Donald Trump’s recruitment of Ohio Sen. J.D. Vance as his running mate may be about the worst news the country could receive on the heels of the former president’s brush with a would-be assassin’s bullet.
Mr. Trump’s resilience after the attempt on his life has boosted his chances of winning the race. But he isn’t there yet. By putting the big-government, isolationist Mr. Vance on the ticket, he’s wooing workers in swing states whose No. 1 grievance is foreign competition and who usually vote for the Democrats. Regrettably, Mr. Vance’s nomination increases the odds that a second Trump presidency will double down on Biden protectionism. That would be nothing but upside for Chinese dictator Xi Jinping in the Americas.
Last month Peru’s President Dina Boluarte was in Beijing, meeting with Mr. Xi. The visit signaled the ever-closer Sino-Peruvian relationship on economic matters but also implies higher risks for U.S. national-security interests in the region.
Exhibit A is the new Port of Chancay, 50 miles north of Lima and 60% owned by China’s Cosco Shipping. In China Ms. Boluarte met with the company, which will operate the new facility under an exclusive contract. When it’s inaugurated in November, the $3.6 billion project, funded by Chinese bank loans, will be the largest deepwater port in Peru and will have the potential for both economic and military use. Which is to say that it won’t be surprising to find Chinese naval vessels docking there.
It’s rumored around Lima that the U.S. tried to stop the Chinese investment. Some pro-market Peruvians say the State Department undermines its own interest in the rule of law by spending too much time promoting left-wing causes and wokeism. Whether that’s perception or reality doesn’t matter. It’s undeniable that U.S. investors have been abandoning the Peruvian playing field and China has filled the void. Tariff increases, “buy American” policies, and threats to scrutinize existing trade agreements (Peru has one) by Republicans are likely to make things worse.
Ms. Boluarte also met in China with telecom giant Huawei, electric-car manufacturer BYD and China Southern Power Grid. Chinese central planners aren’t known for their investment savvy. But that doesn’t matter to Peru. It needs capital and Beijing spreads it around without asking too many questions. All it wants in return is food and minerals—and influence.
That’s part of the problem. Corruption in Peru is legendary. It isn’t hard to imagine that the South American nation is precisely the kind of place that China’s police state finds hospitable.
Chancay Port Investments, which is traded on the Peruvian stock exchange, owns the 40% of the port that isn’t held by Cosco. Minority-shareholder interest seems to be based on the prospect that the modern terminal facility could become a logistics hub for Chile, Ecuador, Colombia and Argentina, signifying the potential for fast growth for the company.
Chancay is expected to offer quicker loading than the congested Port of Callao, also not far from Lima, and will be able to handle ships that can carry more than three times the volume of a standard Panamax vessel. Presumably this means that high-value exports like copper, zinc and agricultural products can get to foreign markets faster. The import side of the ledger also is expected to flow more smoothly.
More-efficient two-way trade will be a win for Peru and its commercial partners. The economy grew quickly between 2002 and 2013 (with the exception of 2009) but in the past decade has slowed. Many Peruvians see the new port as the pixie dust the country needs to turn things around. Ms. Boularte has declared that the “mega project ratifies that Peru is a reliable partner for investments, which will improve the living conditions of more Peruvians.”
Yet unless Chancay is treated as the beginning of an economic transformation to development rather than an end in itself, Peru will likely continue to struggle. It still needs to invest in rail, highways and other infrastructure, and it would be sovereign suicide to rely only on China. Ecuador tried that and got shoddy construction and too much debt. Peru’s economic and geopolitical success will depend on tapping more-diversified sources of capital, which in turn requires greater transparency and institutional stability.
In February, U.S. Army analyst Ryan Berg spelled out some of the security concerns about Chancay, including the possibility that China could use it for military logistics, as a navy port of call or to “track data on trade flows, which could open the door to economic coercion against the host countries as well as other third-party countries.”
All fair. But Peru can police its own turf. What really matters is that it remains a U.S. ally that prefers liberty to tyranny and is encouraged to deepen commercial ties with Americans. If a Trump-Vance administration insists on pulling up the U.S. drawbridge and punishing international commerce, China won’t stop at Chancay.