The mainland spent $1.3 billion to build the port of Chancay in Peru, which is expected to be completed in November this year.
But no one could have imagined that when the project was about to be completed, Peru suddenly turned around and filed a lawsuit to cancel COSCO Shipping's exclusive right to operate the project in Chancay Port.
Why was the Chancay Port built?
In 2023, the mainland will export 1,723.68 billion yuan to South America, a year-on-year increase of 2.3%, which is another major emerging export market in the mainland after Southeast Asia, Europe and the United States.
With a population of more than 30 million, Peru is located in the middle of the west coast of South America, with a superior geographical location and rich in natural resources such as minerals and forests, Peru is China's fourth largest trading partner in South America.
In 2023, the bilateral trade volume between China and Peru will be 37.691 billion US dollars, Peru will export a large number of copper, iron and zinc resources to China, while China will export textiles, automobiles, electromechanical and other countries to Peru, China has become Peru's largest trading partner for nine consecutive years, as early as 2019, the two sides signed a memorandum of cooperation on the "Belt and Road" and announced the joint development of related industrial projects.
Peru is close to the east coast of the Pacific Ocean, has more natural bays, and has built a lot of excellent ports in the historical development, except for a small number of ports invested and operated by foreign capital and private enterprises, with excellent infrastructure, the remaining ports are responsible for state-owned units, the equipment is simple and outdated, the loading and unloading efficiency is low, and the low-level ports seriously restrict the development of Peru.
The Chinese government has been advocating the Belt and Road Initiative, so the governments of China and Peru hit it off and announced the joint development of the port.
The main port cities of South America, such as Rio de Janeiro in Brazil and Rio de Janeiro in Brazil, are all on the Atlantic coast, and to reach these cities from the mainland, you need to bypass the Strait of Magellan at the southern tip of South America or cross the Panama Canal at the junction of South and North America, and the journey is more than 45 days.
Landing at a port on the west coast of South America and switching to a direct destination by rail can save time and money, as well as facilitate the replenishment of passing ships.
The West Coast of South America lacks high-quality deep-water ports, and the largest port in Peru, the Port of Callao, with a cargo throughput of 5 million tons, cannot dock large containers, and has been built for a long time, with limited space and serious congestion, which can no longer meet the heavy freight demand.
Therefore, the port of Chancay, which is 80 kilometers away from the capital of Peru, is selected as the new development port, and the new Chankai port can stay container ships of various tonnages, and will become the largest deep-water port in South America, providing transit and replenishment for mainland ocean-going trade ships, and greatly reducing the time of cargo voyages, starting from the mainland to South America, and shortening the sailing time of cargo ships by more than 10 days.
Development of the Port of Chankay
In January 2019, COSCO SHIPPING Group reached an agreement with Peru that COSCO SHIPPING invested 1.3 billion yuan to account for 60% of the shares, planning to process 1.5 million TEUs and 6 million tons of cargo annually, the project started in 2011, and the first phase of the project is expected to be completed by the end of 2024, with a total annual throughput of 1 million TEUs.
In addition, the project also includes a 1,100-hectare supporting industrial logistics park, which has been joined by a number of Chinese enterprises such as China Railway, China Communications Construction and China Harbor Engineering.
Chancay Port will be the first port managed and operated by China in South America, the gateway port facing the Pacific Ocean in South America, and a symbol of friendly economic and trade exchanges between China and Peru.
With the construction of the port of Chancay, a large amount of capital, talents, and materials have poured into Peru, providing 1,500 direct jobs and 7,500 indirect jobs for the local area.
The Peruvian government is planning to set up an exclusive economic zone around the port, jointly develop it with Chinese enterprises, and launch a large number of cooperation projects to effectively promote Peru's economic and social development.
The arrival of the Chinese side has directly benefited the lives of tens of thousands of local people, and the Chinese construction personnel have provided construction technology training for Peruvian workers free of charge, and cultivated a group of port construction talents with excellent professional quality.
Chinese enterprises have taken the initiative to help students repair and strengthen classrooms, renovate houses in communities, repair public roads and other projects, and carry out public welfare activities such as condolences to the elderly and widows, community public welfare medical care, mental health counseling, etc., which have greatly improved the living and living conditions of the local people, and have been praised and recognized by the local people.
In 2022, when the volcano erupted in Tonga, Chinese companies actively participated in the rescue of penguins, seals and other species, effectively protecting the local marine biological environment, and making contributions to local environmental protection.
The port of Chancay will not only build Peru into the largest cargo distribution center in South America, but also drive the maritime trade of Peru's neighboring countries, such as Brazil, Bolivia, Chile and other countries.
At present, the governments of Peru and Brazil have held consultations on the problem of land transportation difficulties, and plan to upgrade the existing roads and build a new railway to facilitate the transportation of Brazilian grains and meat to Asia through Peruvian ports, which will greatly promote the overall economic development of South America and enhance Peru's international status.
Recklessly tearing up the agreement
The Chachay Port project is a key project of China's Belt and Road Initiative in South America, carrying the friendship between China and Peru and aiming to turn Peru into a hub and bridge between South America and Asia.
Ignoring China's interests and unilaterally announcing the tearing up of the agreement, Peru has politically offended China, the five permanent powers of the United Nations, abandoned the deep friendship between the two countries that have been operating for many years, and economically offended China, the largest trading partner, causing huge economic losses and losing its own credibility, making other countries and international capital question Peru's security, stability and reliability, and unable to gain a foothold in the international market. By all accounts, it is undoubtedly picking up the sesame seeds and throwing away the watermelon.
The reasons for Peru's actions are complex, with many speculating that China's growing influence in Latin America may have been a cause for concern among a superpower as trade with South America flourished.
Moreover, a large number of ships go directly to Peru, reducing dependence on the Panama Canal, which will also reduce transit through the United States, get rid of American restrictions, and also cause losses to the American economy.
Second, it may also be the huge interests of the Peruvian side's red view of the port operation, the mainland's foreign aid projects generally focus on long-term development, short-term interests are not the focus, Peru wants to expand revenue, take advantage of the imminent opening of the port, force China to make concessions, create public opinion momentum to increase its own bargaining chips.
Of course, there may also be other factors, such as the recent crisis in the Peruvian cabinet, the old and new forces are in full swing, and it is also possible that the construction of the port of Chancay will be implicated.
epilogue
After the announcement was issued, the Peruvian side explained that it only took back the exclusive right to operate the port, and did not involve anything else, and the port was still under construction by the Chinese side, and the incident was still under further consultation.
Bibliography:
Economic and Commercial Section of the Embassy of the People's Republic of China in the Republic of Peru. China has been Peru's largest trading partner for nine consecutive years
People's Daily.2024.3.17 Edition 003 Chinese enterprises undertook the construction of the Peruvian Chankai Port Project to promote local economic and social development