Diminished Biden heads to APEC summit in Peru, overshadowed by China's Xi

If things had gone differently last week, US President Joe Biden could have arrived at the Asia-Pacific Economic Cooperation forum in Peru on Thursday projecting confidence and pledging his successor's cooperation with eager Latin American partners. No longer.

Just as in 2016, the last time that Peru's capital Lima hosted APEC, Donald Trump's election victory has pulled the rug out from under a lame-duck Democrat at the high-profile summit attended by over a dozen world leaders.

The renewed prospect of Trump's America First doctrine hampers Biden's ability to reinforce the United States' profile on his first presidential trip to South America, experts say, leaving China and its leader, Xi Jinping, to grab the limelight in America's proverbial backyard.

President Xi's first order of business in Peru is inaugurating a $1.3 billion megaport that will put China's regional influence on stark display. Total investment is expected to top $3.5 billion over the next decade.

This isn't the way the US had hoped to participate in the summit, said Margaret Myers, the director of the China and Latin America program at the Inter-American Dialogue, a Washington policy group. All eyes are going to be on the port, what Xi says about it and how he articulates relations across the Pacific.

With the US seemingly headed back toward isolationism under Trump, China will be seen as the alternative, Myers added.

Sitting 60 kilometers (37 miles) northeast of Lima, the Chancay megaport once a serene fishing village is perhaps the clearest sign of Latin America's reorientation. The Chinese shipping and logistics giant Cosco holds a 60% stake in the project it developed with Peruvian partner, Volcan.

With this port, we're looking at the entire Pacific coast, from the United States and Canada all the way to Chile, Peruvian Foreign Minister Elmer Schialer told The Associated Press in his office on Monday. The shipping business is being transformed.

Peruvian Economy Minister Jos Arista said in June during a visit to China that the country's neighbors Brazil, Colombia, Chile are making constant trips to and from to see how they can modify their supply chain to use this port, which will cut shipping time to Beijing by 10 days.

China's trade with the region ballooned 35-fold from 2000 to 2022, reaching nearly $500 billion, according to data from the Economic Commission for Latin America and the Caribbean. Most of the region's exports came from South America, and were concentrated in five products: soybeans, copper and iron ore, oil and copper cathodes.

At the same time, China's diplomatic engagement in the region has become more effective, with Xi visiting 11 Latin American countries since becoming president, according to Xinhua, China's main state news agency. Brazil, host of the G20 summit, and Peru will bestow the rare honour of a full state visit to Xi this month, but not to Biden.

The misguided notion that Latin America must choose between its two largest trading partners is a strategic defeat for the US, said Eric Farnsworth, vice president at the Washington-based Council of the Americas.

The idea that China is somehow a better partner is increasingly being heard around the region and I think Xi wants to solidify that and amplify that, Farnsworth said.

Roughly a decade after China poured billions of dollars into building power plants, roads, airports and other infrastructure that saddled some developing countries with unserviceable debt, few expect Beijing to direct more massive loans to Latin America through its Belt and Road Initiative. But deeper cooperation on other infrastructure is possible, particularly renewable energy and telecommunications, said the Boston University bulletin.

The US has appealed to Latin American governments to reject telecoms investment, particularly opposing Huawei, the Chinese tech giant that it argues could open the door to Chinese government spying. Similarly, US officials have raised concerns over the Chancay port's possible dual-use by Beijing's navy in the Pacific a prospect dismissed by Chinese officials.

China is working to exploit insecurity in our hemisphere, said US Defense Secretary Lloyd Austin at the Southern Command headquarters in Florida this week, adding that the Asian giant is leveraging the need for investment in the Americas to advance its malign agenda.

Despite its objections to Chinese influence, the US hasn't shown the ability or willingness to build infrastructure like Chancay's megaport, experts note.

Even when the US government has worked to ensure competitive bidding in Latin American massive public works projects, American companies have refrained from participating, said Benjamin Gedan, director of the Wilson Center's Latin America Program.

A Kamala Harris administration wouldn't have changed that, but a Democratic victory would have enabled Biden to speak in Lima with authority about US collaboration to come, such as building regional supply chains, Gedan said.

In sharp contrast to Biden's alliance-building approach, Trump has vowed to protect American interests and promised more of the same unilateralist action the world saw in his first term, when he staked out a combative stance against foreign competitors and deepened the US trade war with China.

In 2022, Biden launched the Indo-Pacific Economic Framework to help integrate economies of the region and enable the US to counterbalance China. But last year, on the campaign trail, Trump said he would kill the trade pact if he were to win the 2024 election and return to the White House in the same way he pulled the US from the Trans-Pacific Partnership immediately after taking office in 2017.

In the years since, US clout in South America has diminished while China's has grown, said Farnsworth, recalling how the last time Lima hosted APEC in 2016, the shock of Trump's victory sucked the energy out of then-President Barack Obama's delegation.

Peru's top diplomat insists that the US hasn't ceded its dominant voice guiding discussions about trade at gatherings such as APEC and doubted that it will, even under Trump.

I'm not sure that Trump will go against these types of multilateral contexts just because he is worried about the American people, Schialer said. He knows that the US is too important for the world. We have to sit down and have a nice dialogue and see how we can face these challenges together.

Yet, in the wake of Trump's win and China's port opening in Peru, analysts expect the hard-nosed competition between the US and China to overshadow APEC this week.

The Chinese love the idea of outmaneuvering the US in its near-abroad, Gedan said. Xi will luxuriate in this dynamic of being able to arrive with a big delegation, (...) to inaugurate this transformational port and suck all the air out of the room when his American counterpart is very weak politically. That is significant to China.