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Xi's plans in Latin America: bring the Chinese threat to the fringes of US shores - Report

With the Biden Administration failing to prevent the port of Chancay in Peru from falling into Chinese hands, the United States should go into high alert mode

Key points

In recent years, China's expansion into Latin America and the Caribbean has been a topic of discussion in major political and economic circles around the world. The reason is obvious: Beijing wants to become the region's largest trading partner and a global leader in financing, construction and operation of maritime terminals.
Twenty-two Latin American and Caribbean countries have joined the Belt and Road Initiative, Xi's signature project aimed at extending Chinese hegemony abroad, as China expands its presence in a region once labeled the "backyard" of the United States. Beijing, in fact, is South America's main trading partner and an important investor in essential projects in the mining, transportation and energy sectors.
Also (and above all) due to strategic mistakes made by the West, China has been able to create a colossal maritime network, woven in a furtive and strategic way to achieve objectives that go beyond simply commercial ones. This maritime network aligns with a strategy known as the “String of Pearls,” which involves positioning ports along key trade routes to protect Chinese trade and expand its influence. Furthermore, by controlling ports, Beijing can monitor the movements of other countries, including US naval activities.
Behind China's civilian infrastructure, there is always the imprint of Chinese military hegemony, and commercial ports are strategically designed for dual use (civilian and military). In fact, most port terminals are concentrated in the Pacific, because China wants to use commercial transport links to open channels through which the military can also pass.
One of the key events of Xi Jinping's trip to Latin America in mid-November 2024 was the opening of the new port of Chancay in Peru. Opened on November 15, this port is a major project that gives China greater control over important shipping routes and trade in developing economies.
China's Cosco Shipping is the sole operator, after Peru withdrew a lawsuit challenging its exclusive status, granting exclusive rights in Beijing with a minimum term of 30 years.
This port infrastructure will also support the Chinese People's Liberation Army's future global operations. Numerous reports have reported sightings of Chinese military personnel in Peruvian port and administrative offices, engaged in activities that go beyond traditional commercial port operations.
China is also present in Antarctica. In December 2022, China Shaanxi Chemical Industry Group, a state-owned energy and chemical company, signed a memorandum with the Governor of Argentina's Tierra del Fuego province for the construction of a multipurpose port in the city of Rio Grande. This company is directly controlled by the CCP.
A 2019 study argues that China should “elevate the security of the ‘Maritime Silk Road’ transportation network to the level of a national strategy [...] by ensuring the safety of maritime traffic in its ports and surrounding waters and actively participating in the governance of global instability.”
In the event of a global conflict, it is entirely feasible for the Chinese government to pressure its port companies to keep host state naval forces in ports or to force them to grant or limit access to valuable shipping lanes. According to Chinese law, in fact, in a possible military mobilization, all civilian assets must be made available to the PLA.
Finally, with access to both poles, China will no longer need the Panama Canal. At that point, it will be able to exploit alternatives that other countries will not have and Beijing will start to create serious problems.

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When Chinese President Xi Jinping began in mid-November 2024 a diplomatic tour in Latin America, his goal was clear: to show the world how China's Belt and Road Initiative was expanding China's influence globally, especially through large infrastructure projects.

This photo taken on November 14, 2024 shows a view of the port of Chancay in Peru. (Xinhua/Li Mengxin)

Twenty-two Latin American and Caribbean countries have joined the Belt and Road Initiative, Xi's signature project to build infrastructure abroad, as China expands its presence in a region once labeled the United States' "backyard."

China is today the main commercial partner of South America and a major investor in essential projects in the mining, transportation and energy sectors.

One of the key events of Xi Jiping's trip to Latin America was the opening of the new port of Chancay in Peru. Opened on November 15th, this port is a big project which gives China greater control over important shipping lanes and trade in developing economies.

This infrastructure is so important that Xi himself, in a letter published in the Peruvian media the day before the inauguration, said: "I will participate in the opening ceremony of the port of Chancay via video link with President Boruarte. The port of Chancay is a major "Belt and Road" project jointly built by China and Peru, and is also South America's first smart port. The first phase of the Chancay Port project can shorten the shipping time from Peru to China to 23 days, saving more than 20 percent on logistics costs, bring Peru $4.5 billion in revenue each year and create more than 8,000 direct jobs."

