Chinese-backed Chancay Port threatens Peru’s fishing industry and local economy

Marinera Noteria is Peru's most famous dance, known internationally, alongside other colorful and popular dances like Festejo and Huacunda.

However, on November 15, the inauguration of the Chancay Port on Peru’s coastal desert brought an unexpected spectacle. Chinese dancers, clad in red dragon costumes, appeared out of nowhere, performing at the docking station as a crane lowered the first containers onto a cargo ship. The event was attended by Chinese President Xi Jinping, who watched live from the presidential palace in Lima, 60 km south of the port, alongside Peruvian President Dina Boluarte.

Chinese dancers were prominent at the event, a reflection of the dominant influence of Chinese shipping giant Cosco, which holds the majority stake in the $1.3 billion Chancay Port project. Under a November 17 Facebook post by ‘ShanghaiEye,’ the Shanghai Media Group’s foreign-language channel, a comment from 'Micko More' labeled the venture a “massive debt trap.”

Many of Chancay’s 60,000 residents remain unconvinced by President Xi’s promise that the port will bring “considerable income and enormous job opportunities.” Locals argue that the port and an associated industrial park, expected to attract over $3.5 billion in investment over the next decade, have so far brought no economic benefit. Instead, the port has deprived fishermen of the waters they once relied on for their livelihoods. 

Fishermen like 78-year-old Julius Caesar are concerned that the port has destroyed their fishing spots. “Our fishing spots no longer exist. They destroyed them,” he told the Associated Press. Another fisherman, 40-year-old Rosa Collantes, expressed her frustration: “This port is a monster that has come here to screw us.” The dredging process to create a shipping channel has ruined breeding grounds for fish, forcing fishermen to travel farther and invest in larger, more expensive boats. With large container ships expected to dock soon, there are fears of pollution and oil spills. 

The port’s construction has also harmed Chancay’s tourism, as changes in water currents have ruined ideal surfing conditions. The town's seafood restaurants now sit mostly empty due to declining fishing stocks and fewer tourists.

China's interests in South America go beyond Peru’s coastal waters. The Chancay Port is expected to facilitate China’s extraction of agricultural and mineral resources from the region, including Peru’s blueberries, Brazil’s soybeans, and Chile’s copper. China is particularly focused on the lithium reserves found in Bolivia, Chile, and Argentina, which together make up over 75% of the world's lithium supply, crucial for powering electric vehicles. In 2014, China purchased the Las Bambas Copper Mining project in Peru for $5 billion. The mine holds one of the largest copper reserves globally, producing two percent of the world's copper. The Chancay Port will help China expand its grip on South America's resources while flooding local markets with cheap, often substandard goods.

The construction of the port has also led to significant issues in Chancay. In May 2023, part of the construction site for the 1.8 km tunnel connecting the port to a highway collapsed. The collapse damaged several houses, and in October 2022, tunneling activities led to a partial street collapse in the Peralvillo locality. Explosions used to flatten the terrain have cracked the walls of nearby homes.

Environmental concerns surrounding the port are also significant. The Santa Rosa Chancay Wetland, a protected 36-hectare area home to diverse plants and bird species, is being threatened by the construction. Local fishermen have been paid to vacate the area, and explosions have permanently damaged their homes. Environmental groups, such as the Global GreenGrants Fund, have reported that the port’s construction is contributing to environmental destruction, including beach erosion, the emission of toxic particulate matter, and the mass mortality of birds and marine species. These issues were downplayed in the port’s Environmental Impact Assessment.

Analysts fear that Chancay Port could trap Peru in a debt situation similar to Sri Lanka’s Hambantota Port or Pakistan’s Gwadar Port. Unable to repay the massive Chinese loans used for constructing the Hambantota Port, Sri Lanka was forced to lease the port to China for 99 years. Pakistan, too, handed over the operation of the Gwadar Port to China for 40 years. With similar financial terms, Peru could face similar consequences.