Sources said that Peru had asked a court to withdraw its request for a Chinese company to be stripped of the exclusive rights to run a "megaport", which it is building along Peru's Pacific Coast. This was done to cool tensions ahead of this week's leaders' meeting.

In March, the government requested the cancellation of its decision to grant Hong Kong-based Cosco Shipping Ports the exclusive right to operate the Chancay Port Terminal deepwater terminal it is building. It cited an "administrative mistake."

Sources close to the Peruvian port authority have told a prosecutor in the ministry of transportation that they "formally" requested on Monday for their original request to be withdrawn.

This announcement comes just days before the Peruvian president Dina Boluarte will meet with Cosco executives during a China trip and Chinese President Xi Jinping. It appears to settle a legal dispute that existed between Boluarte and her government, which had raised fears of an arbitration process.

Another industry source said that the Peruvian port authority had authorized the prosecutor last week to make this request after Congress approved changes in Peru's ports laws which allowed Cosco Shipping to have exclusive rights to run the terminal they are building.

The Chinese company in Peru has declined to comment on this decision.

The Peruvian government hopes that the Chancay megaport, worth $3.5 billion, will become a hub for the South American Pacific. However, the project has angered players from the United States and Europe who are trying to curb the rise of Chinese influence throughout Latin America.

Cosco Shipping plans to open the Chancay Megaport in November when the Asia-Pacific Economic Cooperation Leaders' Summit is scheduled in Lima. Reporting by Marco Aquino, Editing by Lincoln Feast.