A crane moves a container at the new megaport being built by Chinese state company Cosco Shipping, which promises to shorten shipping routes to Asia for Peruvian and some Brazilian goods, in Chancay, Peru, October 24, 2024. Reuters

With the Biden Administration failing to prevent the port of Chancay in Peru from falling into Chinese hands, should the United States now go into high alert mode?

Come highlighted, There are serious concerns about China's growing position in the LAC region and the potential dual use of the Peruvian port.

The expansion of China's port network

In recent years, China's expansion into Latin America and the Caribbean has been a topic of discussion in major political and economic circles around the world. And the reason is now clear: China seeks to become the region's largest trading partner and a global leader in financing, construction and operation of maritime terminals.

A study conducted by the US think tank on security and defense, Center for a Secure Free Society (SFS), indicated that the People's Republic of China (PRC) has investments in almost 40 ports in Latin America and the Caribbean (LAC).

Second Liner Shipping Connectivity Index (LSCI), in just two decades the Asian country has increased its maritime connectivity by over 60% and today it is the best connected nation globally.

Photo: Port of Hamburg, Germany (GettyImages)

China's investment in Chancay Port, however, is not an isolated project. China has financed ports in key areas of the world, including the Indian Ocean, the Middle East, Africa, Europe and South America. These ports are located along important trade routes, such as Djibouti (near a vital shipping passage), Gwadar in Pakistan and Piraeus in Greece.

In Myanmar, China's investments in Kyaukpyu Port are a crucial part of its BRI. This port provides China direct access to the Indian Ocean, helping it reduce its dependence on the narrow Strait of Malacca for energy imports. Through Kyaukpyu, China can transport oil and gas directly from Myanmar to Yunnan province, increasing energy security and influence in Southeast Asia. However, there are fears that Myanmar could become too dependent on China due to these large infrastructure investments.

China's network of ports around the world strengthens its control over global trade routes and builds diplomatic ties that give it potential influence over key shipping lanes.

In Djibouti, for example, China's commercial investments have led to the creation of a naval base near a US military base. Although the port of Chancay is currently focused on trade, its location on the Pacific Ocean raises questions about whether it could be used for intelligence or military activities if tensions between the nations increase.

In short, it is one colossal maritime network which, experts assure, was woven in such a stealthy and strategic way to achieve objectives that go beyond economic and commercial ones.

Dual-use ports and security issues

By controlling ports, China can monitor the movements of other countries, including US naval activities. Although China claims these ports are purely for economic purposes, there are cases of Chinese naval vessels using them, suggesting potential military applications. This “dual-use” capability raises security concerns, particularly in regions where China has not traditionally been active, and could impact the movements of U.S. and allied forces.

China's network of ports aligns with a strategy known as the "String of Pearls," which involves positioning ports along key trade routes to protect Chinese trade and expand its influence. Ports such as Gwadar in Pakistan and Hambantota in Sri Lanka are examples of economic projects that could also serve military purposes. With the port of Chancay located close to the Americas, there are concerns it could increase China's influence over Pacific trade routes.

Traditionally, the United States has dominated trade routes and military influence in Latin America, but China's recent investments could alter this balance, pushing the world toward a more multipolar order. Ports like Chancay, strategically located on the Pacific coast of Latin America, showcase China's growing reach beyond Asia and highlight the need for the United States to reevaluate its interests in the region.

Therefore, the acquisition of the ports represents a precise Chinese strategy to increase wealth and guarantee constant and direct access to natural resources for national security and the growing industrial sector (think of lithium), it is certain that their possession is enormously valuable for Beijing to project its global military power outwards.

Behind Chinese civil infrastructures, as mentioned, there is always the imprint of Chinese military hegemony and commercial ports are strategically designed for a dual use (civil and military).

This dual strategy is evident if we analyze the geographical position of the port terminals.

Most of the ports are concentrated in the Pacific, because China wants to use commercial transport links to open channels through which the military can also pass. It is, in essence, a strategic route that they are building.

In a possible deployment of the Chinese Navy, all Chinese commercial ports will also be able to serve as military bases.

