If you paid attention to China’s belt and road operation, one of the things they do is arrive at different countries in the world and offer them new infrastructure such as port, railways, and then they build them. It is good for China because Chinese firms are doing the work, it is good for the country because infrastructure is improved, but the cost is the Chinese influence in the country becomes greater. We have seen Chinese influence become greater in Africa and Asia.

In an article by Genevieve Glatsky of the New York Times News Service, the next country is Peru.

China is building a $1.3 billion megaport in Chancay, north of Lima.

The interesting backstory is Peru’s ambassador in Washington received a call from the State Department; they were not happy when they learnt a Chinese firm would finance a sprawling new Pacific Coast port project.

The ambassador told the officials; Western investors had passed on the project. The private sector promoters knocked on doors in the US and Europe, and no one opened. The Chinese opened the door and came with resources.

In Washington, they have said the Munroe Doctrine or American influence in the region should be paramount, China has become Peru’s major investor in mining, energy and infrastructure.

At first China came for the resources – copper and iron, but trade grew and now China is Peru’s largest trading partner and buys roughly 1/3 of its exports.

Beyond trade, Chinese firms have steadily expanded into sectors Western businesses have retreated from. Chinese state-owned companies have bought companies from American and European firms. Chinese companies control Lima’s electrical distribution system and play a role in transportation, banking and telecommunications.

The US believes the megaport expands the operations of the Chinese navy.

The Chancay port, operated by the Chinese state-owned shipping giant COSCO has reduced shipping times between Peru and China from 40 days to 23 days. (there are You Tube videos about the ports in China, and this sounds similar) The port features autonomous cranes, driverless trucks, remote controlled cargo and mile-long tunnel routing containers beneath the city.

Hotels and restaurants are expanding in the area, while universities and health care networks are buying land for satellite campuses and offices.

The US focus has been on security projects paid by Peru, including a $1.5 billion modernization of Peru’s naval base and purchase of F-16 fighter jets at a cost of $3.5 billion.

The US remains a major trading partner for Peru and is the main market for agricultural exports including the berries at the supermarket and textiles.

Linking to dividend paying stocks, governments often say things, but if it is not backed by resources then it may or may not happen. When it is backed by resources, things happen. In China, with a variety of state-owned companies, they can do the bidding of the country. With private sector, there are many considerations and government assistance is often required for major infrastructure projects. There is no perfect answer, but if you see government resources, the private sector is willing to be a partner.

There are more questions than answers, till the next time – to raising questions.