"China Builds Giant Dock in South America to Ensure Alternative to US Grain"

[Source/Observer Network, Wang Yi] China's strategic investment in overseas ports over the years has drawn significant attention from foreign media against the backdrop of the United States instigating a trade war against China.

"China plans to ensure access to the rich agricultural products in South America, and the Port of Santos fits this overall plan," reported The Wall Street Journal on May 12. This outdated port is the main gateway for soybeans and other agricultural exports in South America, and for China, these products are the most viable alternative to American agricultural products.

The report stated that COFCO Group Limited is constructing its largest export terminal outside China at this port, which will handle the transportation of corn, sugar, and soybeans. In addition, Chinese companies are laying hundreds of miles of railways in Brazil's agricultural heartland, and the construction of a $3.5 billion deep-water port on the Pacific coast of Peru is nearing completion. The U.S.-initiated trade war with China has made these projects more urgent.

The Wall Street Journal noted that towering cranes are completing the final work on three silos belonging to COFCO Group in the heart of the Port of Santos, each as large as an apartment building, between rows of warehouses and abandoned colonial-era sugar factories.

Since entering the Brazilian market in 2014, COFCO Group has relied on third-party terminals for transportation, increasing costs by about 15%. However, in March 2022, COFCO Group obtained a 25-year operating right for the STS11 terminal through an auction, solving this problem. Bloomberg News last year pointed out in an analysis of COFCO Group's overseas layout that the connection of the STS11 terminal at the Port of Santos with railways reduces transportation costs compared to trucks, making COFCO Group more competitive in purchasing soybeans and corn in Brazil's main production areas. Additionally, it will reduce the probability of paying extra high fees due to warehouse shortages or transportation delays.

This STS11 terminal project, with a total investment of approximately $285 million, began construction and renovation in 2023 and officially started operations at the end of March this year. It is expected to reach full capacity next year, pushing its existing annual export capacity from 4.5 million tons to 14 million tons.

According to a report by The New York Times at the end of April, apart from investing in the largest port in Latin America, Santos Port, China has invested heavily in Brazil's warehouses, railways, ports, and other infrastructure over the past decade to move more Brazilian agricultural products onto Chinese ships.

According to The Wall Street Journal's summary, China Merchants Port Holdings acquired the container terminal operation company of the second-largest port in Brazil, Paranaguá Port, in 2018. China Railway Engineering Corporation has also been involved in building a railway connecting Brazil's central agricultural belt with eastern and northern Brazilian ports. In Peru, COSCO Shipping Ports constructed a deep-water giant port to accelerate trade between Asia and South America. The Chinese government is also discussing with regional governments the construction of an extremely long railway connecting the Pacific coast of Peru with the Atlantic coast ports of Brazil.

On May 9, Brazilian Planning and Budget Minister Simone Tebet revealed that a Brazilian team met with representatives of China's state-owned railway company about a month ago to discuss a potential route connecting the Port of Chancay with Brazil. The Port of Chancay, located on the shortest path to China in South America, can shorten maritime trade distances by at least 10,000 kilometers, and China is very interested in helping Brazil build an interconnected railway network.

The Wall Street Journal reported that Chinese officials stated on April 28 that China does not need to import crops from the United States this year and can still achieve its 5% growth target. Analysts tracking agricultural markets said that Brazil will fill this gap, followed by Argentina.

According to data from the Center for Strategic and International Studies, during the period from 2017 to 2024, China increased its imports of Brazilian soybeans by 35%, reaching 73 million tons, while reducing its imports of American soybeans by 14% to 27 million tons.

The report stated that currently, about 70% of Brazil's soybean supply to China is transported via the Port of Santos, with about 30% of this volume transported through the Port of Paranaguá, the second-largest port in Brazil, and the ports of Itaituba and Bacarena in the north.

However, the massive freight volume has put pressure on the Port of Santos. The Wall Street Journal pointed out that unlike most countries where crops can only be harvested once a year, Brazil's mild climate allows for three harvests per year, presenting great potential. However, the country lacks railways for transporting soybeans and corn like the U.S., and crops are mainly transported to the Port of Santos by truck, with up to 20,000 trucks daily causing traffic congestion on nearby highways stretching up to 20 miles.

This has also placed pressure on the port. Last year, the Port of Santos handled a record 180 million tons of cargo, with about 60% being agricultural products. According to Macroinfra Logistics Consulting, more than 90% of Brazil's agricultural bulk export ports have reached their operational capacity, exceeding 85% of their operational safety limits.

Chinese enterprises' investments in the Port of Santos will greatly alleviate these issues. After expansion, the STS11 terminal will become one of the largest terminals at the Port of Santos. When the project commenced, Mayor Rogerio Santos of Santos City stated that this project would help Santos residents realize their dream of revitalizing the old docks and would also create job opportunities for the city, promoting sustainable development.

Santos Port, Santos Port Official Website

After the Trump administration in the United States initiated another trade war against China, China's purchases of Brazilian agricultural products are expected to continue to increase. Claudia Trevisan, executive director of the China-Brazil Business Council, said, "You just need to look at what happened during the first term of the Trump administration to understand."

The Wall Street Journal cited government data stating that since the U.S. imposed tariffs on Chinese imports during the first term of the Trump administration and faced retaliation from China, by 2023, Brazilian agricultural products accounted for about 1/4 of China's total agricultural imports, while the U.S.'s share had dropped to 14%. Among them, data from the Center for Strategic and International Studies showed that from 2017 to 2024, China's imports of Brazilian soybeans increased by 35%, reaching 73 million tons, while its imports of American soybeans decreased by 14% to 27 million tons.

But the massive freight volume has made the Port of Santos unable to cope. The Wall Street Journal pointed out that unlike most countries where crops can only be harvested once a year, Brazil's mild climate allows for three harvests per year, presenting great potential. However, the country lacks railways for transporting soybeans and corn like the U.S., and crops are mainly transported to the Port of Santos by truck, with up to 20,000 trucks daily causing traffic congestion on nearby highways stretching up to 20 miles.

In January 2025, a worker at the STS11 terminal of the Port of Santos, Bloomberg News

Massive investments by Chinese enterprises in the second-largest port in Brazil, Paranaguá Port, have significantly improved its operational capabilities. Since 2012, Shanghai Dredging Bureau of China Communications Construction Group has been responsible for dredging and maintenance of the Paranaguá Port. By widening and deepening the channel, the maximum navigable tonnage of the port increased from 50,000 tons to 100,000 tons, greatly improving the port's operational efficiency and capacity. After China Merchants Port Holdings acquired the container terminal operation company of Paranaguá Port in 2018, through investments in expanding the terminal and adding berths, the port's throughput capacity was also greatly enhanced.

Therefore, Brazil warmly welcomes Chinese enterprise investments. From May 10 to 14, President Luiz Inácio Lula da Silva visited China for the sixth time. During the visit, Lula expressed that Brazil is willing to align its development strategy with the Belt and Road Initiative and deepen cooperation with China in areas such as economy and trade, infrastructure, aerospace, and finance.

Renan Filho, Brazil's Minister of Transport, who accompanied him, also told The Wall Street Journal that they welcome foreign investments in Brazil's roads, railways, and ports, "We need more and more infrastructure."

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7504210054741115407/

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