The United States has responded with initiatives such as the Build Back Better World program, aimed at providing sustainable infrastructure alternatives to the BRI. However, China's large investments in the BRI still exceed these efforts, which could lead Washington to strengthen diplomatic ties with Latin American nations and explore expanded military partnerships.

The spy base in Cuba and control of the Panama Canal

In early June 2022, the extent of the Xi Jinping government's activities became apparent when the United States Government declassified information from its intelligence services, confirming to the world the existence of a Chinese spy base on the island of Cuba.

This move by China reflects the CCP's efforts to increase its influence in Latin America and the Caribbean.

There are fears that the flu will penetrate the region with greater force through the expansion of ports, which, according to experts, brings with it economic dependence, loss of sovereignty and risks to national security.

Experts, in fact, are certain that port infrastructure supports the global operations of the Chinese People's Liberation Army (PLA).

“Through companies operating at ports, Chinese intelligence agencies could monitor any movement of commercial or military vessels which could help China understand where to restrict sea lanes during a potential military conflict or even close the Panama Canal if they wanted to,” he stated R. Evan Ellis, professor of Latin American studies at the US Army War College. Being the main channel for trade between the Atlantic and the Pacific, Panama is therefore highly strategic. Chinese companies, in fact, have invested billions of dollars in that area and today already have two ports on both banks.

Ellis' concerns are the same as those of Panamanians who, despite seeing opportunities for economic development in the Asian country, fear implications of dependency behind these investments.

Eddie Tapiero, Panamanian economist and expert on Sino-Panamanian relations, echoed this fear. “By thinking in a Machiavellian way,” he said, “China could interfere in the port control system. All the infrastructure is Chinese. From the cranes, to the forklifts, to the robots that are used, and this undoubtedly increases the risk of the 'Chinese Military Vision.'" Added to this is the loss of sovereignty for security control and a greater risk of a possible military strategy. “They have the right to restrict any entry, so what do they do inside the ports? It is not known. What if they have an office where they have hackers, I don't know; it's a safety clause that they put in place and now they have to respect it for another 25 years,” Tapiero said, referring to the renewal of the concession contract for the port of Balboa to the Chinese company Hutchison Ports (much discussed and controversial due to alleged corruption). “In that port they do what they want, in 25 years only 3 million dollars have been generated for the country with the justification that the rest was reinvested, and now they give it to them again,” said Tapieri.

It is worth mentioning that the vice president of COSCO Shipping, China's state-owned shipping company, is a member of the Panama Canal Consultative Assembly, a representation that does not fail to raise questions and suspicions.

It is clear that with this office - as with others around the world, including also in Italy - Beijing gets privileged and sensitive information that could be used in the critical moments of a possible economic crisis e/o di military confrontation.

The Port of Freeport in the Bahamas

Another strategic port to highlight in the region with significant Chinese influence is Freeport in the Bahamas. “The Bahamas is very valuable in terms of security and China understands how strategic this area is,” Ellis said.

US Air Force General Glen VanHerck, commander of the US Northern Command, emphasized a Business Insider China's aggressiveness on the island, stating That not only Beijing has its largest embassy in the world there, but that Chinese investment projects in the Bahamas “have access […] to a control, if you will, of our Navy’s testing and training facilities.”

The Peruvian port of Chancay

One of the ports in which China is investing the most is the multi-purpose port terminal of Chancay in Peru. The mega project - located about 108 kilometers from Lima, with an investment of 3.5 billion dollars - is managed by the state shipping company COSCO Shipping. This port will be the first Chinese logistics center in South America.

Chinese President Xi Jinping formally opened this massive deep-water port on Thursday, November 15, 2024, at the start of a week-long trip to South America.

Xi and Peruvian President Dina Boluarte participated via video link in the opening of the port and signed an agreement to expand an existing free trade agreement.

Xi said Chancay was the successful start of a "21st-century Maritime Silk Road" and part of China's Belt and Road Initiative, its modern revival of the ancient Silk Road trade route.

China and Peru established a comprehensive strategic partnership in 2013. Beijing is currently the main commercial partner, Peru's export market and source of imports.

With China's growing demand for agricultural products and metals from Latin America, Xi then attended the Asia-Pacific Economic Cooperation summit in the capital Lima, before heading to the Group of 20 summit in Rio de Janeiro, where he also made a state visit to Brazil.

