When you think of America you probably think of the United States. You might also think of North or South America, but would you think of China? If you answered no, you might have missed the news that China is investing some $3.5 billion to build a deep water port in Peru. Why is that important? It’s all part of China’s efforts to gain more influence in the global economy, this time by building influence in a region that could be considered the United States’ backyard. Indeed, not only will China have greater influence in the area, it will also gain access to important minerals, rare earth metals, and other resources.
What’s in it for Peru? The opportunity to become a gateway for trade to China and other parts of Asia. The port will bring jobs and new skills, greater prosperity, and other economic development for Peru and neighboring countries. Shipping times between China and Peru are expected to fall by about a third, thereby lowering overall costs for exporters and importers. Lower costs should of course, ultimately mean lower prices for end users. However, not every country sees the new port as a win-win. U.S. government officials are worried about what they see as a growing threat from China as the country works to build influence in region that geographically at least, should be closer to the United States than a competing economic superpower.
Discussion Questions:
1. Peru sees the new megaport as an opportunity for economic growth and greater prosperity. China sees the new port as a chance to build greater influence in the region. Discuss the tradeoffs for Peru. What is the cost of economic development in this case?
2. Consider the intersection of global trade, economic development, and political influence. What role does global trade play in economic development? Is this type of growth sustainable?
Sources| Reuters: https://www.reuters.com/world/americas/peru-eases-chinese-port-dispute-ahead-presidents-meeting-with-xi-2024-06-26/, https://www.reuters.com/world/americas/peru-eases-chinese-port-dispute-ahead-presidents-meeting-with-xi-2024-06-26/; Barrons: https://www.barrons.com/video/series/breaking-ground/why-china-is-building-its-first-megaport-in-peru/AA7EAE52-9FB5-483E-82C0-10915E6DCF2A?mod=BOLvidctr_upnext_pos0; ; Unsplash: Photo by Christian Lue on Unsplash