When U.S. officials are asked about China, the discussion usually turns to Taiwan or tariffs. But another threat posed by the Chinese government has grown in recent years, and it can be seen closer to home in Latin America. A great example is the newly opened deep-sea megaport in Chancay, Peru.
I don’t think the opening of ports is something the United States should worry about. However, this port is 60% owned by COSCO Shipping, a major Chinese state-owned company, and has exclusive operating rights.
Changkai Port is a big win for Beijing. This will cut the time it takes to transport goods between China and South America by about 10 days, helping the Chinese government develop the continent’s resources and bring exports from solar panels to electric cars to the region. It is expected that flooding will become easier and more cost effective. . These benefits will be further enhanced by a planned rail line linking Chancay to Brazil, China’s largest trading partner in South America.
Peru’s government hopes the new port will capitalize on China’s growing trade with the region and become, in the words of one Peruvian official, “the Singapore of Latin America.”
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However, this gamble comes with risks. Some Peruvians worry that the government is giving China too much influence. It is unclear how COSCO was able to obtain exclusive operating rights in violation of Peru’s National Ports Law. The law was amended to legalize the agreement earlier this year after Lima’s government sought to override the exclusivity clause, resulting in COSCO threatening to withdraw from the nearly completed project.
This is not good for Peru, nor for the United States, which is expanding its influence in its own backyard. But Washington hasn’t given Lima a better alternative. Peruvian authorities reportedly spent years seeking financing for the port of Chancay until a consortium of Chinese banks agreed to help in 2019.
It is easy to dismiss China’s infrastructure development based on the Belt and Road Initiative as “debt trap diplomacy.” COSCO’s exclusivity clause lends credence to this view. However, this initiative is an effective diplomatic tool because it provides what developing countries need. Governments are under pressure to address infrastructure gaps and provide economic opportunities for their citizens. They often distrust China and desire a US relationship with their compatriot, but the US is not meeting their needs and China is keen to fill the void.
A recent estimate from AidData found that China’s infrastructure projects in Latin America are worth more than $286 billion, from subways to hydroelectric dams. This figure is rapidly approaching the country’s investment in Africa.
U.S. defense analysts are concerned that China could exploit this infrastructure to gather intelligence and, in the case of Chancai, host Chinese naval vessels.
While these concerns are not unfounded, what is equally concerning is the influence and influence these projects will have on the Chinese government in America’s backyard. China is struggling to win over people’s hearts and minds in an effort to delegitimize America’s global leadership. It enjoys considerable goodwill among governments desperate for economic development and political support on the international stage, neither of which the U.S. government is willing to provide.
Latin America may not be as high on China’s priority list as its Indo-Pacific neighbors, but the region’s unmet infrastructure needs make it ripe for exploitation and its proximity to the United States makes China It has a strategic value that the government wants to exploit.
If China were to accumulate enough influence in the region to create a serious threat that the United States would have to deal with in its own backyard, China would will have greater freedom to pursue their ambitions in Asia.
Threats from extra-regional powers led the United States to adopt the Monroe Doctrine in 1823. In a time of increased Chinese interference, the U.S. government would be wise to revive the spirit of its principles by engaging more effectively in the Western Hemisphere.
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Washington cannot stand up to Beijing by continuing to lecture Latin American countries about an ideology of “diversity, equity, and inclusion” that does nothing to feed or employ local populations. I can’t. It’s also not enough to simply preach about the dangers of doing business with China or try to force us to take sides. The United States needs to rethink its economic engagement with the region to address the needs that make countries hesitant to rely on Beijing in the first place.
This is not a call for charity. China does not give out alms, and neither does the United States. The United States is already the largest source of foreign investment in Latin America. This investment needs to be further channeled into infrastructure and other areas that promote regional economic and social development.
The US government cannot induce private investment as well as China. But while U.S. policy played a key role in encouraging companies to flock to China in the 1990s and 2000s, similar efforts do not seem to be taking place in this hemisphere.
It’s true that Latin America is not an easy place to do business, but neither was China when multinational companies started expanding into Latin America. Now, the region appears poised to play a key role as companies seek to decouple from China and calls for “near-shoring” and “friend-shoring” their supply chains proliferate. China seems to think so, too, with some Chinese companies, including electric car maker BYD, already building factories in the region.
The U.S. government cannot afford to sit idly by as Beijing gradually gains control of its traditional sphere of influence. Although the United States does not have the ability to compete one-on-one in infrastructure development, we will do what is necessary to reassert our leadership in this important region by integrating our approach with allies and partners around the world. Can be done. But we must start acting now.
