China’s Xi Unveils Megaport in America’s Backyard Amid US Concerns

Chinese President Xi Jinping and Peruvian counterpart Dina Boluarte on Thursday inaugurated a new $1.3 billion mega port in Peru’s coastal city of Chancay that was built and funded by Chinese shipping giant Cosco.

While taking part in the ceremony virtually with Boluarte, Xi lauded the venture as a gateway connecting Asia and Latin America and an important source of revenue and jobs for the Andean country, Chinese state media reported.

Chancay is touted by Xi as South America’s first green and smart port. Roughly 40 miles north of the Peruvian capital of Lima, the harbor is expected to reduce shipping times between the countries from 35 to 25 days by allowing ships to bypass port stops at Manzanillo, Mexico, and Long Beach, California.

However, a Chinese state-owned enterprise running a deepwater port so close to U.S. soil has Washington worried. The project marks another significant expansion of China’s presence in a part of the world the U.S. considers its sphere of influence.

“On the big geostrategic issues, the Peruvian government is not sufficiently focused on analyzing the benefits and threats to the country,” an anonymous U.S. official told the Financial Times late last year.

U.S. Southern Command chief Army General Laura Richardson characterized China’s infrastructure projects across the Caribbean, Central and South America as a security threat. “They’re on the 20-yard line, in the red zone to our homeland,” Richardson told Newsweek last year, referencing China’s closer proximity.

In addition to being a large industrial complex, the harbor boasts 15 berths capable of accommodating some of the world’s largest cargo ships—and People’s Liberation Army (PLA) warships.

“Since Southern Command has responsibility for thinking about what U.S. adversaries could do in—or from the region— in time of a war, it is perfectly reasonable to identify a risk that a private port exclusively operated by China’s Cosco in the Western Hemisphere, could be used to support PLA Military operations against the U.S. in time of a war with the People’s Republic of China,” Evan Ellis, professor of Latin American studies at the U.S. Army War College, told Newsweek.

He noted Beijing’s doctrine of civil-military fusion, which allows the Chinese military to have access to everything civilian organizations, including companies, possess. He cited Cosco’s past support for PLA Navy operations, citing the evacuation of civilians from Libya in 2011.

Ellis also pointed out that Hambantota, the second-largest port in Sri Lanka and one leased to China Merchant Ports for 99 years, has received and resupplied Chinese warships, despite the lack of a military basing agreement.

Parsifal D’Sola, CEO of the Colombia-based Andres Bello Foundation, a nonprofit research center on China-Latin American ties, also pointed out the geopolitical impact of the port.

“The People’s Republic of China has a well-documented history of leveraging economic influence—often by restricting market access or halting the purchase of key exports—to advance its interests in other regions, such as Africa and Southeast Asia,” he told Newsweek. “A primary concern is that many policymakers across Latin America and the Caribbean may either be unaware of these potential risks or may downplay or disregard them in favor of economic gains.”

However, D’Sola said concerns China would use the port to ramp up its military presence in the region are “overstated” and that there would be “little strategic advantage” for the East Asian country.

Additionally, Peru would be loathe to compromise its ties with U.S., he said, adding that even countries that are adversarial toward Washington, such as Venezuela and Cuba, would think twice about granting Chinese naval vessels access if it were seen as a threat by the superpower next door.

APAC Summit

Chancay’s inauguration coincides with the Asia-Pacific Economic Cooperation (APEC) forum in Lima, where Xi, U.S. President Joe Biden and other world leaders are gathered to discuss economic collaboration across the Pacific. But as China expands its influence in Latin America, some U.S. officials view the new port with suspicion.

The APEC summit in Lima will wrap up Saturday.

Speaking at a daily press briefing on Wednesday, Chinese foreign ministry spokesperson Lin Jian highlighted China’s growing economic ties with Latin America, with total trade flows last year reaching $489 billion, per the United Nations Economic Commission for Latin America and the Caribbean. He said this figure is projected to hit $500 billion in 2025.

Lin also pointed out that China enjoys free trade agreements with five Latin American nations, including Peru, and that Beijing and Lima have “substantially completed” negotiations on upgrading the deal.

Despite concerns over Cosco’s 60 percent stake in the port, Peruvian officials remain optimistic. Transportation Minister Raul Perez-Reyes assured citizens that the port will continue to operate under the oversight of Peru’s port and customs authorities. “While it is Chinese funding that has brought the port into being, it will operate no differently than if it were a North American or British investor,” Perez-Reyes told AP News.

“We Peruvians are focused primarily on the well-being of Peruvians,” the news agency cited Foreign Minister Elmer Schialer as saying.

Yet not all locals share this enthusiasm. Chancay residents, many of whom rely on fishing, say the project has damaged the local fishing grounds long relied on by the local economy. “I don’t blame the Chinese for trying to mine this place for all it’s worth. I blame our government for not protecting us,” Julius Caesar, a 78-year-old fisherman, told AP.

Newsweek reached out to the Peruvian and Chinese foreign ministries and the U.S. State Department with written requests for comment.