https://geopoliticaleconomy.substack.com/p/china-builds-port-peru-us-old-trains
US politicians complain about China's growing global influence, but give no alternatives to help countries develop. Beijing is building $3.5 billion ports while Washington offers used trains from 1985
Ben Norton
Nov 25, 2024

China has invested billions of dollars in building a historic "mega-port" in Peru, which has the potential to transform trade in Latin America and kickstart regional economic development.

The United States has demonized this port and portrayed it as a threat, but Washington has not offered Peru any alternatives.

Instead of helping Peru construct a comparable infrastructure project, the US government was only willing to sell it used diesel trains from the 1980s.

Adding insult to injury, the Joe Biden administration falsely told the public that it "donated" these 40-year-old trains, but in reality Lima had to pay millions of dollars.

Chinese President Xi Jinping traveled to Peru in November to attend the annual APEC summit. There, he inaugurated the massive Port of Chancay, on Peru's Pacific coast.

The Port of Chancay will significantly reduce shipping time between Asia and Latin America from 35 days to just 23. It is also estimated to cut costs by 20%.

$1.3 billion has already been invested in the project, with plans to continue expanding and adding an industrial park, at a cost of $3.5 billion in total. It is projected to generate $4.5 billion in annual revenue.
US "alternative" for Lima: used diesel trains from 1985

Washington has shown outrage at the growing relationship between China and Peru.

US Secretary of State Antony Blinken also traveled to the South American nation in November. There, in an attempt to steal Xi's thunder, he held a press conference.

Standing in front of 40-year-old trains bearing the US flag, Blinken announced that "the United States will support the city of Lima as it develops a new passenger train line".

The White House published a fact sheet on "advancing the United States – Peru partnership” in which the Biden administration wrote that "California commuter rail line Caltrain will donate 90 passenger cars and 19 locomotives to the city of Lima".

There was a major problem with this claim, however: it was false. The used trains were not a donation.

The local California press revealed that Caltrain had sold the trains to Lima for $6.32 million, after Caltrain had replaced its old diesel trains, which were built in 1985, with a more modern electric fleet.

On Twitter, video of Blinken's Peru press conference received a community note that fact-checked his misleading statement.
US media claims Peru is its colonial "backyard"; Trump advisor threatens tariffs

This incident was a striking symbol of the big differences between the foreign policy of China and that of the United States.

In fact, instead of offering to help Peru develop its infrastructure, US officials have responded by threatening the South American nation.

A top Latin America advisor to President-elect Donald Trump who served in his first administration and is now assisting his transition team, Mauricio Claver-Carone, suggested that the US government will impose 60% tariffs on goods that travel through the Port of Chancay.

Using colonial language, US media outlets like Newsweek depicted the Chinese-built port in Peru as a supposed threat "in America's backyard”.

This condescending rhetoric is based on the 200-year-old colonial Monroe Doctrine, which top officials in the Trump administration invoked as part of an effort to reimpose US imperial hegemony in the region.

Political leaders in Latin America have long emphasized that their countries are not the "backyard" or territory of any foreign power; they are sovereign, independent nations.

Moreover, Peru is not even close geographically to the United States. The distance between US capital Washington, DC and Peru's capital Lima is a staggering 5700 kilometers (more than 3500 miles).

The irony is that, while the US press demonizes China, Washington has a long history of meddling in Peru's internal affairs and violating its sovereignty.

In 2022, the United States sponsored a coup that overthrew Peru's democratically elected left-wing President Pedro Castillo.

Peru's current right-wing leader, Dina Boluarte, was never elected, and is so despised by her people that she has consistently had a single-digit approval rating.

Boluarte has also shown herself to be extremely pro-US. But China is Peru's largest trading partner, with which it does 32% of its trade.

Moreover, this port has been planned for well over a decade. Construction started years before Boluarte came to power, and would have been inaugurated regardless of who was president.

The fact of the matter is that the Port of Chancay can economically transform the country. Any Peruvian leader would have tried to take credit for it. Boluarte simply got lucky that it happened when she was able to (undemocratically) seize power.

