Peru Hosts Giant Chinese Port Amid Ongoing Trade and Security Tensions

Peru’s ambassador in Washington, Luis Miguel Castilla, received a stern phone call in 2015 from the State Department, after U.S. officials learned that a Chinese firm would finance a sprawling new Pacific Coast port project.

Why, they asked, was Peru handing Beijing a strategic foothold in South America?

Mr. Castilla’s answer was blunt: Western investors had already passed.

The port’s Peruvian private sector promoters “came to knock on doors here and in Europe, and no one opened the door,” Mr. Castilla said. “So, any space left behind is space that someone else takes.”

Today, the $1.3 billion Chinese‑backed megaport in Chancay, north of Lima, the capital, has become the most visible symbol of China’s expanding economic presence in Peru.

It is also a key reason the country, which Secretary of State Marco Rubio is planning to visit this week, has emerged as a testing ground for one of President Trump’s core objectives in Latin America: rolling back Beijing’s influence in the Western Hemisphere.

Senior administration officials have warned, while offering no evidence, that Chinese‑financed projects threaten Peru’s sovereignty and, in the case of the port, could give Beijing a military foothold.

But in Peru, Washington’s pressure collides with a stubborn reality. China has become Peru’s largest trading partner and a major investor in mining, energy and infrastructure — a relationship that has helped underpin one of South America’s most resilient economies.

Even the inauguration in July of President Keiko Fujimori, a staunch conservative who has pledged closer security cooperation with Washington, is unlikely to deliver the anti‑China shift the Trump administration seeks.

She has given no indication she will scale back ties to China. In her first speech to Congress, Ms. Fujimori described Peru as a “bridge” between Latin American and Asia.

Over the past decade, Peru has cycled through nine presidents, four impeachments, repeated waves of mass protests, one attempted self‑coup and countless corruption scandals.

Yet it has maintained steady economic growth, low inflation and strong investor confidence, avoiding the debt crises and sharp downturns that have plagued several of its neighbors.

The benefits, however, have been uneven. Millions of Peruvians still live in poverty and rely on underfunded schools and health care.

Experts attribute Peru’s economic stability largely to an independent central bank and successive governments that left economic policy to career economists, insulating it from politics.

In addition, China has become a crucial pillar of Peru’s economy. When the 2008 financial crisis cratered U.S. and European demand for minerals, China’s construction boom continued absorbing Peruvian copper and iron. China eventually surpassed the United States as Peru’s largest trading partner and today buys roughly a third of the country’s exports.

“China has been the perfect partner during these years because they bought everything,” said Eduardo Dargent, a Peruvian political analyst.

Beyond trade, Chinese firms have steadily expanded into sectors Western businesses have retreated from — Chinese state‑owned enterprises have bought Peruvian infrastructure companies from U.S. and European firms. Today, Chinese companies control Lima’s electricity distribution system and play a role in transportation, banking and telecommunications.

Experts describe China as a patient partner, with state‑owned firms that often think on longer timelines than private Western companies under pressure to deliver quarterly profits to stockholders. President Xi Jinping of China inaugurated the port in November 2024, calling it “a new Asia‑Latin America land‑sea corridor for the new era.”

To Washington, however, China’s presence represents something ominous. U.S. officials have repeatedly warned that the Chancay port could eventually provide access for the Chinese navy. After it opened, a Trump administration envoy proposed a 60 percent tariff on cargo routed through Chinese‑controlled ports in Latin America, though it has not come to pass.

“China’s investment advances the Chinese Communist Party’s political agenda abroad, often at the expense of the receiving nation,” the State Department said in a statement. “Through President Trump’s leadership, the United States is working to address risks posed to the security and prosperity of our hemisphere.”

Diplomatic friction escalated this year after a legal dispute erupted over what authority Peru’s transportation regulator maintained over the privately operated port.

“Peru could be powerless to oversee Chancay,” which is controlled by “predatory Chinese owners,” the State Department wrote on X in February. “Let this be a cautionary tale for the region and the world: cheap Chinese money costs sovereignty.”

But Peruvian officials say the port is regulated by the port authority, police, customs, transportation ministry and others.

“We face constant and meticulous oversight,” said Paola Fune, who oversees government affairs for the port.

The Chancay port, operated by the Chinese state‑owned shipping giant COSCO, has reduced shipping times to China from as many as 40 days to 23, port officials say, and is expected to become a major trade hub, increasing Peru’s integration with Asian markets.

The port features autonomous cranes, driverless trucks, remote‑controlled cargo operations and a mile‑long tunnel routing container traffic beneath the city.

Hotels and restaurants are rapidly expanding in Chancay, while universities and health‑care networks have begun buying land for satellite campuses and offices.

Peru’s political and technocratic elite view the port as a major win for the country and bristle at being told by the Trump administration how to manage their commercial relationships.

“They’ve been taking potshots at it, but they can’t make it stick,” said Cynthia Sanborn, a leading China scholar at Lima’s Universidad del Pacífico.

“The U.S. comes along and says, ‘Oh, you’re losing your sovereignty.’ That’s very paternalistic,” Ms. Sanborn said.

Criticism from Washington rings hollow, analysts say, because many Peruvians see a stark contrast between Chinese and American engagement.

While China has poured money into ports, mines and electricity infrastructure, U.S. engagement has focused on security projects paid for by Peru, including a $1.5 billion modernization of Peru’s naval base and the purchase of American F‑16 fighter jets.

“The Chinese are investing in Peru and Peru is giving its money to the U.S.,” Ms. Sanborn said.

U.S. pressure to buy 24 F‑16s provoked widespread criticism over the $3.5 billion cost and the strain on public resources.

“Aren’t there other, more important uses for that money than buying fighter jets?” said Mr. Castilla, now a senior visiting fellow at the London School of Economics.

The tension is visible in the combative posture of the U.S. ambassador, Bernie Navarro, whose sharp rhetoric has alienated Peru’s political class. When it briefly seemed the fighter‑jet deal would fall through, Mr. Navarro wrote on X that Washington would use “every available tool” to promote its interests “if you deal with the U.S. in bad faith.”

Across Latin America, Chinese firms have financed more than 300 infrastructure projects worth over $130 billion, and increasingly dominate sectors like electronics and electric vehicles, said Enrique Dussel Peters, an economist at the National Autonomous University of Mexico.

Washington has treated trade with China as an ideological question rather than an economic necessity for Latin America, he said, and may not recognize what a gargantuan task it would be to try to reverse China’s “massive presence across the Americas.”

“It is as if people think that by making a decision on a Friday we can just make China disappear by Monday,” Mr. Dussel added.

The United States remains a major trading partner for Peru and is the main market for agricultural exports and textiles, sectors that generate far more jobs than some Chinese‑dominated industries.

Mr. Castilla said he agreed with longstanding American complaints about smuggling, intellectual‑property theft and unfair competition from some Chinese firms. But, he added, pressuring countries to choose sides without offering comparable investment alternatives risks alienating allies and pushing countries closer to Beijing.

The United States “is bullying us a bit,” he said.

Yet Latin American leaders — even those closely aligned with Mr. Trump — show no intention of severing lucrative ties to China. They hope their region will benefit from being a battleground for influence between global superpowers.

José Tam, a lawyer specializing in Asian investment and former head of the Peruvian‑Chinese Chamber of Commerce, said Peru welcomes greater U.S. investment.

“What should not really be our problem is the geopolitical aspect,” he said. “As a developing country, what we need is investment, and it’s all the same to us.”

Mitra Taj contributed reporting from Lima.

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