2021 is a special year in Peru's relationship with the People's Republic of China as it marks (in November) 50 years since the establishment of diplomatic relations with that country. China is increasingly important for Peru (and the world as well), as it is the country's largest trading partner, it is becoming the largest investor, and at the present juncture of the pandemic, it is the country that actually provides and will provide Peru with the largest number of vaccines to face the COVID-19 pandemic.
For this reason, Foreign Minister Allan Wagner said that "The relationship with China must be taken with much care" . In this article we will review the state of Peru's relationship with that country, to see what makes it special and why it should be taken with much care.
An introduction will be seen first, where a brief review of the history of relations with that country will be made, then the current commercial relationship will be seen, then the status of Chinese investments in Peru, the political and diplomatic relationship, then the topic of the vaccines, and finally some conclusions will be given.
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Peru relations with china at present
1. Peru'srelationswith Chinaat present
CarlosAquino,Directorof CEAS1
2021 isa special yearinPeru'srelationshipwiththe People'sRepublicof Chinaasitmarks (in
November) 50yearssince the establishmentof diplomaticrelationswiththatcountry.Chinais
increasinglyimportantforPeru(andthe worldaswell),asit isthe country'slargesttrading
partner,itis becomingthe largestinvestor,andatthe presentjuncture of the pandemic,itis
the country thatactually providesandwill providePeruwith the largestnumberof vaccinesto
face the COVID-19pandemic.
For thisreason,ForeignMinisterAllanWagnersaidthat"The relationshipwithChinamustbe
takenwithmuchcare"2
. In thisarticle we will review the state of Peru'srelationshipwiththat
country,to see whatmakesitspecial andwhyit shouldbe taken withmuchcare.
An introductionwill be seenfirst,whereabrief review of the historyof relationswiththat
countrywill be made,thenthe currentcommercial relationshipwillbe seen,thenthe statusof
Chinese investmentsinPeru,the political anddiplomaticrelationship,thenthe topicof the
vaccines,andfinallysome conclusionswillbe given.
1. Introduction.-
We have a longhistoryof relationswithChina,withthe ManilaGalleon,of the greatshipsthat
made the Acapulco - Manila(thenSpanishcolonies) crossing,whichexistedfromthe second
half of the 16th centuryto the early19th century.FromManila othershipswenttoMacao,
and thisallowedarelationshipwithAsia,andChinainparticular.There wasanexchange of
goods,and evenpeople, inthatperiod.
Thena massive Chinese immigrationtoPerubegan,since 1849, the firstinSouth America,
whentheycame to workon the coastal farms,andwhichcreatedthe largestChinese
communityinLatinAmericainour country3
.Andin1874 Peruestablishedrelationswiththe
thenQingEmpire,the firstof Chinawitha country inLatin America.
2. Trade relations.-
Before 1990 the commercial relationshipwithChinawasless important.Withthe openingof
the Peruvianeconomyfrom1990 onwardsandChina'sgrowingappetite fornatural resources,
trade (and investment) betweenPeruandChinaincreases.Of course,there wasalsothe vision
of the PeruvianState of projectiontoAsiaPacificfrom1990 onwards,which,forexample,
made it possible forthe countrytoalsojointhe APECforumin 1998. Beinginthisforum
broughtus closerto China.
Let's rememberthatChinaisthe secondlargesteconomyinthe world.Itgrew at ratesof
almost10% annual average for33 consecutive yearsfrom1979 to 2011. Afterwardsithas
grownon average at 6.5% annually.Chinaretakesthe place ithashad inthe world,inwhichit
was the largesteconomyuntil eventhe beginningof the 19thcentury4
.
1 CEAS, Centre for Asian Studies, San Marcos National University,Lima,Peru
2 El Comercio newspaper, page 4, sunday 21, february 2021.
3 For a detailed analysis see:https://www.slideshare.net/carlosalbertoaquinorodriguez/relaciones-de-
peru-con-china-inmigracion-china-y-la-ifr
4 See: https://www.slideshare.net/carlosalbertoaquinorodriguez/el-resurgimiento-de-asia-241612909
2. Chinaisnow the engine of the worldeconomy,ithasbeensince the second half of the 2000s.
In 2020 the worldeconomyfell -3.5%,butChinagrew 2.3%.This year2021 the worldeconomy
will grow5.5% and China8.1% accordingto figuresfromthe International MonetaryFund(see
attachedtable).
Source: https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021-world-economic-outlook-
update?fbclid=IwAR0cUzIcn9fXIu95-lvki4TeNHcJyOgRC_PkZ2X_ItT9A-1I-SsIE0gGf_s
That is whyChinaisour biggesttradingpartnertoday.The year2020 represented28.7% of our
foreigntrade ingoods(althoughwe sell almostonlyraw materialsandimportmanufactured
goods).The secondisthe US, but far below China,withonly17.1% of the total.28.3% of what
was exportedtothe worldwenttoChina,and28.5% of what wasimportedfromthe world
came fromChina. See nextTable.
3. Source: MINCETUR:ReporteMensualdeComercio Exterior, diciembre 2020
Chinaisalso importantbecause 42%of all the mineralsthatPeruexportsgoto that country,
and let'srememberthatminingrepresented57.7% of everythingthatPerusoldtothe worldin
2020. Moreover,the mainproductthat Peru exportsiscopper,whichrepresented28.6% of
everythingexportedin2020, and Chinais the mainbuyer,since 62% of all Peruviancopper
wentto China.
