A new $1.3 billion deep-water megaport in Peru will likely become the latest battleground in a simmering trade conflict between the United States and China.
The port of Chancay, with 15 berths, located about 80 kilometers north of Lima on the Peruvian coast, was jointly inaugurated by Peruvian President Dina Boluarte and Chinese President Xi Jinping as part of the initiative Belt and Road Initiative (BRI).
The port, built by Chinese state-owned Cosco and local mining company Volcan, is poised to transform regional trade. Chancay is capable of handling larger “post-Panamax” container ships that are too large for the Panama Canal. The port has an initial capacity of 1 to 1.5 million 20-foot equivalent units (TEUs), an industry standard for assessing container volumes. The port’s capacity is expected to reach 3.5 million TEUs once fully operational.
With an eye on this resource-rich region, the largest container ships will now be able to sail to Shanghai in 23 days, 10 days faster than via the Panama Canal route.
Mexican and American port operators will likely see their revenues decline. And U.S. analysts fear the port could serve as a base of operations for the Chinese navy in America’s backyard, despite being located about 6,000 miles from the United States. China’s appetite for Latin American resources and its ability, through the BRI, to invest in developing countries, has led to accusations that the United States has fallen behind in implementing a similar initiative.
They point to the stark contrast between outgoing US Secretary of State Antony Blinken, who gifted Peru a number of 1980s-era Caltrain diesel locomotives in a $6 million deal announced immediately after the inauguration of the port of Chancay. They argue that the United States has neglected Latin America, allowing China to take advantage of local resources while gaining geopolitical advantage.
Chinese investments in Chancay have not gone smoothly. In May, while embroiled in a dispute with Cosco, Peruvian lawmakers passed a law granting Cosco exclusive rights to operate the port, a move previously considered unthinkable by analysts. China is Peru’s main trading partner, with copper, iron and fishmeal making up the bulk of exports.