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Why should we be concerned about China's involvement in Peruvian ports?

Peru awarded the construction of the New San Juan de Marcona Port Terminal to the Chinese company Jinzhao on March 22, 2024 in a 30-year concession with an estimated investment of $405 million. The expansion of Chinese influence in Latin America (LAC) is evident in participation in the management of key ports, such as Ensenada, Manzanillo, Lázaro Cárdenas, and Veracruz in Mexico, Freeport in the Bahamas, Kingston in Jamaica, Balboa and Colón in Panama, Paranaguá in Brazil, and Buenos Aires in Argentina.


In late March, the Peruvian government, through the Private Investment Promotion Agency (ProInversión), awarded the New San Juan de Marcona Port Terminal project, in the Ica region, to Chinese firm Jinzhao Peru Port Terminal for its design, financing, construction, operation, and maintenance.


Work on the mega-port is expected to begin in late 2025 or early 2026, after an estimated investment of $405 million, ProInversión indicated.


Photo: NEW PORT TERMINAL OF SAN JUAN DE MARCONA

Jinzhao Peru Port Terminal, part of the Chinese conglomerate Zhongrong Xinda Group, dedicated to the production of carbon chemicals, will obtain a 30-year concession to operate the port of Marcona from the signing of the contract, Peruvian daily Construyendo, dedicated to construction, reported. This port is expected to become the third largest port in the country, after Callao and Chancay, ProInversión said.


“China seeks to have control over global connectivity, to ensure its access to strategic markets, raw materials, and to increase its economic and political influence,” Euclides Tapia, professor of International Relations at the University of Panama, told Diálogo on April 8. “Beijing planned all the details.”


Bribes and rejections


Joel Rosales, mayor of Marcona, expressed his concern about the bidding process seeming favoritism for Jinzhao, highlighting that 90 percent of the local population rejected the environmental impact study that minimized the presence of valuable hydrobiological resources such as sea urchins and seaweed, which will be affected by the project. “Marcona is being undervalued,” he told Construyendo.


“Where Chinese companies participate it leads to the end of opportunities for local companies, creating a situation where only Chinese companies can compete for bids. This scenario speaks to us of corruption,” Tapia said. Jinzhao was the only company bidding for the Marcona port initiative.


Peru’s Public Prosecutor’s Office is currently investigating bribery between public officials belonging to the so-called Dragon Club and Chinese companies, who modified the contracting law to keep local construction companies out of the competition that would also use local labor, Peruvian newspaper El Comercio reported on February 20.


Abuses


China’s increasing involvement in projects worldwide raises concerns about human rights abuses and serious environmental impacts, according to a report by international nongovernmental organization (NGO) Collective on Chinese Finance, Investment, Human Rights, and Environment (CICDHA) in Latin America.


According to the NGO, these violations arise in the absence of effective policies and laws in China to prevent, mitigate, and respond to these abuses committed by its companies and financiers. Under the Xi Jinping administration, Chinese companies have expanded their investment and port construction projects worldwide.


Checkbook diplomacy


One of Beijing’s big port projects in Latin America is the port of Chancay, off Peru’s Pacific coast. This facility is intended to create a direct route to China. The depth of the water in front of the port distinguishes it from other South American ports, U.S. news site Voice of America (VOA) reported.


The construction of the port of Chancay, majority-owned by China state-owned company Cosco Shipping, involves an investment of $3.6 billion, reported Spain’s University of Navarra’s Center for Global Affairs and Strategic Studies (GASS).


However, Chinese investment in projects such as the port of Chancay, raises debates about its “checkbook diplomacy” strategy, which seeks to promote ties in key areas, for its geopolitical benefit. Although attractive to Peru, these projects may involve compromises such as the exploitation of strategic natural resources, GASS indicated.


“This influence is evidence that China has established control in [Peru]. Its economic presence and its impact on the country’s decisions cannot be underestimated,” Tapia said. “Although not absolute, its influence is broad and decisive in decision-making, an aspect that should not be overlooked.”


In addition to these implications, there are internal provisions in China that impact the port operations of its companies abroad, such as the obligation to host the Chinese Navy, GASS indicated. This overlap between economic and strategic interests creates difficulties in international relations, security, and global geopolitics.


Control of ports

The expansion of Chinese influence in Latin America (LAC) is evident in participation in the management of key ports, such as Ensenada, Manzanillo, Lázaro Cárdenas, and Veracruz in Mexico, Freeport in the Bahamas, Kingston in Jamaica, Balboa and Colón in Panama, Paranaguá in Brazil, and Buenos Aires in Argentina.

China’s presence goes beyond major ports. In the last decade, Beijing has invested billions in infrastructure across Latin America, Asia, and Africa through its Belt and Road Initiative, which has resulted in the construction of ports, roads, and tactical rail lines in more than 140 countries, the BBC reported.


“This will make it easier [for China] to develop a comprehensive maritime and land connectivity strategy in South America. Its objective is global control, as seen in Africa with the Congo River,” Tapia said. “Its influence extends to multiple regions, including Latin America, where its presence is significant, but often overlooked.”



Source Dialogo Americas
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