What Does the Chancay Port Mean for China-Peru Relations?

On November 17, 2024, Chinese President Xi Jinping inaugurated the Chancay Megaport near Lima, Peru, marking a significant milestone in China's Belt and Road Initiative (BRI). This $3.5 billion port features 15 deep-water berths and is designed to enhance trade ties between China and Peru by reducing shipping times to China from 35 to 23 days and lowering logistics costs by over 20% [5d701036][1f197aa7]. The port is projected to generate $4.5 billion annually and create over 8,000 jobs, emphasizing its importance for connecting Asia and Latin America [5d701036]. Peruvian President Dina Boluarte expressed national pride in the project, highlighting Peru's role in global transshipment [1f197aa7].

During the APEC summit in October 2024, Xi discussed the port's role in facilitating faster shipping and improving bilateral trade, which reached nearly $36 billion in 2023 [d2ece873]. The Chancay Megaport is expected to handle up to one million containers in its first year and has a maximum depth of 17.8 meters to accommodate large container ships [87f8f48a]. The inauguration coincided with an updated free trade agreement that favors Peru's exports, particularly as the country is now recognized as free of foot-and-mouth disease, allowing for meat exports to China [5d701036].

However, the port's inauguration has raised concerns among local residents, particularly fishermen, who fear the loss of fishing waters and diminished fishing stocks. Fishermen like Julius Caesar and Rafael Ávila have voiced frustrations over potential pollution from large container ships and the lack of economic benefits for the local community [b7c4814a]. Local protests have emerged over concerns about environmental impacts and the adequacy of public services in the surrounding areas, as property prices in Chancay have surged from $2 to $35 per square meter [23e1b10f].

U.S. military officials have expressed concerns regarding the potential for Chinese military use of the port. Analysts suggest that the U.S. has neglected Latin America, allowing China to gain significant influence in the region. This shift comes at a time when Latin American leaders are wary of U.S. pressure, especially under the incoming president-elect Trump, who may seek to renegotiate trade agreements [d2ece873].

Brazilian officials are already planning integration routes to utilize Chancay, but challenges such as long distances and infrastructure inefficiencies could impede immediate benefits [aa72d3e1][31ebc020]. The exclusivity agreements that grant Cosco significant control over port operations have raised alarms about the implications of such foreign investments on Peru's sovereignty and infrastructure management [6c177fca]. Peru's Foreign Minister, Javier González-Olaechea, has called for increased U.S. investment to balance China's growing influence, emphasizing the need for a diverse investment landscape [6c177fca].

As trade between China and Latin America reached $485.7 billion in 2023, a 7.7% increase, the geopolitical dynamics are shifting, with countries like Peru tightening tax regulations on imports while balancing relations with both the U.S. and China [a9823a8f]. Xi has also promoted cultural exchanges to strengthen ties further, underscoring the multifaceted nature of China's influence in the region [a9823a8f]. Experts warn of potential economic ramifications for South America if the Chancay Megaport becomes a critical link in China's trade network, especially as Brazil's trade figures stand at $104.32 billion in exports and $53.17 billion in imports [aa72d3e1]. The first commercial vessel is set to transport Peruvian fruits to China, symbolizing the operational launch of this strategic port [1f197aa7].