THE PORT OF CHANCAY AND CHINA’S EVOLVING BRI

China’s Belt and Road Initiative (BRI), launched in 2013, has been one of the most ambitious infrastructure projects in modern history, aiming to connect Asia with the rest of the world through a vast network of ports, railways and roads. In its early years, BRI was defined by high-profile mega projects like Sri Lanka’s Hambantota Port, Pakistan’s Gwadar Port and Kenya’s Nairobi-Mombasa Standard Gauge Railway. While these projects showcased China’s engineering prowess, they also generated concerns over financial risks, environmental impact and allegations of “debt-trap diplomacy”. Recognising these challenges, President Xi Jinping introduced a shift in BRI strategy, emphasising smaller, more sustainable and locally tailored projects under the ‘small is beautiful’ approach. This recalibration prioritises renewable energy, digital infrastructure and smart cities over the traditional model of large-scale infrastructure investments.

However, the Port of Chancay in Peru challenges this narrative. With a 3.5 billion USD investment by a Chinese State-owned Enterprise COSCO Shipping, this state-of-the-art deep-water port is one of the most ambitious BRI projects to date. Its scale, strategic importance and geopolitical implications raise a fundamental question: is Chancay the final vestige of the BRI’s mega-project era, or is the rhetoric about a shift toward smaller projects merely a strategic repositioning by Beijing?

A Gateway Between Asia and Latin America

Officially inaugurated on November 14, 2024, the Port of Chancay is a key gateway for trade between South America and Asia, significantly reducing shipping time across the Pacific. Developed by China’s COSCO Shipping Ports in partnership with Peru’s Volcan Mining Company, the port boasts a 1,500-meter length, four berths - two for containers and two multipurpose - and the capacity to handle 1 million TEUs annually. Its deep-water draft of 17.8 meters allows it to accommodate ultra-large container ships carrying up to 18,000 TEUs.

The Port is set to transform global trade by establishing a direct maritime link between South America and Asia, bypassing traditional transit hubs like the Panama Canal. By facilitating the efficient movement of goods across the Pacific, Chancay is poised to become a key node in China’s Belt and Road Initiative (BRI) and a strategic hub for trade expansion.  

The port’s first phase, with 1.3 billion USD investment, has already begun operations. The first shipment from Peru arrived in Shanghai on December 2024 and carried agricultural products and raw materials such as copper, fruits and fishery products. The port is projected to generate 4.5 billion USD in annual revenue and create over 8,000 jobs, strengthening Peru’s position as a crucial trade partner for China. 

Latin America’s vast reserves of natural resources, including copper, lithium and agricultural products, are vital for China’s industrial and technological growth. Peru, as one of the world’s largest copper exporters, will benefit immensely from the port’s ability to streamline the transportation of raw materials to Chinese industries, reinforcing economic ties between the two regions. 

China’s Gains from the Port

Designed to handle the largest container ships, the Port of Chancay is a fully modernized and highly automated facility. The port is equipped with unmanned electric vehicles to transport containers, automated cranes for efficient loading and unloading, facial recognition systems to enhance security, radio frequency tracking for cargo monitoring and 5G internet connectivity across the port. Much of this advanced infrastructure, including Huawei 5G towers and BYD electric trucks, has been provided by Chinese technology companies, reinforcing China’s growing influence in Latin American trade logistics. 

China’s investment in the Port of Chancay strengthens its economic foothold in Latin America, providing a direct trade route for exports and greater access to South America’s resource-rich markets. However, concerns persist over Beijing’s growing influence in global maritime logistics, as Chinese firms now hold stakes in terminals handling over 27 percent of global container trade. Western analysts fear ports like Chancay could have dual-use potential, citing China’s precedent in Djibouti, where a logistics hub later supported military operations. This development also challenges U.S. influence in the region, reshaping Latin America’s geopolitical landscape. 

For Peru, Chancay presents a major opportunity to modernize infrastructure and enhance its role in global trade, creating thousands of jobs and benefiting local businesses. However, economic risks tied to Chinese investments remain a concern, alongside environmental challenges such as marine ecosystem disruptions and displacement of fishing communities. Thus, balancing economic growth with transparency and sustainability will be crucial for the project’s long-term viability.

