U.S. Faces New Challenge: China’s Megaport in South America

By: Alyssa Miller | Published: Jun 14, 2024

In the world’s largest market, fishermen, pelicans, and many resources that shape almost everyone’s daily lives, the United States has held a stronghold over the trading ports along South America’s Pacific coast.

However, the US faces its biggest modern threat: opening a new megaport that could potentially destabilize the US economy even further.

China Builds a Megaport

China is building a megaport in one of the world’s most important trading regions. This port is crucial for trade between countries and has long been under US influence.”

A shipping yard next to a small ship sailing in the port

Source: Kim Parco/Pexels

Now, Chinese leader Xi Jinping is expected to inaugurate the new port at the end of the year, marking his first trip to the continent since the COVID-19 pandemic.

A $3.5 Investment

The $3.5 billion port, funded by Chinese bank loans, will be located 50 miles north of Peru’s capital, Lima. This will be the first port on South America’s Pacific coast that can receive megaships because of its nearly 60 feet of depth.

A wide shot of a shipping yard in a harbor at night

Source: Wolfgang Weiser/Pexels

This depth allows companies to send cargo on these vessels directly between Peru and China, bypassing the need for smaller ships to go through Mexico or California first.

China’s Trade Power Increases

Cosco, a giant in the China Ocean Shipping Group, owns the majority of this megaport, promising to speed up trade between Asia and South America.

Map of China and surrounding countries with a red push pin

Source: Freepik

China is already a top trade partner for most of South America, but this new port could potentially put the US in a tricky situation.

China’s Future With Peru

Soon after the port was agreed to in 2019, Chinese state media was flooded with predictions of Peru’s future as a hub in Chinese-South American trade.

The flag of Peru flying on a flag pole during the day

Source: Wikimedia Commons

“Peru could be the anchor for such a corridor not only because of its geographical location but also because of its relations with China,” said an English-language commentary published in China Daily (via The Wall Street Journal).

In the Importance of This Trade

The importance of this trade cannot be overstated. Customers from as far away as Brazil could shorten sailing time across the Pacific to trade everything from fresh fruit to important minerals.

An image of a large Chinese shipping vessel sailing out to sea.

Source: Wikimedia

South American countries will also benefit, as a flood of cheap Chinese manufactured goods would become available, and new markets, like electric vehicles, could open up.


The US Concerns

“This will further make it easier for the Chinese to extract all of these resources from the region, so that should be concerning,” Army Gen. Laura Richardson, who heads the US Southern Command, said at a Florida International University security conference.

An image of a large cargo ship with many containers on board.

Source: Wikimedia

But this isn’t the only threat that the US is worried about.


The Global Commerical Hub and More

The US worries that the megaport could potentially further China’s control over what might become South America’s first global commercial hub.

An aerial image of a large shipping container yard close to a dock.

Source: Wikimedia

This would allow Beijing to strengthen its influence over the region’s resources, affecting America’s closest neighbors, and potentially leading to the establishment of a nearby military presence.


Not Enough Eyes on Peru

A project by former American officials highlights a diplomatic void that has caused the US to focus on resource efforts elsewhere instead of focusing on Latin American countries.

A photograph of Joe Biden next to an American flag

Source: Wikimedia

Most of the US’s efforts have focused on the Middle East and Ukraine.


The Megaport “Changes the Game”

“This changes the game,” said Eric Farnsworth, a former high-ranking State Department diplomat who now leads the Washington office of the Council of the Americas think tank.

A crowded street filled with pedestrians in one of China’s major cities

Source: iStock

“It really platforms China in a major new way in South America as the gateway to global markets. It is not just a commercial issue at that point, it is a strategic issue.”


Peru Isn’t As Concerned as the US

While Peru has brushed aside the US concerns, Congress in Peru has to approve the arrival of a foreign military.

A blue and red cargo ship carrying containers at sea during daytime

Source: Ian Taylor/Unsplash

“This is a commercial project to promote development,” said Gonzalo Rios, Cosco’s deputy general manager in Peru. “There is nothing to hide here.”


Peru Invites the US to Invest 

Peru’s Foreign Minister Javier González-Olaechea said that the US could step up its investments in the country if it is concerned about China’s growing involvement.

Chancellor Javier González-Olaechea Franco received the document that formalizes the incorporation of the magazine to the LATINDEX repository

Source: Ministerio de Relaciones Exteriores/Flickr

“The United States is present almost everywhere in the world with a lot of initiatives, but not so much in Latin America,” González-Olaechea said in an interview. “It’s like a very important friend who spends little time with us.”