, including the controversial concession of areas reserved for national defense, the granting of licenses without prior environmental studies, the acquisition of public lands under cost and negative impacts on local communities due to material damage. Furthermore, the project was marked by incidents of harassment of journalists trying to cover its development, raising concerns about transparency and respect for the rights of affected communities.
“The Peruvian State does not get involved in these types of projects to compensate and create an adequate business climate”, admits Narrea.
Additionally, local communities expressed concern about the social and economic impact of the project. The construction of the port generated an increase in heavy traffic on the region’s roads, affecting air quality and noise levels in inhabited areas. Fishermen, in particular, have reported that the works have disrupted their activities and fear that the port will permanently affect their livelihoods.
Despite these problems, the Chancay megaport presents a series of benefits that could transform Peru’s economy and its position in global trade. The port was designed to be a strategic connection point between South America and Asia, particularly with China, Peru’s largest trading partner.
The port will allow Peru to become an important logistics hub in the Pacific region, significantly reducing cargo transportation times to and from Asia. Analysts point out that the particularities of the port of Chancay will allow a reduction in transport costs of around 30%, making Peru significantly more competitive in relation to other countries in the region.
Currently, most cargo from South America to Asia passes through the Panama Canal or requires longer routes, with transshipment in other countries. Chancay, with its strategic location and modern infrastructure, should reduce these times and costs, facilitating the direct flow of goods.
Its geopolitical impact on the region will be undeniable, as it will also function as a commercial distribution center, redirecting cargo to Ecuador, Chile and Colombia, in addition to its connection with the Amazon Multimodal Corridor of the Northeast Bioceanic Corridor, linking Brazil and Peru.
This scenario is especially beneficial for Peruvian exports, such as minerals, agro-industrial products and fishing, key sectors of the national economy. The port is expected to attract new foreign investment, both in the industrial sector and related infrastructure, generating thousands of direct and indirect jobs.
China’s role in the development of the port of Chancay cannot be underestimated. Chinese investment was crucial to financing the project, but its influence on Peru’s strategic infrastructure has also sparked debate.
Some experts see this collaboration as an opportunity for Peru to improve its infrastructure without relying exclusively on multilateral loans or public financing. In a country in great need of modernization in its transport and logistics system, the injection of Chinese capital is seen as a relief.
However, other analysts warn about the risks of relying so much on China. As COSCO is a state-owned company, there are fears that control of such an important port could affect Peru’s economic and political sovereignty in the long term. In this sense, the criticism goes beyond the port of Chancay and focuses on China’s growing influence in strategic sectors in Latin America, from mining to infrastructure.
Ultimately, the Port of Chancay represents the opportunities and risks brought by globalization. For Peru, this could mean economic transformation and better integration into international trade routes. However, questions about foreign influence and the impact on local communities will continue to be part of the debate as the port becomes a reality.
The challenge for Peru will be to maximize the economic and commercial benefits of the port while remaining attentive to the environmental, social and geopolitical implications that accompany this monumental project. Over time, Chancay could not only connect Peru with Asia, but also redefine the country’s role in Pacific trade dynamics.
Via Andrés Bello Foundation
Source: https://www.ocafezinho.com/2024/11/12/como-sera-o-megaporto-chines-inaugurado-agora-no-peru/
