An interesting development recently took place at the Asia-Pacific Economic Cooperation (APEC) meeting, held in Peru just before the G20 meeting in Brazil. At the APEC summit, two significant announcements were made, the nature of which illuminates the current global situation. Two heads of government met with the Peruvian president: Joe Biden, the outgoing President of the United States, and Xi Jinping, the President of China.
President Biden held a press conference with the Peruvian president, where he announced that the United States was providing Peru with 150 locomotives and passenger cars for Lima's metro system, which is in need of expansion. However, Mr. Biden did not mention that these were not new passenger cars or locomotives. In fact, these vehicles had been previously used and subsequently discarded by the California Department of Transportation (Caltrans) before being shipped to Peru as a gift. In essence, Mr. Biden presented Peru with used locomotives and passenger cars.
In stark contrast, at a separate meeting in Lima, President Xi Jinping and the Peruvian president virtually inaugurated the Chancay port, located several kilometers north of Lima. This deepwater port, costing USD 3.6 billion to build, features 18 berths. Notably, its construction did not involve used machinery; sophisticated equipment was required to excavate an 18-berth deepwater port. The striking difference between the United States' gift of used equipment and China's collaboration with Peru to build a major deepwater port for commercial traffic between Peru, China, and other parts of the world is significant, revealing much about the contemporary global landscape.
What was less remarked upon was that just a few years prior, the Chinese government had been negotiating a similar deal with El Salvador. A long-term objective of the Belt and Road Initiative (BRI) has been to establish a port on the Pacific coastline not controlled by the United States, unlike the existing major deepwater ports of Seattle, Los Angeles, and Panama. When China expressed interest in building such a port in El Salvador through the BRI, the Salvadoran government was highly receptive. However, upon leaving the meeting in Beijing, the then-president of El Salvador was asked by the United States to travel via Tokyo. In Tokyo, Prime Minister Shinzo Abe conveyed a message on behalf of the United States government: El Salvador could not build a port with China, as it posed a national security risk. The pertinent question, however, was whose national security this port truly threatened. Ultimately, the port in El Salvador was not built approximately seven years ago. In contrast, the Chancay port in Peru has now been completed. This demonstrates a shift in historical trajectory, where countries in the Global South have come to understand that only a few nations are willing to provide the scale of infrastructure and investment necessary to foster South-South integration.
It is crucial to consider this narrative within a broader context. This is not merely a philanthropic gesture from China to Peru; the Chinese economy will also benefit from this port. Eventually, a train line is projected to run from Peru deep into the Brazilian state of Amazonas to the Manaus Free Trade Zone. It is anticipated that industrial products from Manaus will then be able to travel directly to Peru and cross the Pacific, bypassing the need to be transported to São Paulo and around the Cape of Good Hope in Africa. Some estimates suggest this route will be significantly faster even for Brazilian products destined for Singapore and China.
A key question for the intellectuals and governments of the South is what products will be exported from the Global South to China. The Chinese proposals through the Belt and Road Initiative are clear and distinct from the pledges made by the United States. For instance, the Millennium Challenge Corporation (MCC) grant to Nepal was hardly a development initiative; it was a deal designed to channel Nepali energy to India, not genuinely develop Nepali industry. While the choices are evident, the critical question is how the opportunities presented in this period will be leveraged by the Global South. Reliance solely on the Belt and Road Initiative is insufficient for achieving comprehensive development.
The fundamental question is the Global South's own development agenda. Do Southern countries possess a coherent development plan? Will they forever export raw materials — whether to the United States, Europe, or now China — and merely import finished products from elsewhere? If the structure of the world economy remains unchanged, then this form of "development" will resemble the old patterns. Therefore, the structure of the international economy itself must be transformed. In this endeavor, the countries of the Global South bear the responsibility to formulate a development plan and agenda that best capitalizes on the current situation.
Recently, the governments of China and various African nations, through the Forum on China-Africa Cooperation (FOCAC), have been discussing industrialization on the African continent. This discussion is particularly significant. If industrialization is to occur, will it be limited to the processing of raw materials in countries like Peru? Part of the agenda suggests that instead of shipping frozen avocados from Peru to China, they should be partly processed in Peru before shipment, ensuring some value-added remains within Peru. The persistent question remains: what form will this industrialization take? Will it solely involve raw material processing, or will finished products be manufactured within these nations? This is a critical challenge that demands careful consideration. Will the Global South merely process raw materials, or will it establish a comprehensive commodity and value chain within its regions before exporting goods?
A second critical issue arises when industrializing or scaling up productive forces: the source of capital for such expansion. Will capital be borrowed at commercial rates, thereby trapping nations in another cycle of debt dependency? Or will it be secured at concessionary rates, or through joint ventures where Southern countries provide land and raw materials, while partners like China, India, or Vietnam provide capital for industrialization? These are serious issues that cannot be avoided. It is impossible to discuss "development" without a frank discussion about the level of raw material processing into finished products, or how the entire process of industrialization will be financed.
It is evident that China's development and modernization were achieved not primarily through raw material exports, but largely through the immense development of technology and the qualitative improvement of productive forces. This involved the careful importation of technology from Europe, Japan, and other countries, its meticulous harnessing, and subsequent enhancement to qualitatively boost productive forces. Will the Global South develop a development agenda that includes the technical improvement of productive forces, ensuring that it is not apprehensive about productivity improvements? In many Southern countries, populations are vast, and unemployment is a grave concern, leading to a fear of labor substitution by capital. There is even a tendency to believe it is better to exploit labor and hire more workers than to qualitatively improve productive forces. This mindset must be overcome. The qualitative improvement of productive forces must be central to any development agenda.
This panel was framed by three words: sovereignty, independence, and development. My focus has been on development, primarily because I believe that in the long term, no country can truly be sovereign or independent if it does not genuinely develop itself and provide a dignified life for its people.
(Transcribed from recording and edited.)