APEC 2024 and the Tension Between China and the U.S.: A Stormy Summit

This week, the annual APEC summit in Lima (November 10-16) was followed by the G-20 summit in Brazil (November 18-19). Both events mark the final meetings of outgoing U.S. President Joe Biden, who will be succeeded in office by former President Donald Trump on January 20. Interestingly, Lima also hosted APEC in 2016, when Trump’s first electoral victory captured the attention of the leaders gathered there, overshadowing the presence of outgoing U.S. President Barack Obama.

What is APEC

APEC is the Asia-Pacific Economic Cooperation Forum, a multilateral dialogue platform established in 1989 to consolidate the growth and prosperity of the countries in this region. Today, it brings together 21 economies (not countries, which allows for Taiwan’s membership, for example) and represents approximately half of global trade and 60% of GDP. Its decisions—non-binding—are made by consensus, as it is a forum and not an international organization.

Its annual meeting involves closed-door discussions among leaders, as well as discussions between them and members of the Business Advisory Council. This council has called for APEC to promote inclusive growth and prioritize the needs of SMEs, particularly those led by women and indigenous entrepreneurs. Peru, as the host, set an agenda focused on deepening trade and investment ties within the bloc.

However, this APEC meeting was overshadowed from the outset by the inauguration of the Chancay port, an event highlighted by an official visit to Peru from Xi Jinping and a large Chinese delegation. This display contrasted with the political weakness of his U.S. counterpart, who was on his way out, and whose presence at APEC marked only his second visit to Latin America and his first to South America. In contrast, Xi has visited eleven Latin American countries since taking office.

Chancay: A Symbol of Regional Influence^[1]

Located 60 kilometers northwest of Lima, this deep-water megaport was built in what was once a quiet fishing village at a cost of USD 1.3 billion (in the next decade, total investment is expected to exceed USD 3.5 billion). It promises to become the largest maritime transport center in South America and a distribution hub for cargo to and from Ecuador, Chile, and Colombia. Between 2000 and 2022, trade between China and Latin America multiplied by 35, reaching nearly USD 500 billion. Exports from the region to China mainly come from South America and are concentrated in five products: soybeans, oil, iron ore, copper, and copper cathodes.

The state-owned transportation and logistics company China Ocean Shipping Company Limited (COSCO) holds a 60% stake in the project developed with its Peruvian partner, Volcán. It is the first Chinese port investment in Latin America that is also operated by China, and the unprecedented control over the port granted by the Peruvian government has generated criticism. Observers have warned that these operational rights could allow Chinese intelligence services and armed forces to use the port for espionage of naval and commercial vessels, and for potential misappropriation of confidential commercial data.

The U.S. Response

APEC and the G20 have been the last opportunity for diplomatic interaction for the Biden administration with governments in Latin America. The United States has always been a top trading and investment partner in the region and has exerted significant political influence. However, in the last two decades, this role has diminished, while China’s influence has grown. It is noteworthy that despite its objections to Chinese influence, U.S. investment in the region in recent years has not included the construction of port infrastructure on the scale of Chancay.

The Biden administration’s economic initiative for the region (APEP, Alliance for Economic Prosperity in the Americas), launched at the Summit of the Americas in 2022 and inaugurated in November 2023 to intensify efforts for regional economic cooperation and the creation of quality jobs and more resilient supply chains, is a medium- to long-term project, well-intentioned, and belated. If the new Trump administration makes a radical shift in foreign policy, as expected, the fruits of APEP may not materialize.

On the eve of a new Trump administration that— as announced— will favor transactional diplomacy and isolationism, APEC will be remembered, in addition to the inauguration of Chancay, for Xi’s call in defense of free trade made at the forum. In it, Xi made a veiled criticism of the incoming U.S. government, urging member economies to ‘tear down the walls that hinder trade flow’ and labeling tariffs—which Trump plans to raise—as a ‘setback in history.’ 

China thus shows a willingness to fill the leadership vacuum in favor of free trade and multilateralism that the United States, under Trump, is poised to abandon.

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^[1] Review Working Document No. 15: Chancay Port in Peru and Its Geopolitical Impact available at https://www.athenalab.org/publicaciones/2022/03/22/documento-de-trabajo-no15-puerto-chancay-en-peru-y-su-impacto-geopolitico-en-chile/