The Transition in the Belt and Road Initiative

In its early years, China’s BRI was defined by grand infrastructure port and railway projects which showcased China’s engineering capabilities and its ambition to reshape global connectivity infrastructure. Over time, these megaprojects led to increasing scrutiny, with accusations of “debt-trap diplomacy” and pushback from host countries and Western governments. However, the real shift in China’s BRI strategy emerged not just from external criticism but from domestic economic constraints that forced a reassessment of its global ambitions.

Since 2018, China’s economy has faced mounting challenges—trade restrictions from Western nations, regulatory crackdowns on key industries, a sluggish post-pandemic recovery, a real estate crisis and rising local government debt. These factors have constrained China’s ability to fund capital-intensive overseas projects, prompting a recalibration of its global ambitions. In response, Beijing rebranded the BRI under the “small is beautiful” approach, emphasizing financially viable, environmentally sustainable and locally beneficial projects. The focus has shifted to green energy, digital infrastructure and industrial parks, with greater private sector involvement and a pivot towards middle-income nations like Saudi Arabia and Indonesia rather than low-income regions.

African nations, once central to China's large-scale infrastructure push, are experiencing a sharp decline in BRI funding. Debt distress across the continent and concerns over financial feasibility have led Beijing to scale back major projects. According to the Green Finance and Development Centre at Fudan University, BRI investments in Sub-Saharan Africa dropped by 54 percent in 2022, reaching their lowest level since the initiative’s launch in 2013. High-profile projects such as Kenya’s Mombasa-Nairobi railway remain incomplete due to China’s reluctance to extend further funding, while Tanzania’s ambitious Bagamoyo Port has been shelved. Instead, China is focusing on smaller projects such as solar farms and digital infrastructure, particularly in Egypt and South Africa.

A similar trend is evident in Southeast Asia, where Chinese investments are increasingly focused on renewable energy and high-tech infrastructure. Malaysia’s East Coast Rail Link was downsized after renegotiations, while Indonesia’s Jakarta-Bandung High-Speed Railway faced significant cost overruns and delays, prompting greater caution. Meanwhile, China has expanded its investments in solar farms, wind energy projects and battery storage facilities in Vietnam and Thailand, aligning with the region’s push for sustainability.

Despite this broader shift, the $3.5 billion Port of Chancay in Peru stands as an exception to the trend. Its scale and strategic significance challenge the narrative that China is moving away from megaprojects.

This raises an important question: Is Chancay the final large-scale infrastructure project of the BRI’s first phase, marking the end of China’s grand infrastructural ambitions? Or does it signal that China will continue to invest in select megaprojects where they serve strategic purposes, even as it promotes the “small and beautiful” model elsewhere?

If the shift to smaller projects is genuine, Chancay may be a remnant of the earlier BRI era rather than a harbinger of future trends. However, if China continues to finance major ports, railways, and highways under the guise of strategic necessity, then the rhetoric around a more modest BRI may be more about optics than the actual policy shift. The Port of Chancay thus serves as a test case—either it will be the last of its kind, or it will redefine the next phase of China’s global infrastructure ambitions.

The Way Forward

The Port of Chancay embodies the contradictions of China’s evolving BRI—an ambitious infrastructure project at a time when Beijing claims to be shifting towards smaller, greener and more financially sustainable investments. It presents Peru with economic opportunities but also raises concerns over sovereignty, environmental risks and China’s growing geopolitical influence.

The key question is whether Chancay is the last of its kind or a sign that large-scale BRI projects are far from over. If it truly marks the end of China’s mega-infrastructure era, it will stand as the final chapter of the BRI’s first phase. But if more projects of similar scale emerge, then the “small is beautiful” rhetoric is merely a recalibrated narrative, not a fundamental shift in strategy.

Ultimately, Chancay is more than just a port—it is an indicator for the future of the BRI. Its success or failure will shape how China balances its global ambitions with growing scrutiny and changing economic realities. Whether it is a capstone or a blueprint, the world will be watching.