A port in Peru, mostly owned by China, is expected to become a key link in the infrastructure initiative of the Belt and the Trail. The United States is afraid about Beijing's increasing influence in a region that Washington considers to be its domain.
Port Chancay, built by the Chinese company Cosco Shipping in collaboration with Peruvian company Volcan, officially opened on Thursday 14 November – as stated in the Global Times editorial article – will “open a new” maritime road “to integrate the Asia-Pacific economy”.
COSCO Group, the parent company of the largest Chinese state shipping company COSCO Shipping, owns about 60% of the port company-operator, located about 60 kilometres north of Peru's capital city, Lima. The largest container ships in the planet can go to this port.
The yearly volume of container handling in Chancay port will be 1.5 million TEU (units equivalent to 20 alloy containers) at the beginning. Its combined capacity with Callao, the largest Peruvian port, besides located close Lima, will surpass the capacity of the Brazilian port of Santos, the largest in South America (5 million TEU in 2023).
According to the Peruvian government, container cranes in the port are automated and distant controlled, which ensures advanced efficiency in loading and unloading goods. Lima claims that the port will be the most technologically advanced in Latin America.
The Peruvian government estimates that the port will pump $4.5 billion into the economy annually, equivalent to about 2% of the country's gross home product.
The beginning of the port in Peru can influence trade between South America and east Asia.
Currently, most of the cargo headed to Asia from South America is shipped by Central or North America. According to the Peruvian government, Chancay port is expected to shorten the journey time of goods to China from 35 to 25 days.
The time needed for shipping to China or Japan from Brazil, the largest economy in South America, can besides be reduced by half, to about a month, thanks to intermodal solutions that Chinese companies are besides investing in.
China is the largest trading partner of many Latin American countries, including Brazil, Peru and Chile. According to the global Monetary Fund, Latin American trade with China increased from around $12.5 billion in 2000 to around $483 billion in 2022. China's share of the full volume of trade in the region increased to 16% from 2% 2 decades ago, erstwhile US share fell from 52% to 39%. Today, a large proportion of the goods shipped from Latin America to the US are those produced from natural materials, components and parts originating in China.
China relies on South America for key minerals specified as copper and lithium, as well as food specified as soya and meat. As South America has besides become a major export mark for Chinese electrical vehicles and steel in fresh years, request for greater port capacity on the Pacific coast is increasing.
The issue is further exacerbated by trade restrictions imposed on China by the United States and Europe.
There are besides diplomatic considerations. In the past, the United States has had a strong influence on Latin America. However, as tensions increase on the USA-China line, Beijing is trying to establish closer relations with the Global South countries.
Foreign Ministers of Argentina, Peru and Bolivia separately visited China in the spring of that year to meet with abroad Minister Wang Yi, a associate of the Communist Party's Political Bureau. All 3 countries agreed to extend economical and trade cooperation, including actively promoting the Belt and way initiative, in which 22 Latin American countries already participate.
Although China emphasizes the commercial and economical functions of Chancay port, the United States fears that it may besides be utilized as a military base.
Whether Brazil joins the Belt and the way is simply a key issue for this region. The weakly developed logistics infrastructure hinders the improvement of agriculture, which is the country's main industry. The government has strong voices supporting the Chinese initiative. Economically friendly with China is although agriculture minister Carlos Favaro.
Some speculate that Brazil will announce its participation in the Belt and way erstwhile China's president Xi Jinping visits Rio de Janeiro at the G20 summit starting on Monday.
The beginning of Chancay port did not happen by accident on 14 November. At that time, the APEC summit hosted by Peru was held. Among another things, the president of the PRC Xi Jinping came to this summit.
On the margins of the APEC summit there was besides a brief gathering between US president Joe Biden and Xi Jinping. We will inform you of the details in a separate material.
Based on: Nikkei Asia
Leszek B. Glass
Email: [email protected]
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