With the rise in trade tensions between the US and China, Beijing has significantly grown its presence in South America to hold leverage over Washington on more fronts than simply rare earth materials, a report said.
The Chancay Port in Lima, Peru, into which China poured $1.3 billion, is one such opportunity for geopolitical leverage that Beijing has grabbed, in the wake of Washington's waning influence on the region due to its protectionist trade tariffs that has left it increasingly isolated from the region.
The primary advantage of having Chancay under its control—Chinese state-owned firm Cosco is a majority stakeholder with a 60 per cent stake in the deep-water megaport—is that it frees China from US transshipment controls by a considerable degree, maritime think tank Pacific Forum reported.
This is because the Chancay Port is the only port in South America with a maximum depth of 17.8m, giving it the capability of berthing Ultra Large Container Vessels (UCLVs) with a capacity of up to 18,000 TEUs.
Before this port was declared operational on November 2024, the UCLVs had to go to Mexico’s Port of Lazaro Cardenas or US ports in Los Angeles, Long Beach, and Oakland, where the cargo would be re-routed to South America via smaller cargo ships.
Not only was this a costly and time-consuming affair, but it also accorded the US a significant degree of control over the transshipment process.
The Chancay Port, however, gives Chinese vessels the power to ignore the American and Mexican ports completely, making the trip from China's Guangzhou Port to Chancay a 25-day affair (from the earlier 35), and cutting travel costs by 20 per cent, according to the report.
The report added that the Peruvian port is expected to handle 1-1.5 million shipping containers in its first year, with the goal of reaching 3.5 million containers annually. While this figure is much smaller than the American ports' capacities, the problem for the US lies in how Chancay could polarise maritime traffic away from it—not only Chinese vessels, but also vessels from other nations that might dislike US control over their shipments.
"This will further make it easier for the Chinese to extract all of these resources from the region, so that should be concerning," Army General Laura Richardson, who heads the US Southern Command, was quoted as saying by The Wall Street Journal.
“Wait until the port of Chancay in Peru gets connected to Brazil. That’s going to be a wake-up call for all of us ... If you’re not tracking that, just Google it. It’s a big deal," warned Erik Bethel, a former US representative at the World Bank, as per a South China Morning Post report.
This is likely not far from the truth, as the Peruvian Port has had many other Latin American countries scrambling to use it, what with Brazil and China being a major influence in the BRICS bloc that Trump has vocally opposed in the past, and with half of the countries in South America receiving a 15-40 per cent tariff rate.
In fact, Peru is not the only country that China has an eye on. Ecuador's exports—especially fresh fruits and seafood—are important for Beijing, because the Chancay Port enables these exports to be shipped faster, cutting costs.
Keeping geopolitics aside, even language offers a vital clue into China's attempts to wedge itself into the equation between the Americas.
The phrase, "from Chancay to Shanghai”, has become well-known, even among locals in China and Peru, says a Global Times report.