Xi Jinping prepares to inaugurate South American megaport made in China

In today's newsletter:

• South America made in a Chinese megaport

• The controversial choices of the Trump cabinet

• Xi faces attacks on overseas Chinese workers

Good morning. Our biggest news story comes from Peru, where Xi Jinping will today inaugurate a Chinese-built megaport intended to transform trans-Pacific trade.

The port of Chancay will disrupt maritime trade along the continent's Pacific coast as it can accommodate larger ships in its deep waters. It will also significantly reduce transit time for ships traveling to Asia from Peru.

But it has not been without controversy. Analysts and officials have expressed concerns that the $3.6 billion port actually represents a ceding of Peruvian sovereignty over the port.

China's Cosco Shipping, which built the port with a local junior partner, will be the sole operator when it opens after Peru dropped a lawsuit challenging its exclusive status.

Meanwhile, the United States, which views Beijing's growing influence in Latin America as a strategic challenge, has warned that the port could be used by Chinese warships. The development could be a point of contention with President-elect Donald Trump, who is taking a tougher line on China.

Andean correspondent Joe Daniels tells the whole story of the port of Chancay, where everything is made in China.

Here's what we were keeping an eye on today:

• Economic data: Australia releases labor force data for October.

• Parliamentary elections in Sri Lanka: Left-wing President Anura Kumara Dissanayake, elected in September, hopes to consolidate his party's power in today's vote to help implement his campaign promises.

• Results: Foxconn and the three largest Japanese banks publish their latest results.

Five other headline news

1. Donald Trump nominated Matt Gaetz, the firebrand Republican congressman from Florida, to be U.S. attorney general. in his second administration. The controversial choice comes as the president-elect vows revenge for the criminal investigations and indictments launched against him by federal prosecutors in recent years.

• More Cabinet Selections: Trump chose Tulsi Gabbard, a former Democratic congresswoman known for her pro-Russian views, as director of national intelligence.

• Trump's nominee for Secretary of Defense: Right-wing television personality and U.S. Army veteran Pete Hegseth is set to lead the world's largest, most powerful, and possibly most bureaucratic military.

• More US news: South Dakota Sen. John Thune was elected the next Republican leader in the Senate during Trump's second term, in a rebuke to Trump allies who had pushed for another candidate to get the job.

2. Seven & i Holdings ends months of obstruction and begins negotiations with Alimentation Couche-Tard of Canada on a $47 billion takeover bid for the owner of the 7-Eleven store. The long-awaited talks began just as a potential white knight candidate emerged, adding to the frenzy around a deal that, if successful, would transform Japan's corporate mergers and acquisitions market.

3. US inflation reached 2.6 percent in October, as the Federal Reserve debates whether to cut interest rates at its final meeting before Trump takes office. Sarah House, senior economist at Wells Fargo, said the numbers showed it was difficult to eliminate this last bit of inflation.

4. The detention in Mali of an international mining boss and two colleagues raises concern in the industry on the growing personal risks for the leaders of this gold-rich West African country. The three executives of Australian gold producer Resolute Mining are among seven executives of Western mining companies who have been detained in the past two months as tensions rise between the industry and the military junta.

5. Elon Musk's support for Trump is expected to boost X's declining business, with some marketers ready to return to the social media platform in order to curry favor with the new administration. Media executives told the FT that some brands were preparing to advertise on X again and would seek to curry favor with Elon.

In-depth news

Chinese leader Xi Jinping is under pressure to better protect his country's interests in volatile parts of the world after a bomb attack by Pakistani separatists last month claimed the lives of two Chinese engineers. A spike in violence from the Balochistan Liberation Army poses a risk to the China-Pakistan Economic Corridor, the largest set of projects under Xi's Belt and Road Initiative, with investments Chinese totals estimated at 62 billion dollars.

We also read…

• US-China Ties Under Trump: The range of possible outcomes from this relationship is wider than ever, writes Evan Medeiros, a professor at Georgetown University.

• Sentient AI: As companies race to build machines that are more like us, Anjana Ahuja asks: should we worry about the feelings of artificial intelligences?

• The most badass airline on the planet: Lebanons Middle East Airlines is the only carrier serving the country in the middle of a conflict.

Chart of the day

Investors poured record amounts into exchange-traded funds this year, even before the buying frenzy sparked by Trump's election. As of October 31, global net flows to the ETF sector had reached 1.4 trillion dollarsaccording to BlackRock data.

Take a break from the news

Samantha Harvey won the 2024 Booker Prize for fiction for her novel Orbitala sharp and lyrical meditation on the state of the Earth and humanity seen from space. Edmund de Waal, president of the jury, said that Harvey made our world strange and new to us.