The Chancay megaport is expected to enhance trade between Asia and South America while raising U.S. concerns over increased Chinese influence and control over South American resources.
In a strategic move to expand its global trade influence and strengthen its Belt and Road Initiative (BRI), China is constructing the deep-water Chancay megaport in Peru, a development that could strain its already tense relations with the United States.
The Chancay megaport is a $3.5 billion project developed by China’s Cosco Shipping. It is currently 70% complete and will be inaugurated in November by Chinese President Xi Jinping during the Asia-Pacific Economic Cooperation (APEC) Economic Leader’s Week (AELW).
Located in a resource-rich area, the Chancay megaport is expected to enhance trade between Asia and South America, creating new markets for Chinese exports, including electric vehicles. With its nearly 60 feet of depth, it will be the first port on South America’s Pacific coast capable of accommodating mega ships.
China’s Belt and Road Initiative (BRI) is a global development strategy that aims to enhance regional connectivity and economic cooperation. This ambitious Chinese infrastructure project seeks to build trade and investment links across Asia, Europe, and beyond, with South America becoming a key region in this grand plan.
Peru is among several South American countries participating in China’s BRI, where the country is integrating its infrastructure with various Chinese investments.
In addition to the Chancay megaport, Peru has awarded a contract to a subsidiary of Chinese firm Jinzhao to build another port in the southern part of the country, requiring a $405 million investment. Construction is set to begin in late 2025 or early 2026, and Jinzhao Peru has been granted a 30-year concession to operate the port. The port, expected to become the third largest port in Peru, will handle bulk goods and minerals and will reactivate mining projects worth $15 billion.
The development of the Chancay megaport has raised concerns in the U.S., which views it as a strategic move by China to strengthen its grip on South America’s resources. According to WSJ, Gen. Laura Richardson, head of the U.S. Southern Command, has expressed worries that the port could facilitate China’s extraction of regional resources, potentially further escalating tensions between the two nations.
Relations are already tense between the U.S. and China, with the former expressing concerns over human rights abuses related to Uyghur forced labor in China’s Xinjiang region. The U.S. has implemented measures to restrict imports linked to these abuses, significantly impacting trade relations. The Uyghur Forced Labor Prevention Act (UFLPA), enacted to prevent goods made with forced labor from entering the U.S. market, is part of this strategy.
In addition to the UFLPA, the U.S. has recently increased duties on several Chinese imports, such as electric vehicles and solar cells, to counteract what it views as unfair trade practices. This move aims to pressure China to address human rights concerns and level the economic playing field. The heightened tariffs may further complicate the trade dynamics between the two countries.
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