Via The Financial Times, a look at a proposed Panama Canal rival being discussed by China and Colombia:

“…China is in talks to build an alternative to the Panama Canal that would link Colombia’s Atlantic and Pacific coasts by rail – a move that Bogotá also hopes will spur Washington to push for Congressional approval of a US-Colombia free-trade pact.

“It’s a real proposal? … and it is quite advanced,” Juan Manuel Santos, Colombia’s president, told the Financial Times. “The studies [the Chinese] have made on the costs of transporting per tonne, the cost of investment, they all work out.”

The mooted rail link is the latest example of China’s increasingly aggressive lending to the developing world, as evidenced by Chinese banks having lent more to developing countries over the past two years than the World Bank.

The 220km “dry canal” would run from the Pacific to a new city near Cartagena where imported Chinese goods would be assembled for re-export throughout the Americas. Colombia-sourced raw materials would make the return journey to China.

“I don’t want to create exaggerated expectations, but it makes a lot of sense,” Mr Santos said. “Asia is the new motor of the world economy.”

Colombia has long dreamt of building an alternative to the Panama Canal. The country is the US’s closest ally in South America, but Bogotá is frustrated by Washington’s stalling over a free-trade agreement signed by both governments four years ago but yet to be ratified by Congress.

Bilateral Sino-Colombian trade has meanwhile soared from $10m in 1980 to more than $5bn in 2010, making China Colombia’s second-biggest trade partner, after the US.

“Colombia has a very important strategic position, and we view the country as a port to the rest of Latin America,” said Gao Zhengyue, China’s ambassador to Colombia.

In documents seen by the FT, the project is just one of a series of Chinese proposals that would boost transport links with Asia and improve Colombia’s creaking infrastructure – a priority of Mr Santos’ administration.

Chinese and Colombian officials say talks are most advanced over a 791km railway and expansion of the Pacific port of Buenaventura. The $7.6bn project, funded by the Chinese Development Bank and operated by China Railway Group, would move up to 40m tonnes of cargo a year from Colombia’s economic heartland to the Pacific. Priority would be given to coal destined for China.

Colombia is the world’s fifth-largest coal producer, but most is exported via Atlantic ports even as demand is growing fastest across the Pacific.