More deeply, what this situation demonstrates is that, despite the political sympathies of the local comprador ruling elites, the US is losing influence simply because it is not offering anything that will actually benefit Peru's economy.

Washington expects countries like Peru, even their Westernized ruling classes, to sacrifice their own economic interests of behalf of the United States. Increasingly, however, even pro-US elites are no longer willing to do so, because they have other options.
China's state-led Belt and Road Initiative vs G7's BlackRock-funded private infrastructure

China is already the largest trading partner of most countries in South America.

New infrastructure projects in the region like the Port of Chancay will help Asia and Latin America deepen their economic integration, in what Beijing refers to as South-South cooperation.

The mega-port is an important part of what China calls the 21st Century Maritime Silk Road.

Beijing considers the Port of Chancay to be a "flagship" project in its Belt and Road Initiative (BRI), a decade-long campaign in which China has spent more than $1 trillion building infrastructure around the world.

With the BRI, China has sought to diversify its international economic relations and reduce its reliance on Western markets.

In 2011, the Barack Obama administration announced a "pivot to Asia", making plans to send more US troops to the Asia-Pacific region to militarily encircle China.

The Donald Trump administration upped the ante by launching an aggressive trade war on China, which was only escalated by Joe Biden.

By building new infrastructure and trade networks in the Global South, China has sought reduce its dependence on trade with an increasingly hostile United States that seeks to contain it.

The projects in China's BRI are largely built by state-owned enterprises (SOEs), which are not driven by profits, and thus can invest in infrastructure that may not earn much money, but will be strategic. SOEs make up more than one-third of China's economy.

60% of the Port of Chancay was funded by China's state-owned firm COSCO Shipping, whereas the other 40% was financed by a private Peruvian mining company.

Meanwhile, as China has become the world leader in constructing high-quality infrastructure, the United States has failed to invest in basic infrastructure at home, where its own bridges are collapsing.

The Biden administration made a last-ditch effort to compete with Beijing by announcing in 2021 a G7-backed initiative called Build Back Better World (B3W). US state propaganda outlet VOA bluntly described this as Washington's "counter to China's Belt and Road”.

To date, however, B3W has accomplished very little. One of the main reasons is that, instead of relying on the state, like China has done in the BRI, the G7 campaign relies on private, for-profit companies.

From the very beginning, the US government made it clear that B3W is a neoliberal campaign based on "public-private partnerships", in which investment funds on Wall Street will gain returns for their wealthy clients by buying up privatized infrastructure.

The White House press release announcing the initiative stressed that, "Through B3W, the G7 and other like-minded partners will coordinate in mobilizing private-sector capital”; adding that B3W aims "to support and catalyze a significant increase in private capital to address infrastructure needs", by relying on a "market-driven private sector".

B3W was later rebranded as the Partnership for Global Infrastructure and Investment (PGII).

At the G7 summit in Italy in June 2024, the White House announced that BlackRock would help oversee the PGII, by mobilizing "private capital for projects" and using the "private sector" to build infrastructure.

BlackRock is the world's largest investment company, with $11.5 trillion in assets under management.

The billionaire oligarch chairman and CEO of BlackRock, Larry Fink, spoke as a guest of honor at the G7 summit, where he insisted that "building new infrastructure is critical, especially through public-private partnerships".

Fink outlined the plans of Wall Street investment firms to enrich their clients by building privatized infrastructure in the Global South, explaining the strategy as he sat at a table alongside the G7 heads of state:

The IMF and the World Bank were created 80 years ago, when banks, not markets, financed most things. Today the financial world has flipped. The capital markets are the biggest source of private sector financing, and unlocking that money requires a different approach than the bank balance sheet model of yesterday.

There is still a lot of work to be done, but reform over the past eight months have resulted in billions of new dollars for developing countries' infrastructure. That is what you saw last week with the announcement of the investor coalition. BlackRock, GIP [Global Infrastructure Partners], KKR, and other major firms will deploy $25 billion in Asia's emerging economies.