The roughly $3.5 billion deep-water port, set to operate later this year, will give China control of a key gateway to the resource-rich region, where for ten years it has dethroned USA in commercial terms, devouring soybeans, corn and copper.
The terminal will be the first controlled by Beijing in South Americawhich will receive large cargo ships that could head directly to Asia, which means a cut of more than two weeks for some exporters.
Beijing and Lime They hope Chancay will be a new regional export center, both for the copper-rich Andean nation, as well as for farmers in western Mexico. Brazil, whose shipments of soybeans currently travel through the Panama Canal or skirting the Atlantic before heading to China.
“The Chancay megaport aims to turn Peru into a strategic commercial and port hub between South America and Asia”, said the Peruvian minister of Foreign Trade and Tourism, Juan Mathews Salazarwho often jokes that Chancay sounds like Shanghai, the giant Chinese port.
The work is part of the “Belt and Road” initiative that China has been going on for a decade, and poses a challenge to the United States and Europe as they seek to stop China’s rise in Latin America. Beijing’s commercial strength has helped it gain allies and influence in political, financial and technological forums.
The keys to the project
The first phase of Chancay, majority controlled by the Chinese state company Cosco Shipping Portsshould be completed in November 2024. And Chinese President Xi Jinping, who is expected to visit Peru that month for a summit of the Asia-Pacific Economic Cooperation Forum (APEC), could inaugurate the port, said a diplomatic source in Lima.
“It is part of the new Silk Road of China”, said Mario de las Casas, corporate affairs manager of Cosco Shipping, which has 60% in the port. The rest belongs to the local mining company Volcan, controlled by the global firm Glencore.
At the port of Chancay, whose construction 80 kilometers north of Lima began in 2018, an access tunnel shines with white Chinese characters on a red background, while huge concrete breakwaters protect six kilometers of pier.
José Adriano da Silva, a Brazilian agricultural businessman from Acre state who visited the port, said the project will accelerate regional development in western Brazil and that talks between Peruvian and Brazilian officials were underway to resolve land transportation challenges.
The Peruvian government plans a special economic zone near the port and Cosco Shipping wants to build an industrial hub near Chancay to process raw materials that could include grains and meat from Brazil before shipping it to Asia.
The relationship with Uruguay advances
This advance strengthens the relationship between the Asian giant and the region, a decision that could favor commercial connection with Uruguay who is looking for a FTA (FTA) with China.
In the month of November, President Luis Lacalle Pou traveled to China and returned to the country with several objectives accomplished. In political terms, the central issue is the possible signing of a Free Trade Agreement (FTA) with the Asian giant, and the issue was included in the final declaration of both countries.
Specifically, the parties “welcome the completion of the Joint Feasibility Study on a possible Free Trade Agreement (FTA) Uruguay–China”, and based on their conclusions “they reaffirm their willingness to promote the construction of a free trade association.” These concepts – which are in point 9 of the joint declaration – are followed by a mention of the Mercosur: “both Parties are willing to promote dialogue on free trade between the Mercosur and China”.
Uruguay signed several new agreements and protocols with the Chinese government, aiming to establish a Comprehensive Strategic Alliance. According to the doctor in International Relations, Ignacio Barthesaghithis type of alliance reserves China to large countries, so the fact that it has been agreed with Uruguay It is significant and illustrates the relevance that the Chinese government gives to the relationship with the country.
Even so, some businessmen expressed to Ambit that Uruguay has important challenges to advance more trade with China. “It must be remembered that maritime freight China They take between 55 and 60 days, so the possibility of placing fresh products is limited, especially for fruits,” they explained.
One of the signed protocols is linked to the trade in citrus fruits, and enables the export of lemons, in addition to oranges and tangerines, already enabled. “To send these fresh fruits, the logistics have to be very well oiled,” they added. China It is not among the main destinations for Uruguayan citrus fruits, but its importance may increase in the future.
The greatest and most immediate impact will surely occur in the meat sectorfor which China It is the main destination. The reduction of the minimum length of stay in the establishment prior to slaughter (which dropped from 90 to 46 days) will give more flexibility to livestock businesses for the Asian giant. In addition, the authorization of purchases of tripe and booklet (ruminant stomachs) can add about 40 million dollars more per year to the meat processing industry.
Due to the logistical issues described, most of the Uruguayan meat is exported to China frozen, which gives it a much longer shelf life, although sacrificing quality.
Uruguay exported goods to China for about US$1.4 billion in the first 10 months of the year. The figure is 44% lower than that of the same period in 2022, due to the sharp drop in soybean exports (due to the drought) and the drop in the price of meat. To that figure we must add pulp (which leaves from free zones and has China as its second destination, behind the EU), and some other products that leave free zones. Overcome the droughtexports to China should exceed US$3 billion in 2024.
Source: Ambito
