The Chancay port in Peru has cut maritime transit time for cargo between Peru and Asia by roughly 15 days since it opened, and in its first year of operation it moved more than 286,000 TEU while generating over 939 million soles in customs revenue, according to a column by guest writer Antonio Pagan published in La Republica.
Pagan, a researcher at the Center for Studies on China and Asia-Pacific (CECHAP) at the Universidad del Pacifico, wrote that the port's results have exceeded initial expectations, but said the economic gains are not the only factor shaping how Chancay is viewed.
Ownership and military concerns
The Chinese state-owned company COSCO Shipping Ports holds a 60% stake in the port, with the Peruvian firm Volcan owning the remaining 40%, Pagan noted. He said that because COSCO is a state enterprise, it operates according to political as well as economic logic, and has ties to the Chinese military.
Pagan wrote that a frequent argument raised about the port is its possible military use by China, since it meets the conditions needed to receive the largest ships in the Chinese navy. He said that if this happened during a future conflict between China and the United States, the consequences for Peru could be serious, potentially even making it a party to the conflict.
However, Pagan argued that several factors make this scenario unlikely. He pointed out that Peru's Congress would need to authorize the reception of foreign troops and could refuse to do so, and that the port would have limited strategic value in a conflict given its distance from the likely theater of operations, presumed to be around the Taiwan Strait, as well as how easily it could be destroyed.
A regional logistics hub
On the commercial side, Pagan wrote that the port has the potential to turn Peru into a regional logistics hub. He noted that almost half of the cargo handled during the port's first year involved transshipment with neighboring countries.
Pagan also said Chancay could further deepen Peru's economic relationship with China, which already accounts for 38.5% of the value of Peruvian exports. He said this brings new economic opportunities for Peru but also increases its exposure to swings in the Chinese economy and could narrow its room to maneuver in the event of disagreements with Beijing.
Contrast with the United States
As South America's first smart port, Pagan wrote that Chancay can reinforce a Chinese narrative built around cooperation, modernization and mutual benefit. He said the contrast with the United States is clear, since over the past year and a half Washington has imposed tariffs on Peru, as it has on other economies, despite the two countries having a Free Trade Agreement in place.
Pagan also raised the possibility of future retaliation from Washington against Peru for having allowed COSCO to take majority control of the port.
Balancing two powers
Pagan described the resulting situation for Peru as highly complex. He wrote that giving in to potential US pressure could damage Peru's relationship with China, while resisting it would carry the risk of retaliation from Washington.
He argued that the best way for Peru to protect its interests is to maintain a positive political and economic relationship with both powers, rejecting the idea of choosing a side or fully aligning with either one. Instead, he said, Peru should cooperate with both countries according to its own interests and the specific issue at hand, without giving up the opportunities that come from keeping economic relations open with all parties.
Pagan concluded that the new international situation will require considerable political skill and shrewdness from Peru. He said the challenge for the country will be to turn its position between the two major powers into a source of opportunity, while avoiding letting that same position become a vulnerability.
