Chancay megaport magnifies China’s presence in South America – Asia Times

The fresh deep-water port at Chancay, northeast of Lima, is open for business, signaling the start of a new era of effective, high-capacity transport between China and Peru, with a link to Brazil across the Andes. The US military and corporate managers are being driven out of their comfort zone by this, but they have nothing to sell and no way to stop it.

However, Caltrain, the rail services operating between San Jose and San Francisco, has sold its ancient diesel trains to the city of Lima. Caltrain itself has gone electronic.

On November 14, Xi Jinping, president of China, Xi Jinping and President Dina Boluarte of Peru attended the seaport’s opening meeting via video connection from the Lima Government Palace. Xi was also there to attend the annual APEC ( Asia-Pacific Economic Cooperation ) summit meetings, which began the following day.

The Chancay initiative, which Xi described as” the beginning stage for the creation of a new maritime-land passageway between China and Latin America and the connection of the Great Inca Trail,” was wax poetry.

Built by COSCO ( China Ocean Shipping Company ) and Peruvian mining company Volcan over the past three years, Chancay port has a maximum depth of 17.8 meters, deeper than Peru’s main port of Callao. The largest vessel boats in the world will be able to control them thanks to this.

Financed by Taiwanese businesses, with total funding exceeding$ 3.5 billion, Chancay is 60%-owned by COSCO. More than 8, 000 careers are expected to be created. Annual income is projected to reach$ 4.5 billion.

Starting at 1 million TEUs ( twenty-foot equivalent units ), the port’s annual throughput is scheduled to rise to 3.5 million TEUs when all the facilities are completed, making it the premier deep-water port on the west coast of South America.

In addition to the port, a warehousing, business, and industrial park will benefit both foreign investors and overspending in the crowded Lima-Callao area. According to reports, BYD is interested in setting up an automobile assembly grow it.

By eliminating trans-shipment via Manzanilla, Mexico, or Long Beach, California, Chancay may decrease travel time to and from China by more than a fourth, from 35 to 23 time, while reducing overall shipping costs by an estimated 20 %. Chancay is more than 4, 500 km from Manzanilla and more than 6, 600 km from Long Beach.

The Chancay port is fully automated, with Huawei’s 5G wireless control equipment, driverless electric container trucks, and unmanned cranes manufactured by Shanghai Zhenhua Heavy Industries ( also known as ZPMC). The bulk of the equipment is imported from China. BYD pickups are used by engineers to circle the port.

The port is connected to the north-south Pan American Highway, which passes through Cuzco, Porto Velho in the upper Amazon basin, and Sao Paulo and Porto de Santos on the Atlantic coast, and then travels to Brazil via the southern interoceanic highway.

In a new era, Xi claims,” We are witnessing the establishment of a new land-maritime corridor between Asia, Latin America, and the Caribbean.”

With this megaproject, Boluarte stated,” We are beginning a transformation that will strategically project us in the Asia Pacific region while consolidating our position as a top-notch technological and industrial logistics hub.”

This bothers the Americans. Chancay was built by the Chinese in what they refer to as their “back yard” and is also technologically advanced than any US seaport. From their perspective, it could turn out to be a strategic nightmare.

General Laura J. Richardson, until recently head of the US Southern Command, has warned that the Chinese navy might use Chancay at some time in the future. The risks to Peru are “at multiple levels,” according to professor Evan Ellis of the US Army War College. The Chinese are reaping the benefits of their abundant resources and geographic position, but risk number one is that they do not.

COSCO has the exclusive right to run Chancay for 30 years thanks to the Peruvian government. Although Peru’s minister of transportation claims that Chinese capital will be the same as American or British capital, Ellis calls this “previously unthinkable and against the very essence of Peru’s assertion of sovereignty over its own ports.”

In any case, Peru acquires a port that it is unable to construct on its own, which should result in significant increases in trade with China and Brazil. Additionally, goods are anticipated to be transported to Chancay by Ecuadorian and Chilean vessels for later shipment to Asia. Additionally, the Panama Canal would be bypassed by a proposed Brazil-Peru Transcontinental Railway that would travel to Chancay.

China is already Peru’s largest trading partner, ranking first in both exports and imports, and Chancay should expand its lead. The US ranks second, with Canada, India, South Korea, Japan, Chile, Spain, the Netherlands and Brazil well behind individually but ahead of the US in the aggregate. In 2023, Peru’s exports to China were 2.5 times its exports to the US.

