Chinese President Xi Jinping is set to inaugurate the Chancay Port, a monumental infrastructure project located just 44 miles north of Lima, by the end of this year. This $3.6 billion mega-port, developed by China’s state-owned COSCO Shipping, will reshape the economic landscape of Peru and extend China’s logistical footprint into South America’s Pacific coast. However, while this port promises to open new markets and enhance trade between the two nations, it is also sparking debates about Peru’s sovereignty, regulatory capacity, and environmental concerns.

The Chancay Port is a key part of China’s Belt and Road Initiative (BRI), aimed at fostering global trade routes and consolidating China’s influence in strategic locations worldwide. Once completed, this deep-water port will be the first in South America capable of accommodating mega-ships, significantly reducing the shipping time between Asia and Latin America by ten days.

Peru stands to benefit economically from this development. The port will create thousands of jobs and enable the country to export goods—such as minerals, fishery products, and agricultural commodities—more efficiently. Additionally, it is expected to facilitate the import of Chinese electric vehicles and other goods, potentially transforming Peru into a major hub for Chinese exports in the region.

Yet, the port is not without controversy. China’s increasing economic and infrastructural dominance in the region raises concerns, especially as Washington watches its traditional sphere of influence in Latin America diminish. Peru is becoming a focal point of this growing influence, and while the economic benefits are clear, the costs are increasingly tied to Chinese illegal fishing activities, as well as deeper geopolitical implications.

China’s Illegal Fishing Fleet in Peruvian Waters

Despite the economic promise, the issue of illegal, unreported, and unregulated (IUU) fishing by Chinese fleets looms large. For more than a decade, China has steadily increased its fishing activities in the South Pacific, with a particular focus on squid. Chinese fishing vessels are now a common sight off the Peruvian coast, especially during peak squid-fishing seasons.

The scale of the problem is immense. By July 2024, around 70 foreign vessels—primarily Chinese—had entered Peruvian waters. Many of these ships have troubling histories, ranging from illegal fishing practices to human rights abuses onboard. Chinese fishing vessels have repeatedly encroached into Peru’s exclusive economic zone (EEZ), often evading detection or exploiting regulatory loopholes to avoid penalties.

The Peruvian fishing sector has become increasingly vocal about these activities. In mid-July, artisanal fishermen from the northern Port of Paita staged protests, accusing Chinese vessels of depleting fish stocks and blaming the government for inadequate oversight. These fishermen, who rely on healthy fish populations for their livelihoods, argue that the unchecked presence of these foreign ships threatens their way of life.

In one notable case in May 2024, the Chinese vessel Tian Xiang was caught fishing illegally within Peru’s EEZ but was only fined a small, symbolic amount, which industry representatives called “laughable.” This weak response has raised further doubts about the government’s ability—or willingness—to effectively regulate Chinese fishing operations in its waters.

Government Response: Regulation and Oversight

Recognizing the growing threat, Peru has begun to ramp up efforts to combat illegal fishing. In early July, Peru’s Minister of Production, Sergio González, announced plans to implement an emergency decree aimed at increasing oversight and supervision of foreign vessels, particularly Chinese ones, engaged in fishing activities along the coast. This comes on the heels of regulations passed in 2020, which mandated that all foreign vessels using Peruvian ports must install an additional satellite device to improve tracking and ensure compliance with local laws.

While these measures initially reduced the presence of Chinese vessels, their numbers surged again between 2023 and 2024, with many ships entering smaller ports or bays to evade detection. According to Milko Schvartzman, project coordinator at the Argentine NGO Círculo de Políticas Ambientales, these tactics represent a concerted effort to circumvent regulations.

Chinese vessels have also exploited emergency provisions to bypass the new satellite requirements. Many have entered Peruvian ports under the guise of medical or mechanical emergencies, avoiding further scrutiny while continuing their fishing operations.

In addition to illegal fishing, Chinese vessels operating in Peruvian waters have been implicated in serious human rights abuses. Many of the crew members aboard these vessels are from the Philippines or Indonesia and often work under deplorable conditions. Investigations have uncovered instances of semi-slavery, where crew members face long hours, poor health and safety conditions, and little oversight.

One particularly troubling case involves the Chinese vessel ZHE PU YUAN 98, which has been functioning as a floating hospital in the Southeast Pacific since 2021. While it provides medical aid to injured or ill crew members, its presence has raised suspicions that it operates outside proper regulations. Over the past three years, the vessel has disembarked dozens of severely ill crew members and even a deceased individual at the Peruvian port of Callao, all while evading port inspections.

These reports of labor exploitation add another layer of complexity to the issue of Chinese fishing in Peruvian waters, further underscoring the need for robust regulations and international cooperation to protect the rights of vulnerable workers.

Economic Dependence vs. Sovereignty

Peru’s economic relationship with China extends far beyond fishing. Over the past two decades, China has become Peru’s top trade partner, particularly in the mining sector. Between 2018 and 2023, Peru emerged as the second-largest recipient of Chinese foreign direct investment (FDI) in Latin America and the largest in South America relative to its gross domestic product (GDP).

This relationship was further solidified in June 2024, when Peruvian President Dina Boluarte met with Xi Jinping during a state visit to China. The visit underscored the importance of economic cooperation between the two countries, especially as China continues to dominate the copper and lithium markets—key sectors for Peru’s economy.

However, this deepening economic engagement comes at a cost. China’s control over strategic infrastructure, such as the Chancay Port, raises questions about Peru’s ability to maintain its sovereignty. The U.S. has expressed concerns about China’s expanding influence in the region, with some analysts warning that Beijing’s economic interests could have military implications. The construction of ports, for example, could potentially support Chinese naval activities in the future, a concern that Washington has conveyed to Peruvian officials.

U.S. Concerns and Geopolitical Tensions

Washington has watched China’s growing presence in Latin America with increasing unease, particularly as it sees the region as part of its traditional sphere of influence. U.S. officials are especially concerned about the dual-use potential of infrastructure projects like the Chancay Port, where Chinese commercial enterprises might also serve military functions.

One key player in this context is China’s People’s Armed Forces Maritime Militia (PAFMM). Often referred to as a “shadowy armada,” the PAFMM consists of vessels that resemble regular fishing boats but can be mobilized for military operations in support of the People’s Liberation Army (PLA). This hybrid role of Chinese vessels, blending commercial and military capabilities, could pose long-term risks to regional stability.

Despite these concerns, Peru has largely dismissed U.S. apprehensions. In a pointed comment, Peru’s Foreign Minister Javier Gonzalez-Olaechea suggested that if Washington is worried about China’s growing influence, it should bolster its own investments in the region. This sentiment highlights a broader issue: the U.S.’s relatively limited engagement with Peru in recent years, which stands in stark contrast to China’s active economic diplomacy.

Peru finds itself in a delicate position as it navigates the opportunities and challenges presented by its growing relationship with China. On one hand, projects like the Chancay Port offer significant economic benefits, promising to boost trade and create jobs. On the other hand, the presence of Chinese fishing vessels in Peruvian waters—and the broader geopolitical implications of China’s influence—raise concerns about sovereignty, environmental sustainability, and regulatory enforcement.

As President Xi Jinping prepares to inaugurate the Chancay Port, Peru must carefully weigh the advantages of deeper economic ties with China against the risks posed by illegal fishing and potential military involvement in its waters. Striking a balance between these competing interests will be crucial for Peru’s long-term stability, sovereignty, and role on the global stage.