Tag Archives: Asia-Pacific Economic Cooperation

Peru’s Stance On Megaport Is a Test of China’s Influence

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“Now the National Port Authority is trying to rescind the exclusivity, claiming it made a mistake…The Chinese company, however, remains firm and even hints that it could withdraw if it does not obtain exclusive access.”

China’s megaport in Chancay, Peru, just north of Lima, is set to be inaugurated by Chinese President Xi Jinping later this year during the annual Asia-Pacific Economic Cooperation conference. One of the largest deep-water ports of its kind, Chancay represents one of China’s most ambitious projects in South America. Built by state-owned enterprise Cosco Shipping, Chancay is meant to catalyze the China’s food security and dominance over critical minerals, while cutting shipping times to Asia by around one week. However, according to Argentine media outlet Infobae, Peruvian officials have announced an “administrative error” permitting Cosco Shipping to both build and operate the port exclusively.[i] According to the article, Peruvian regulators have rejected Cosco’s exclusivity, declaring it incompatible with having built the port under domestic law.[ii] As per the second excerpted article from Infobae, Cosco has said it will initiate legal action against Peruvian regulators, insisting on its economic model of exclusivity. The fallout from the Port of Chancay legal wrangling is notable, and likely to have a lasting impact. China sees the moment as precedent-setting for other countries with Chinese state-owned enterprises controlling key infrastructure projects, while Peru finds itself in a major bind after years of burgeoning Chinese influence over strategic sectors in the country. If Cosco manages to win exclusive control of Chancay, China will further solidify its control over strategic infrastructure in the Western Hemisphere; if Peru manages to safeguard its autonomy, it may furnish a blueprint for other regional powers willing to test the limits of China’s infrastructure ownership models.

Sources:

Source: “El ‘error administrativo’ que pone en jaque al Perú: dio el control total a China del Megapuerto de Chancay (The ‘administrative error’ that puts Peru in check: it gave China full control of the Chancay Megaport),” Infobae (an Argentine outlet with excellent regional coverage), 14 May 2024. https://www.infobae.com/peru/2024/05/14/el-error-administrativo-que-pone-en-jaque-al-peru-dio-el-control-total-a-china-del-megapuerto-de-chancay/  

With a projected investment of more than three billion, China is now bringing out its true intentions and at the same time taking advantage of an ‘administrative error’ on the part of Peruvian officials by granting operational exclusivity to Cosco, which has put the project in check…a situation that the National Port Authority of Peru is currently trying to solve…The Peruvian government assumed that the Chinese shipping giant would simply use the port of which it will be the majority owner and would not have exclusive rights over it. But during the negotiations, Cosco somehow obtained precisely these rights. Now the National Port Authority is trying to rescind the exclusivity, claiming it made a mistake…The Chinese company, however, remains firm and even hints that it could withdraw if it does not obtain exclusive access.

Source: “Megapuerto de Chancay: Cosco Shipping no da su brazo a torcer y anuncia sus acciones legales por conflicto con el Estado peruano (Chancay Megaport: Cosco Shipping does not give in and announces its legal actions due to conflict with the Peruvian State),” Infobae (an Argentine outlet with excellent regional coverage), 8 May 2024. https://www.infobae.com/peru/2024/05/07/megapuerto-de-chancay-consorcio-chino-no-dara-su-brazo-a-torcer-y-anuncia-sus-acciones-legales-por-conflicto-con-el-estado-peruano/  Through a statement, the Chinese consortium Cosco Shipping Ports Chancay Peru SA, in charge of the megaproject, recognized that the port infrastructure work in the country has been ‘seriously harmed’ by a change in the regulatory scheme…the company reported that they have found it necessary to initiate legal actions to defend its operating model and ensure its classification as private infrastructure, despite the public benefits it offers.

Notes:

[i] At an earlier period, U.S. officials warned Peru about China exerting control and exclusivity over Chancay. See: Michael Stott and Joe Daniels, “U.S. Raises Concern with Peru over Chinese Control of Infrastructure,” Financial Times, 3 October 2023. https://www.ft.com/content/2c77be69-60d7-4d5c-a0c6-c7978bde3888

[ii] According to noted analyst Elisabeth Braw, this situation is likely the result of Peru failing to read the fine print of the agreement. See: Elisabeth Braw, “Peru Learns to Read the Fine Print in China Deals,” Foreign Policy, 13 May 2024. https://foreignpolicy.com/2024/05/13/peru-learns-to-read-the-fine-print-in-china-deals/

Vietnam Defense Exhibition Shows Diversified International Partnerships To Balance Against China

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Vietnam claims Paracel and Spratly islands.

Vietnam claims Paracel and Spratly islands.

“An exhibition was officially opened for international partners and domestic citizens to observe the capacity, technological progress, and weapons and equipment manufactured by Vietnam.”

