Latin America Allows China to Take Over Ports

Latin America Allows China to Take Over Ports

By Gustavo Arias Retana/Diálogo
December 06, 2018

Companies from the Asian country are building up presence in Latin American commercial terminals.

Chinese interests are growing stronger as the country increases its presence in commercial ports around the world—Latin America is no exception. On the contrary, Latin American countries are increasingly handing over control and development of port terminals to Chinese companies, yielding strategic commercial and military locations to the Asian nation.

Alejandro Barahona, an international relations specialist at the National University of Costa Rica, explains that Chinese interests in Latin American commercial ports combine military and economic aspects that align with the goals of its Belt and Road Initiative, better known as the New Silk Road. With this initiative, the Chinese government intends to connect Asia, Oceania, Europe, Africa, and the Americas via roads, railways, and oil and gas pipelines.

“The interests are a combination between commerce and military projection. For China it’s easier to enter Latin America by sea, because it doesn’t have military bases in the region. Ports are strategic to consolidate its commercial and political influence. Once this is achieved, it will expand with commercial investments to influence key areas, militarily speaking,” Barahona told Diálogo. “Basically, everything has to do with the Silk Road, a very ambitious project that caught the attention of many countries, including those of Latin America, because there aren’t many options apart from Chinese funding.”

Enrique Dussel, director of the Center for Chinese-Mexican Studies at the National Autonomous University of Mexico, agrees with Barahona on that China’s expansion in Latin American ports is related to an international projection strategy. He also believes that the region is an easy target for Chinese intents, since most countries need to invest in infrastructure, yet do not have the resources to do so, and see China as an option to obtain that influx of fresh resources.

“In Latin America, there is a huge unsatisfied demand for infrastructure. The region should invest at least 5 percent of its gross domestic product in infrastructure, such as commercial ports, but in reality, that investment is only about 2 percent,” Dussel said.

Important locations in Latin America

Panamá, a country with two of the most important ports in the region—Colón and Balboa—is one of the nations in China’s line of sight. The Chinese company Landbridge Group is building the Panamá Colón Container Port, a terminal for neopanamax ships, with an investment of more than $1 billion. In addition, China’s Harbour Engineering Company Ltd. is building a port station for cruises in the Amador area.

In Brazil, state-owned Chinese company Merchants Port controls the Paranaguá Port, the second largest in the country surpassed only by the Santos Port. To gain control of the terminal, the Asian company bought Brazilian company Terminal de Contêineres Paranaguá, which managed the port, for $935 million in 2017.

In 2017, the Chinese company China Construction showed interest in developing and funding infrastructure in Mexico’s most important port, Manzanillo. Many Chinese businesspeople are also interested in investing in the special economic zone Mexico seeks to develop around Lázaro Cárdenas Port, in Michoacán state. The initiative needs an initial investment of $90 million, and focuses on promoting metallurgic and steel industries near the port.

In Peru, the Chinese company Cosco Shipping will develop Chancay Port with an investment of about $2 billion. The governments of Colombia and China signed a memorandum of understanding in 2016, enabling the Asian nation to develop a series of projects near Buenaventura Port. China promised an investment of $16 million in the area.

In Uruguay, Chinese company Shangdong Baoma Fishery propelled in 2016 the development of a fishing port requiring $200 million. Apart from the terminal, the plan includes building a plant to store fishing equipment and the manufacture of fishmeal.

China replicates its tactic all over Latin America. Through investments in commercial ports, China is slowly taking over the region’s strategic trade and defense points. The tactic is clear, and China uses it in other parts of the world: money for ports in exchange for power.