The new Peruvian port "could be used as a dual-use facility, it's a deep-water port," said Gen. Laura Richardson, outgoing head of U.S. Southern Command, which covers Latin America and the Caribbean. "[The navy] could use it, absolutely... this is a script that we've seen play out in other places, not just Latin America."

On this project there are also concerns from local communities and environmentalists about the impact of such a large project. Some worry about the potential damage to the environment and the risk that such investments could put countries into debt, forcing them to make economic or political compromises. While Peru's current economic stability reduces the immediate risk, concerns remain about the environment and how local authorities will manage the project's impacts.

China's investments in ports help develop infrastructure, boost trade and create jobs, but can also make countries economically dependent on China. For example, Sri Lanka's debt led it to lease the port of Hambantota to a Chinese company to help it repay what it owed. In Latin America, there are fears that relying too much on Chinese infrastructure could limit their foreign policy freedom, making their economies more vulnerable to pressure from China.

Countries must weigh the benefits of these investments against the potential long-term risks. For Peru, the new port of Chancay could strengthen its role as a Pacific trading hub, but could also bring challenges with regulatory oversight, debt management and environmental protection.

China's Cosco Shipping, which is building the port together with a smaller local partner - lThe next phase will be completed within a period of four years, with the aim of tripling the port load - is the only operator, after Peru withdrew a lawsuit that contested its exclusive status, granting exclusive rights to China with a minimum duration of 30 years.

The shadow of corruption

Although initially seen as an economic opportunity for Peru's struggling economy, several opaque actions have led to continued controversy.

According to a relationship published by Central America 360, “corruption and the alleged sale of national interests by President Boluarte and his team have cast a shadow over the project.”

“The president has already appeared at public events wearing several Rolex watches of unknown origin, raising suspicions of corruption and bribery. In March, judicial and police authorities searched his residence and the presidential palace and found a dozen luxury watches, along with several pieces of jewelry. Although no clear explanation has yet been given as to their origin, speculation among Peruvian politicians links these objects to Chinese Ambassador Song Yang and the COSCO group, which has exclusive rights to manage the port. This wealth and the tasks delegated by Beijing are part of an exchange, as the president also received anti-riot equipment to protect her and her associates.” wrote Central America 360.

“The negotiations that led to Cosco's exclusive control over Chancay, and in particular the Boluarte government's rush to change its laws to satisfy China, granting Cosco rights not enjoyed or contemplated by any other operator in the country,” They illustrate with strength how the People's Republic of China does business and protects its commercial and strategic interests,” he stated the famous American academic Dr. Evan Ellis, a specialist in China-Latin America relations.

The China Ocean Shipping Company (COSCO), as owned by the Chinese government, is operated by the State Commission for Supervision and Administration of Assets; so, it is an extension of the power of the Chinese Communist Party (CCP).

The impact on the local community

The area was originally a small fishing village with a population of 60,000, which depended mainly on fishing and tourism. Boluarte and his team moved forward, without consulting residents, with the transformation of the port of Chancay into a large-scale port under the justification that joining China's Belt and Road Initiative would benefit Peru's economy.

“Five years of construction, however, have significantly damaged the surrounding houses, affecting the well-being of women and children and seriously disrupting the local fishing ecosystem, on which the community depends, " denounces the report. Despite this, the Chinese construction team, through intimidation of residents and collusion with authorities, withheld information about the damage. Local residents intended to protest directly with Boluarte and Xi Jinping during the opening of the port,” the report denounced Central America 360.

The military presence of the PLA

Numerous relationships have reported sightings of Chinese military personnel in the port and administrative offices, engaged in activities beyond commercial port operations.

“ Beyond Chancay's strategic logistical importance, in the event of a war involving China in the Indo-Pacific, having a port operated by a PRC-based company in the far eastern Pacific, overseen by a government whose political future, direction and oversight capacity are uncertain, would represent strategic military concerns for the United States,” he said. warned Dr. Ellis.

The northern sections of the port territory are intended for large communications stations and heavily fortified warehouses, as well as dormitories and training facilities. Domestic concerns are growing that this port could become a military base similar to the one in Djibouti, positioning Peru as a possible site for Chinese military operations against the United States. Now that control of the port is completely in Chinese hands, Peru risks becoming a future battlefield.