According to the first excerpted 6 April article from Vietnam’s national television broadcaster vov.com, the Vietnamese Ministry of Foreign Affairs deputy spokesperson denounced the National Natural Science Organization of China’s plans to conduct surveys in 33 areas of the South China Sea. Among the archipelagos in the South China Sea are the Spratly Islands (Truong Sa), which are claimed and controlled by Vietnam but are also claimed by China. Vietnam considers the Chinese survey’s encompassing of the Spratly Islands as an act of aggression. One way Vietnam has responded to China’s more aggressive military posture in the South China Sea, such as through surveying, is by branching out to multiple international actors to balance against China, if not also China’s ally, Russia. This was demonstrated at the 2022 International Defense Exhibition in Hanoi last December.[i] As the second excerpted article on the government-funded Voice of Vietnam website vtv.com noted, the exhibition was intended to highlight Vietnam’s military modernization and diversified international partners.[ii] While Russian artillery systems, which Vietnam has historically acquired for its army, were on display alongside Vietnamese ballistic missiles and unmanned aerial vehicles, there were also weapons from companies of Western countries and their partners, such as the United States, Czechia, Israel, and India. China was not among the nearly 70 countries that attended. The weapons at the exhibition are among those that Vietnam could acquire and employ during any future confrontation without relying on Chinese allies.[iii]

Sources:

“Việt Nam phản đối việc Trung Quốc công bố khu vực khảo sát bao trùm Trường Sa (Vietnam opposes China’s announcement of conducting a survey area throughout the Spratly Islands),” vov.vn (official website of the Voice of Vietnam radio broadcaster), 6 April 2023. https://vov.vn/chinh-tri/viet-nam-phan-doi-viec-trung-quoc-cong-bo-khu-vuc-khao-sat-bao-trum-truong-sa-post1012290.vov

Regarding the information that the National Natural Science Organization of China announced 33 survey areas, including some lines covering the Truong Sa archipelago in Vietnam’s waters, Deputy Spokesperson of the Ministry of Foreign Affairs Pham Thu Hang at the press conference on April 6 stated, As it has repeatedly affirmed, Vietnam has a full legal basis and historical evidence to affirm its sovereignty over the Hoang Sa and Truong Sa archipelagoes based on international law.

“Người dân Hà Nội háo hức với Triển lãm quốc phòng quốc tế 2022 (Hanoians are enthusiastic about the 2022 International Defense Exhibition),” vtv.vn (Vietnamese government’s national television broadcaster), 8 December 2022. https://vtv.vn/xa-hoi/nguoi-dan-ha-noi-hao-huc-voi-trien-lam-quoc-phong-quoc-te-2022-20221208183916675.htm

On the morning of December 8, an exhibition was officially opened for international partners and domestic citizens to observe the capacity, technological progress, and weapons and equipment manufactured by Vietnam…. Many Vietnamese people witnessed the modern weapons of the army for the first time

Notes:

[i] Among the purposes of the exhibition was to “diversify defense equipment procurement sources” and to “introduce Vietnam’s defense capabilities and Vietnamese-made weapons” to the international community. Although Russia has historically been Vietnam’s main weapons supplier, the presence of Western countries at the exhibition indicates Vietnam’s interest in gradually diversifying by engaging in weapons transfers with them. See: “Vietnam hosts its first international defense expo.” rfa.org, 8 December 2022. https://www.rfa.org/english/news/vietnam/vietnam-defense-expo-12082022030531.html

[ii] Unlike Truong Sa, the Hoang Sa (Paracel Islands) have been under Chinese control since the Chinese navy expelled the South Vietnamese navy from the islands in 1974. The Socialist Republic of Vietnam has inherited the South Vietnamese claims over the islands since 1975, as well as concerns about China attempting to occupy Truong Sa in the future.

[iii] After 1991, Vietnam sought to “multilateralize and diversify” its foreign ties by normalizing its relations with China and all Southeast Asian states and becoming a member of Asia-Pacific Economic Cooperation (APEC). By 2001, Vietnam and Russia revived bilateral relations in the form of a strategic partnership and Vietnam and the United States signed a Bilateral Trade Agreement. Vietnam’s broader goal was to insulate the country from Sino-U.S. competition or other major power rivalries and protect its independence and self-reliance. See Carlyle A. Thayer (2017), “Vietnam’s Foreign Policy in an Era of Rising Sino-US Competition and Increasing Domestic Political Influence,” Asian Security, 13:3, 183-199.

Image Information:

Image: Vietnam claims Paracel and Spratly islands.
Source: Tonbi Ko https://commons.wikimedia.org/wiki/File:Vietnam_claims_Paracel_and_Spratly_islands.JPG
Attribution: CC x 3.0