Fruit were on board the first ship to travel from Chancay to China. Other Peruvian exports, including fish products, iron ore and copper, plus agricultural products from Brazil, will follow. Imports from China include autos and tires, computers and other electronic equipment, clothing and toys. How will this benefit Peru and its neighbors? It is the US that might not benefit.

Peru is a member of the CPTPP ( Comprehensive and Progressive Agreement for Trans-Pacific Partnership ), the free trade agreement put together after the US withdrew from the original TPP ( Trans-Pacific Partnership ) in 2017. The other members of the CPTPP are Japan, Vietnam, Malaysia, Singapore, Brunei Darussalam, Australia, New Zealand and, in the Americas, Chile, Mexico and Canada.

During Xi’s visit, Peru’s free trade agreement with China was strengthened. As a result, Peru’s foreign minister told Reuters, trade between the two countries should expand by at least 50 %. Xi was accompanied to Lima by 400 Chinese business representatives. Like most of the Asia-Pacific, Peru is committed to expanding international trade and investment, while the US retreats into protectionism.

If, as some Chinese commentators and US trade hawks fear, Chancay is used to dodge tariffs by assembling or refining Chinese goods for onward shipment to the US, then the US has a free trade agreement with Peru, which incoming president Donald Trump might override. There is no reason to believe that Peru would be any different from the US, which has already done this to Mexico. However, focusing on it detracts from Chancay’s significance and purpose.

Even if it had wanted to, the US could n’t have built Chancay. It simply does not have the required expertise. The International Longshoremen’s Association ( ILA ) is fighting tooth and nail to keep it that way because none of the world’s most advanced ports are located in the US.

As reported by The Wall Street Journal, ILA President Harold Daggett and Executive Vice President ( and son ) Dennis Daggett told the union’s rank and file in September that” the ILA does not support any kind of automation, including semi-automation”.

The Yangshan Deep-Water Port in Hangzhou Bay south of Shanghai is ranked first by the World Bank’s” The Container Port Performance Index 2023: A Comparable Assessment of Performance Based on Vessel Time in Port,” which is based on this perspective. The Port of Salalah in Oman, the Port of Cartagena in Colombia, and many other ports outside the US also come first. The most efficient US port, the Port of Charleston, South Carolina, ranks 53rd.

The US government views the automated ZPMC cranes as a cyber threat in particular. Last February, as reported by Material Handling &amp, Logistics, Rear Admiral John Vann, head of the Coast Guard cyber command, noted that Chinese ship-to-shore cranes “account for nearly 80 % of cranes at US ports. By design, these cranes may be controlled, serviced and programmed from remote locations”.

Why were there so many Chinese crane installations before he pointed out that Admiral Zain and others are concerned about the cranes being shut off during the war, paralyzing the US economy? Almost needless to say, the Chinese embassy in Washington, DC, called this paranoia.

The Biden Administration made plans to spend more than$ 20 billion on port security, including replacing Chinese cranes with American-made cranes by Japanese shipbuilding and engineering firm Mitsui E&amp, S.

Efficient, computerized remote control is, of course, key to building a fully automated port. Huawei noted that it optimizes loading and unloading and manages each piece of equipment while lowering costs and reducing energy by referring to the Smart Port Solution it created with China Mobile and the Port of Tianjin.

The Chinese are bringing this to South America, and the US would like to, but probably cannot, prevent it. The US is, however, doing its bit for Peru.

For less than$ 6 million, Caltrain announced on November 15 that it had sold 90 passenger cars and 19 diesel locomotives to the Lima municipality. The retired trains, according to the article,” will enable thousands of riders to benefit from a new regional commuter rail line that significantly reduces automobile traffic and greenhouse gas emissions.” &nbsp,

Michelle Bouchard, the executive director of Caltrain, traveled to Lima to celebrate this agreement at the APEC summit. Back in California, Caltrain was already operating what it calls a” 100 % renewable, zero-emission service with high-performance, state-of-the-art electric trains”.

The retired but still useful railroad cars, which Caltrain Chair Dev Davis describes as “hold a special place in the heart of train enthusiasts,” appear to be for sale in Lima. Still, the juxtaposition with Chancay is unfortunate.

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