By John Caicedo | 2024-09-06

LIMA -- The Peruvian seaport of Chancay, set to become the largest on the South American Pacific coast, is rapidly progressing towards its promised November completion.

However, concerns over possible hidden intentions of China -- the project's main financier and beneficiary -- are intensifying.

Suspicions grew with the arrival in Peru of seven cranes owned by the Chinese company ZPMC, which is under investigation by the US House of Representatives for allegedly using its equipment to install tools that could be used for espionage.

Those cranes are destined for Chancay.

The US investigation focuses on about 200 Chinese cranes installed in US ports, which the House Committee on Homeland Security and House select committee on China claim contain hidden cellular modems capable of enabling remote communications -- an aspect unnoticed at the time of installation.

Such a scheme could allow Beijing to "not only undercut trade competitors through espionage, but disrupt supply chains and the movement of cargo, devastating our nation's economy," Homeland Security Committee Chairman Mark Green told CNN in March.

In Peru, Mario de las Casas, Cosco Shipping's spokesman, confirmed the cranes' arrival in early June.

He did not address the US allegations, which have received little attention in the Peruvian media.

Cosco Shipping Ports Limited, owned by the Chinese state, is spearheading the development of Chancay with an investment of approximately $3.6 billion.

So far, the terminal has created about 1,300 direct jobs and 8,000 indirect jobs. Once fully operational, it will generate estimated annual revenues of at least $4.5 billion for Peru, a prospect fueling widespread enthusiasm.

Situated about 80km north of Lima, the port is over 90% complete and is on track to open in November.

It is expected to be inaugurated in the presence of Chinese President Xi Jinping, who will visit Peru that month for the Asia-Pacific Economic Cooperation Forum.

Operations are anticipated to commence in 2025.

Lima hopes that Chancay will emerge as a major hub for commercial, industrial and transportation development, boosting trade not only for Peru but also for neighboring countries looking to expand their trade with Asia, particularly with China.

Brazil could potentially become involved in the project, as the Peruvian government has announced plans to connect the port with another major initiative -- the Bioceanic Corridor.

This corridor will link Brazil and Peru by road through the Amazon.

It would give Brazil access to the Pacific and offer Peru a route to the Atlantic.

Geopolitics

This development involves not just trade and economic considerations but also significant geopolitical implications, say analysts.

The scale of China's investment in Peru, almost $30 billion, may explain the increasing allegiance of some Peruvian business leaders and politicians to Beijing.

During his visit to Lima on August 28 and 29, US Under Secretary of State for Economic Growth, Energy, and the Environment Jose Fernandez highlighted that Chinese investments in other countries serve as key instruments of Beijing's foreign policy.

Washington's warnings are not intended to deter Peru or other countries from engaging with China, as the United States itself maintains "significant relations" with Beijing, said Fernandez.

"We aim to enhance our own offerings by comparing them and encourage any host country to do the same with other proposals," he stated during a meeting with journalists on his visit.

Among the business advantages highlighted by the United States, Fernández noted that it partners with responsible companies -- a subtle reference to ongoing concerns about Chinese companies' environmental practices and social responsibility.

"Our offer comes from companies that comply with the law, adhere to labor regulations, follow best environmental practices and do not force communities to choose between ecological disaster and economic growth. We believe this represents a strong offer," stated the official.

"Our trade is a source of pride because it goes beyond mere extraction and export. It creates jobs and brings advanced technology," he said.

The United States, because of its political and economic model, cannot compel its companies to pursue specific projects for geopolitical reasons, he added.

In contrast, China's centralized state structure, where most companies are state owned or closely aligned with the Chinese Communist Party, allows for such influence.

Chancay represents a beacon of hope for Peruvians, yet it also raises concerns about granting the Chinese a license to misbehave.

Residents of the affected area are wary because of the historical record of Chinese companies, which often abuse the environment and workers' rights.