Peru shows the limits of Washington’s anti-China push
By GENEVIEVE GLATSKY
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?
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,” Castilla said. “So, any space left behind is space that someone else takes.”
Today, the $1.3 billion Chinese-backed mega-port 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 Donald 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, Fujimori described Peru as a “bridge” between Latin America 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 healthcare.
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. Chinese President Xi Jinping 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% 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 the social platform 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 healthcare 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. “Peruvians are really proud of that port.”
“The U.S. comes along and says, ‘Oh, you’re losing your sovereignty.’ That’s very paternalistic,” 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.,” Sanborn said.
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