Chinese President Xi Jinping launched a week-long diplomatic push in South America on Thursday by opening a massive deep-water port in Peru, a $1.3 billion investment by Beijing as it seeks to expand trade and influence on the continent.
As China’s demand for agricultural goods and minerals from Latin America increases, Xi will attend the Asia-Pacific Economic Cooperation summit in Lima and then head to the G20 summit in Rio de Janeiro next week, where he will also pay a state visit to China. Brazil.
On Thursday, Xi and Peruvian President Dina Boluarte participated via video link in the opening of the port of Chancay, about 80 kilometers (48 miles) north of Lima on the Pacific Ocean, and signed an agreement to expand the existing free trade agreement.
Xi said Chankai, a deep-water port with 15 berths, was a successful start to the “21st Century Maritime Silk Road” and part of China’s Belt and Road Initiative, a modern revival of the ancient trade Silk Road.
“China is willing to work with the Peruvian side to take the Chancai project as a starting point for establishing a new land-sea corridor between China and Latin America and linking the Great Inca Road,” Xi said, referring to a mountain network dating back to the 15th century. Which joined the Inca Empire.
In an opinion piece published in the state newspaper El Peruano, Xi said the Chancai project would generate annual revenues of $4.5 billion, create more than 8,000 direct jobs and reduce the logistics costs of the Peru-China route by 20%.
The massive Chinese-controlled port was built by Cosco Shipping Ports and received $1.3 billion in Chinese investment in its first phase. China is expected to spend billions more as Beijing and Lima work to make it a major shipping hub between Asia and South America.
Mario Ocharán, director of Peru’s Chancay Chamber of Commerce, said the first ship is scheduled to sail from Chancay next week, transporting Peruvian fruit to China.
China’s main motivation for developing the mega port, according to Ocharan, was access to neighboring Brazil, where a new railway line is planned to transport Brazilian exports such as soybeans and iron ore to the port.
The cost of the railway project is estimated at $3.5 billion, according to Mario de las Casas, director of corporate affairs at COSCO Shipping Company Chancay Peru.
He said building this link is “crucial” to improve soybean transportation as Brazil is the largest seller of the commodity to China.
“Geopolitical and economic headwinds”
The opening of the port comes as Beijing looks to benefit more from resource-rich Latin America, amid trade tensions with Europe and concerns about future US tariffs on Chinese exports from the incoming Trump administration.
Xi was accompanied on this trip by hundreds of Chinese businessmen, including the heads of companies that invest heavily in Peru such as Chinalco, which owns the Toromoco copper mine.
Robert Evan Ellis, a professor of Latin American research at the U.S. Army War College, said Chancai will make shipping between Latin America and China more efficient.
Because the port can handle the largest ships, it will reduce the need for shipping companies to collect cargo containers at intermediate points, reducing costs and handling times.
“Chankai shows how China is seeking secure access to resources and markets and its more successful than ever battle to capture global value-added,” Ellis said.
China’s heavy investment in Zhankai has raised alarm bells in Washington. Gen. Laura Richardson, former head of US Southern Command, warned earlier this month that the Chinese navy could use Zhankai for intelligence gathering.
US concerns about Chankai reflect a broader, decades-long shift in a region that Washington has long viewed as its backyard. China has overtaken the United States to become the largest trading partner of countries like Peru.
State-backed China Global Times She wrote in an editorial on Monday that the port is “in no way an instrument of geopolitical competition,” and called US accusations of possible military use of the port “slander.”