The well-known journalist Juan Pablo Cardenal , Analysis editor Sinico, recently warned in an item that “ Chancay is the first deep-water port in Latin America over which Cosco will have full operational control” and recalls that “as in the case of other state-owned giant Chinese ports, the long shadow of the Chinese government is cast on the shipping company” .

Cardenal agrees with Ellis that “due to the nature and size of a deep-water port infrastructure, it could later become a naval base that provides logistical support and allows for the repair, replenishment and calling of warships.”

“This is important in the context of the growing rivalry between China and the United States (Peru's two main trading partners), in which a war between the two in the Pacific over Taiwan is by no means ruled out. It is disconcerting that such a relevant issue has been absent from public debate,” Cardenal said.

An aerial view of the port of Chancay. Analysts warn of fears of its military use by China.

And regarding Cosco, Cardenal recalls that this company "has already participated in mixed exercises in the past and supported the operations of the Chinese Navy. Furthermore, it is subject to rigorous control. It is required by law to include a Communist Party (CCP) committee in its corporate structure and to cooperate in intelligence gathering and national defense mobilization.”

According to the China Index 2022, an initiative of Doublethink Lab - a civil society organization dedicated to studying the malign influence of digital authoritarianism which also classifies China's penetration of the world - globally Beijing has penetrated more forcefully into Peru, surpassed only by Pakistan, Cambodia, Singapore and Thailand.

The door to Antarctica is open

In December 2022, China Shaanxi Chemical Industry Group, a state-owned energy and chemical company, signed a memorandum with the Governor of the Argentine province of Tierra del Fuego for the construction of a multipurpose port in the city of Rio Grande. According to a survey conducted by Infobae it is assumed that behind all this there is the HydroChina Corp. Shaanxi Group, another large company controlled by Xi Jinping.

But what most raised the alarm was the fact that Argentina would do so and opened the doors of Antarctica to China, thus facilitating the expansion strategy of the Asian country.

According to a study by the Center for Strategic Studies (CSIS), China's ambition has led Beijing to seek to conquer the world's most remote frontiers to advance its strategic and military interests. CSIS refers to the two poles: the Antarctica and the Arctic.

As written in this post, China is already present in the Arctic region through partnerships with other states to promote its interests. Beijing has two permanent research stations in the region, one in the Norwegian archipelago of Svalbard and the other in Iceland.

While focusing on scientific knowledge, the strategic writings of China expose the PLA's interests in the region. “Bringing together military and civilians is the primary way great powers achieve a polar military presence,” reads the 2020 edition of The Science of Military Strategy [translation by China Aerospace Studies Institute] one of the PLA's major military doctrine books on the study of war, published by the China National Defense University.

With access to both policies, China will no longer need the Panama Canal. At that point, it will be able to exploit alternatives that other countries will not have and Beijing will start to create serious problems.

Double strategy: commercial and military

The concentration of Chinese ownership in the port sector mainly concerns three conglomerates:

China Ocean Shipping Company (COSCO);
China Merchants Ports;
Hutchinson Ports.

The first two are state-owned enterprises, the last is a private company which in recent years, according to analysts, has lost its autonomy due to China's national security law.

While commercial ports are not designed to have high-level capabilities for military functions, they provide a window of opportunity for Beijing to use them for military purposes if it so chooses.

“According to Chinese law, in a possible military mobilization, all civilian assets must be made available to the PLA,” Ellis said.

A studio in 2019 published by some Chinese researchers entitled “Research on the strategic structure of overseas ports based on the security of the Maritime Silk Road canal’”he claims that China should “elevate the security of the ‘Maritime Silk Road’ transportation network to the level of a national strategy [...] by ensuring the safety of maritime traffic in its ports and surrounding waters and actively participating in the governance of global instability.”

