The United States has issued a stark warning to Peru, cautioning that China’s expanding influence over a key Pacific port could put the nation’s sovereignty at risk. This development adds fuel to the already simmering tensions regarding Beijing’s growing presence in Latin America.

At the heart of the issue is the $1.3 billion deep-water port in Chancay, located north of Lima. This port has become a focal point of contention between Washington and Beijing, especially following a Peruvian court decision that curtails the government’s regulatory authority over the project.

Expressing its unease, the U.S. Department of State’s Bureau of Western Hemisphere Affairs took to social media, stating, “We are concerned about recent reports indicating that Peru might be unable to regulate one of its largest ports, now under the control of aggressive Chinese owners.” The bureau further emphasized, “We stand by Peru’s sovereign right to manage essential infrastructure within its borders. This situation should serve as a warning to the region and beyond: accepting inexpensive Chinese investments could come at the cost of sovereignty.”

Aerial footage reveals the construction of a new mega-port in Chancay, undertaken by China’s state-owned Cosco Shipping. This development is anticipated to streamline shipping routes to Asia for Peruvian and some Brazilian exports. (Angela Ponce/Reuters)

Responding to these claims, China’s foreign ministry dismissed the U.S. remarks as “rumor-mongering and smearing,” asserting that the project remains firmly under Peruvian jurisdiction, as reported by the Associated Press.

Gordon Chang, an Asia analyst, shared with Fox News Digital, “Chancay is pivotal, with experts suggesting it could reshape trade dynamics across the South Pacific. It’s known that Beijing views ports as both strategic and dual-use assets. Notably, China delayed BlackRock’s acquisition of CK Hutchinson’s port operations in the Panama Canal Zone, despite the ports being geographically distant from China.”

“In times of war, China will not allow its port operations to load, unload, or service American ships or ships coming from or going to U.S. ports,” he warned.

Jack Burnham, senior analyst in the China program at the Foundation for Defense of Democracies, said the port reflects a broader strategic push by Beijing in the region.

Workers stand next to cranes at the new megaport being built by China’s state-owned Cosco Shipping, in Chancay, Peru. Oct. 24, 2024. (Angela Ponce/Reuters)

“The Chancay port is a keystone in China’s investment in Latin America — its size and proximity provide a bridge across the Pacific and access to another market to fuel Beijing’s export-driven economic engine,” Burnham said.

“China’s investment in Peru is predicated on Beijing grasping the sinews of Lima’s critical infrastructure to gain influence. With effective control over the port cemented for now by a lower Peruvian court ruling, China gains access to one of the largest critical infrastructure projects in the region, a position from which it could exercise significant control.”

The dispute comes as Washington and Beijing compete for influence across Latin America, where China has expanded investment through infrastructure projects and trade, analysts say.

Fishing boats are anchored in the bay near the new megaport being built by China’s state-owned Cosco Shipping, in Chancay, Peru Oct. 24, 2024. (Angela Ponce/Reuters)

China’s state-owned shipping giant Cosco, which holds a majority stake in the project, dismissed U.S. concerns and said the court ruling “in no way involves aspects of sovereignty,” adding that Peruvian authorities still oversee security, environmental compliance and customs, according to The Associated Press.

Peru’s transport infrastructure regulator, Ositran, has said it plans to appeal the ruling, arguing the port should not be exempt from the same oversight applied to other major facilities.

Embassy spokesperson Liu Pengyu told Fox News Digital that China strongly opposes what it called U.S. “false accusations and disinformation” regarding the Chancay port, citing remarks made by a Foreign Ministry spokesperson at a regular briefing on Feb. 12.

He described Chancay as a flagship China-Peru Belt and Road project and South America’s first “smart and green” port, saying the first phase is expected to cut shipping time between Peru and China to 23 days and reduce logistics costs by more than 20%, while generating about $4.5 billion annually for Peru and creating over 8,000 direct jobs. Liu said the project will strengthen Peru’s role as a regional trade gateway linking Asia and Latin America and support broader development, including environmental initiatives tied to wetlands and coastal habitats.

He added that China–Latin America partnerships are driven by shared development goals and benefit people on both sides.