Chinese President Xi Jinping launched a significant diplomatic and economic initiative in South America, inaugurating the Chancay deep-water port in Peru. The $1.3 billion Chinese-funded project is part of Beijing’s Belt and Road Initiative, marking a critical step in its efforts to strengthen trade and influence in the region.
The port, located 80 kilometres north of Lima, is expected to serve as a major shipping hub between Asia and South America, boosting economic ties and logistics efficiency.
Chancay Port: A Strategic Investment
Xi and Peruvian President Dina Boluarte officially opened the 15-berth Chancay port via video link on Thursday. Xi highlighted the port as a milestone in China’s “21st century maritime Silk Road,” a modern extension of the ancient Silk Road trading route.
The port aims to streamline the Peru-China trade route by reducing logistics costs by 20%. It is also expected to generate $4.5 billion in annual revenue and create over 8,000 direct jobs in Peru, according to an opinion article by Xi in El Peruano.
Built by China’s Cosco Shipping Ports, the project represents the first phase of a multi-billion-dollar Chinese investment plan. The first shipment from the port, carrying Peruvian fruit to China, is set to depart next week.
Connecting Peru and Brazil
The Chancay port is not just about enhancing Peru’s trade with China. It is strategically positioned to facilitate access to Brazil, a key supplier of soybeans and iron ore to China. Plans for a $3.5 billion railway connecting Brazil to Chancay are underway.
This railway is critical for transporting Brazilian exports, particularly soybeans, to the Peruvian port, cutting transportation costs and boosting trade efficiency. Mario de las Casas of Cosco Shipping described the rail link as essential for ensuring the project’s success.
Geopolitical Implications
China’s significant investment in Latin America reflects its broader ambitions to secure access to resources and markets amid growing trade tensions with the US and Europe. However, the Chancay project has raised concerns in Washington.
US officials, including General Laura Richardson, have expressed fears that the port could serve military or intelligence purposes for China. These allegations have been denied by Beijing, with the state-backed Global Times calling such claims baseless smears.
China’s presence in Latin America is undeniable. It has surpassed the US as the largest trading partner for countries like Peru, signalling a shift in regional dynamics. The Chancay port exemplifies China’s ability to integrate economic interests with strategic infrastructure projects, further embedding its influence in the global supply chain.
(With Inputs from Reuters)