According to such researchers, “China is already trying to build an overseas strategic hub and security barrier for the 'Maritime Silk Road' corridor. Currently, among the nine major sea routes linked to the 'Maritime Silk Road', only the Taiwan Strait is under our effective control, while the other straits are outside our effective intervention and control, making them the soft underbelly of security of transport of the 'Maritime Silk Road'. In this regard, China can only accelerate the construction of overseas strategic corridors. In this regard, only by accelerating the construction of overseas strategic pivots can we reduce the impact of geopolitical risks on our country and safeguard the security and fluidity of the 'Maritime Silk Road'. As an important deterrent force, China, in addition to taking the lead in planning the construction of ports along maritime corridors, should also continue to strengthen the construction of maritime military forces, establish overseas military bases, enhance ocean capacity and increase China's military presence in the waters surrounding important maritime corridors."

In the event of a global conflict, therefore, it is entirely feasible for the Chinese government to pressure its port companies to keep the host state's naval forces in ports or to force them to grant or limit access to valuable sea routes.

Such a situation has already become evident in some countries. Some Chinese-run overseas port terminals already serve PLA Navy warships for refueling, maintenance or shore leave, according to an investigation by the US international relations magazine Foreign Affairs. Examples include the port of Singapore, Dar es Salaam in Tanzania and the Piraeus in Greece.

Not only that; Through these ports, Beijing can obtain strategic information for national security decision-making.

Chinese companies are gaining an invaluable treasure of information on any country's maritime cargo. This information is even more valuable when you consider that some of these ports are located next to military bases in host nations, such as Haifa in Israel. And “this allows China to observe the operational routes, personnel, requirements and movements of other militaries,” Ellis said.

In Latin America and the Caribbean, many of the region's major Chinese ports are close to these naval bases.

This is the case of Mexico, where the port of Veracruz is located near the Gulf Sea Naval Force of Tuxpan, or of Panama, whose port of Balboa is located just 6 kilometers from the naval base of Noel Rodriguez.

There are other port terminals, such as Paniagua in Brazil - which is located near the Logistics Support Base created to centralize the supply operations of the Brazilian Army with the headquarters at Rio de Janeiro - which carries out the majority of military material unloading operations, mostly from the United States. Finally, it is worth mentioning the construction of the port of Chancay in Peru, which is only 73 kilometers from the naval base of Callao.

Whoever rules the seas rules the world

One of the biggest threats experts see in Beijing's efforts to expand its maritime network are the debts that some countries have with the PRC which Beijing has begun to collect with loans for the construction of strategic infrastructures.

China has taken advantage of vulnerable situations to then collect its debts from the assets of lending countries, several analysts say.

The most emblematic example is Lo Sri Lanka, a country that, faced with the inability to repay its debt to China, had to rent the port of Hambantota to Beijing for 99 years.

Debt situations with China are becoming even more worrying in light of the Asian country's evident economic slowdown, as the New York Times recently reported.

What will happen to countries that are unable to pay their debts when the Chinese economy begins to falter? Although experts believe that Beijing is far from reaching formal military alliance agreements or having a military base as a Djibouti, you shouldn't let your guard down. “Militarization could happen at any time because the reality is that China does not need a formal agreement for a military deployment or base,” Ellis said.

Beijing's ability to impose its security objectives on civilian assets is what makes it so dominant and yet dangerous, experts say.

While the United States, to establish any forward operating post, conduct military training or host any military exercise on its territory, ask for authorization from the local government, with China this does not happen and there is a deliberate mix in what they call “civil-military” fusion.

One never knows for sure whether a Chinese company is committed to free capitalism or whether it instead operates to serve the national interests of the state.

But there is another risk that worries global security specialists even more.

“The biggest risk is not China itself, but the alliance China has built with Russia and Iran,” said Joseph Humire, executive director of SFS. For the expert, these three countries have a "political-military" penetration strategy through China.

“In the eyes of the region, China enjoys great political legitimacy and credibility as a trade ally. A role that it wants to continue to preserve and that Iran does not have. But because China doesn't have the economic power to conquer the region on its own, it is turning to other countries to join and increase its military strength. In the end, China continues to play the clear and legitimate role it has always had, leaving the dirty work to Iran and together they take control of the region. A strategy that is already evident in the Middle East, Ukraine and Latin America,” Humire said.

Faced with the harsh and complex prospect that looms over the world, experts recommend its leaders to measure and be attentive to maritime strategies which are gradually revealed, as in the case of China. Never before has the prediction of the famous English writer and sailor Sir Walter Raleigh been so precious and important: “For whoever commands the sea commands […] the world itself”.