China’s future gateway to Latin America is Peru’s megaport

Lima — China’s most important trading terminal with South America is built 75 kilometers north of Lima, the capital of Peru. Known as the Chancay port facility, the port has an initial investment of $ 1.3 billion with this fishery. It will transform an agricultural town into a regional hub that can redefine shipping companies throughout the South Pacific.

The port will have access to 800 hectares of land adjacent to it, and the operating consortium will develop a logistics and industrial complex with a total investment cost of $ 3 billion. Since 2019, the main stakeholder in the project is the Chinese state-owned company Cosco Shipping Ports (60%), with a 40% stake in Volcan, a mining subsidiary of Glencore in Switzerland.

Cosco is a partner in 52 port projects around the world. But in the Americas, Chancay was the first city to be built in the capital of China. The complex is expected to be fully functional by 2024. Help strengthen China’s influence in South AmericaAnd especially in Peru.

In the last 10 years, this country has Regional core of China’s economic and geopolitical interestsSo far, Chinese companies have invested more than $ 30 billion in Peru, more than just the amount spent in Brazil. The main sector is the mining industry, which has absorbed more than half of these investments and has proven to be an excellent source of mineral resources for China to thrive in the industrial sector.

One of those materials is copper. Peru Mass-produce. The company is the world’s second largest exporter of metals, exporting two-thirds of its total production to China.

The two countries signed a free trade agreement in 2010, restructuring Peru’s trade balance. Since 2014, China has been a major trading partner, followed by the United States. Over the last five years, Peru has sent $ 58 billion worth of exports to China, compared to $ 33 billion in the United States. And in the coming years, given China’s decisive mining interests, the gap will widen further, assuming that the “super cycle” of another commodity is imminent, as some observers predict. There is likely to be.

China is again pursuing a global integration strategy. Belt and Road Initiative, Promotes a global infrastructure in favor of trade. In a conflict with the United States Signed agreements with 138 countries Despite a warning from Washington, the state has warned China that it is at risk of over-debt.

Peru is an important point on this because of its location New silk routeA long example of the Pacific coastline, directly opposite Asia and also a link to Brazil and the Atlantic Ocean. In April 2019, the two states signed a memorandum of understanding to increase investment in the Belt and Road Initiative.

Chancay is undoubtedly very important to China’s global strategy to win its market. In fact, Cosco Shipping Ports joined the Ports Consortium two weeks after the above memorandum and paid Volcan $ 225 million.

Other Belt and Road projects in Peru include the Amazon waterway given to the Chinese state-owned company Sinohydro, which canceled the project before many environmental opposition, and the transcontinental railroad connecting the port of Santos in Brazil and Bayóvar in northern Peru. Is included.

The proximity of Chancay to Callao Port will handle 71% of the country’s shipped imports, reducing congestion there and developing economic activity outside Lima. Cosco estimates that the initial investment will create 1,500 direct and 7,500 indirect jobs and create 300 new businesses locally.

In the first phase, the port ships 6 million tonnes annually, but in response to local concerns, Volcan also said that Chancay is a mining subsidiary and China is the world’s major copper buyer. Nonetheless, it says it will not ship minerals. Instead, the company says it will redistribute goods arriving from Asia, making Peru more competitive with its Pacific rivals such as Colombia and Chile.

Nevertheless, Chancay and the people around it are concerned about the impact on the local economy. Agriculture and fishing, And civil society groups have questioned the project’s building codes and potential environmental and social implications.

They say the complex is located in the city of Chancay and many homes have already been damaged by the explosion to reshape the bay. The project is also expected to affect local wetlands, but the bay ddd, which will allow the largest container ships to enter, will ultimately affect fisheries and marine life.

The consortium made 89 environmental observations in the latest diagnostic report on the environmental impact of the project and checked the document, but NGOs observed omissions and incorrect methods to measure the impact. did. Nonetheless, Peru’s environmental certification body, SENACE, approved the project last December, overcoming opposition from civil society groups.

Much of Peru’s economic growth owes to China’s immense demand for natural resources. Still, the latter investment leaves an indelible mark on many affected communities. This includes social conflicts in mining areas such as Morokocha and Las Bambas, as well as indigenous communities affected by the Amazon Hydroway.

China has promised to increase its investment in Peru, and the Belt and Road Initiative will step up its activities. However, the Peruvian state must insist on higher environmental standards and begin by including the environmental chapter in the current renegotiation of free trade agreements with China.

Both countries need to commit more than financial gain.Long-term perspective is also needed sustainability We aim to improve and protect people’s lives. In particular, the impact of their projects on the community and the environment.