According to a CNBC report citing remarks by experts, Beijing is ramping up efforts to establish robust economic bonds with Latin America, aiming to increase trade and gain a stronger foothold in the resource-laden region.
During a recent visit to Peru, Chinese President Xi Jinping inaugurated a Cosco-owned major port that cost $3.5 billion, setting up a direct shipping route between Shanghai and Chancay, a Peruvian city.
This move comes in light of slower economic growth in mainland China, prompting its government to escalate its export efforts, as explained by William Reinsch, Scholl Chair in International Business at the Center for Strategic and International Studies. He noted that Beijing was set on penetrating markets not yet fully explored, including the Western Hemisphere rich in commodities, agriculture, and minerals that China needs.
Under the Belt and Road initiative, the Chancay port slims down shipping times from Peru to China by 23 days, thus reducing logistics expenses by approximately 20%, as mentioned by Chinese Foreign Ministry spokesperson Lin Jian.
Experts believe that the development of the port amplifies China’s status as a primary trade associate of Peru and the broader Latin America, effectually replacing the U.S.
According to Juan Carlos Ladines Azalia, a professor of international affairs and international trade management at Peru’s Universidad del Pacífico, the Chancay port is a significant milestone altering the logistics dynamics of Latin America, potentially spurring more Chinese investments into South America as Beijing continues to displace traditional regional partners like the U.S. and Europe.
In addition, countries expected to be beneficiaries of the new port include Brazil, a key buyer of Chinese goods and one of the largest exporters of agricultural commodities and iron ore.
Carlos Cardenas, Head of Latin American Insights and Analysis at S&P Global Market Intelligence, believes the port has reignited discussions on the possible building of a “bioceanic corridor”—a railway connecting Peru’s Pacific coast and Brazil’s Atlantic coast that could expedite exports to Asia through Chancay.
