China Is Alarmingly Near to Bypassing the Panama Canal, Report Shows

China Expands Influence in Latin America Through Major Infrastructure Projects

China is stepping up its efforts in Latin America by initiating significant megaprojects designed to bypass the Panama Canal, according to a recent advisory report from Horizon.

Brazil and Peru have become focal points for China, which is investing heavily in infrastructure to circumvent the Panama Canal. This move comes in response to the Trump administration’s broad efforts aimed at reducing China’s influence in critical shipping routes. The report outlines how China plans to channel investments into vital Peruvian ports and develop extensive rail connections through Brazil to facilitate access to the Atlantic Ocean.

“We’re belatedly addressing the looming threat,” remarked Nate Picalchick, co-founder of both the Democracy Foundation and Horizon Advisory. “After two decades, we’re now concerned about the Panama Canal as China ramps up its competition by launching substantial new projects in Peru, allowing us to circumvent the canal altogether.”

The Chancay Port began operations in November 2024 after significant Chinese investment in Peru as part of the Belt and Road Initiative (BRI). Critics have labeled this strategy as a means for Beijing to exert control through debt and influence, with a local COSCO shipping port representative admitting in August 2025 that the demand for transportation is increasing faster than expected.

However, the report warns that while access to China’s market might seem advantageous, it often comes with operational dependence on Beijing. “China has framed this initiative as a win,” the report states, “but its real intention is to ensure that both Peru’s economy and the broader regional economy become reliant on China.”

Plans are also underway for a twin rail route stretching 3,000 miles across Brazil, aimed at connecting the port to the Atlantic. Projections suggest that shipping times for Brazilian goods could potentially outpace those of the Panama Canal, enhancing China’s grip on South America.

Picalchick highlighted the urgency of addressing China’s rapid expansion in Latin America, also commending the Trump administration for paying attention to issues in the southern region of the Americas. “I think it’s a positive step to focus on security in the hemisphere,” he said. “The details matter greatly, as we strive to strengthen our strategic foothold and ensure peace and prosperity in our area.”

The report concludes by calling on the U.S. not only to rival China in business endeavors but also to confront the military strategies that underpin these ambitious projects.