Source: MINCETUR:ReporteMensualdeComercio Exterior, diciembre 2020
4. The importance of Chinais growingasa marketforour productsmore and more,and itwill
continue togrow inthe future.In2010 we exported15% of the total,at the endof the last
decade itreachedalmost30%. See Table below.Amongotherreasons,because Perumainly
exportsrawmaterials,andChinaisstill the one thatmost demandsthese productsforits
industrial machinery,foritsurbanizationprocess,and,althoughnotasmuchas a few years
ago, as ithas alreadybuiltanimportantpart of it, forthe constructionof its infrastructure.
Exports of merchandise of Perú to Asia by main destination, million dollars, and as a % of
total, years 2010 to 2019
Economíes
(Ranking* en el 2019)
2010 2011 2015 2018 2019
China
(1)
5,436
(15%)
6,961
(15%)
7,333
(22.1%)
13,237
(27.6%)
13,503
(29.4%)
Corea del Sur
(5)
896
(2.5%)
1,695
(4%)
1,077
(3.2%)
2,467
(5.1%)
2,228
(4.8%)
Japón
(6)
1,792
(5%)
2,175
(5%)
1,118
(3.4%)
2,181
(4.5%)
1,974
(4.3%)
India
(7)
219
(0.6%)
248
(0.5%)
676
(2.0%)
2,481
(5.2%)
1,787
(3.9%)
Taiwán 293
(0.8%)
369
(0.8%)
270
(0.8%)
289
(0.6%)
201
(0.4%)
Total, Asia 9,163
(26%)
12,191
(27%)
11,043
(33.2%)
21,982
(45.8%)
21,755
(47.3%)
Total, mundo 35,806
(100%)
45,726
(100%)
33,245
(100.0)
48,014
(100.0%)
45,978
(100.0%)
*Ranking como principales mercados para el Perú.
Soruce:MINCETUR, Reporte Mensualde ComercioExterior, yReporte de Comercio
3. Chinese investmentinPeru. -
China'sinvestmentrepresentsalmost25% of the accumulatedFDIin the country(31 billion
dollarsalreadyinvested,andseveral billionsof dollarsmore toinvest, -onlyinminingthere isa
projectportfolioof 10.4 billiondollars -)5
.Atthe endof 2019 there wasa cumulative stockof $
115 billionof foreigndirectinvestment inPeru.Andonlyfrom2005 to 2020 it isestimated that
Chinahad invested29.3billiondollarsinPeru.What'smore,justinminingChineseinvestment
inthe comingyears will be important. See followingchartsandgraphs.
Stock offoreign direct investment, million dollars
5 See the Conference of CEAS in january of this year about this theme:
https://www.facebook.com/CentroDeEstudiosAsiaticos/videos/263108838490448
6. Source: MINEM:2020 Cartera de Proyectos de Construcción de Mina, noviembre 2020
Traditionally,Chinese investmenthasbeeninthe extractionof natural resources,butinrecent
yearsinvestmentininfrastructure projectshasincreased.The importanceof Chinese
investmentinminingis remarkable,forexample, asitscompaniesproduce 100% of the iron
(Shougang),almost30%of the copper(LasBambas and Toromocho),and34% of the oil (CNPC
and itssubsidiarySAPET),14% fromfishmeal andfishoil (the CFGcompany).(2019 figures).
The importance of Chinese investmentisalsobeginning tobe seeninothersectorssuch as
electricitygenerationanddistribution,andinportcapacity.The fact that Perujoinedthe
Chinese BeltandRoadinitiative in2019 is expectedtofurtherpromote thatcountry's
investmentinPeru.
Chinese investment will continue toincrease,asPeruneedsforeigninvestmentandthe
Chinese wanttoinvesthere.Peruoffersafavorable environmentforforeigninvestment,and
thisisparticularlyappreciatedbythe Chinese.
Large-scale Chineseinvestmentwasthe firstinLatinAmerica.Theyhadsome problems,inthe
miningandhydrocarbonssectorinparticular(mainlyenvironmentalproblemsandwiththe
local community).
Peruwill need5GtelecommunicationsnetworktechnologyandHuawei willbe acandidate.
Chinese investmentshouldbe attractedtomanufacturing,butthatdependsonPeru.Itshould
be addedthat mostof the Chinese investmentismade bystate companies.
4. Political and diplomaticrelationship. -
As saidin1874, Peruestablishedrelationswiththe thenQingEmpire,the firstwithacountry
inLatin America.Afterthe establishmentof the People'sRepublicof Chinain1949, Peruwas
the thirdcountry inLatin Americatoestablishdiplomaticrelationswiththe new China,in
1971.
Since thenthe political relationshiphasadvancedalot.Thiswasdrivenbythe growing
economicandcommercial relationshipfrom1990 onwards.Thus,in2009 a Free Trade
Agreementwassignedwiththatcountry,whichentersintoeffectin2010 (andat the moment
a modernization,an adaptationtothe new times,isbeingnegotiated).
7. In 2013 Peruand Chinasigna comprehensive strategic partnership6
,andin2019 Perujoinsthe
Chinese initiative of the BeltandRoad7
.
5. Peruand Chinese vaccines. -
The COVID-19 pandemicaffectsthe wholeworld,anduntil acountryvaccinatesthe majorityof
itspopulation,itwill notbe safe,andeconomicactivitieswillnotbe able tostart 100%.
For variousreasons,whichisnotthe case to analyze atthistime8
,Peruhasbeenone of the
countries mostaffectedinthe worldbythe pandemic.We became the countrywiththe
highestnumberof deathspermillioninhabitants,now we are the 15th country,andthe
secondinLatin AmericaafterMexico(see table below),althoughif we includethe real number
of deathswe wouldcontinue tobe the firstinthe world.
Coronavirus (COVID-1)) Deaths in the world
Source: https://www.realclearpolitics.com/coronavirus/?fbclid=IwAR0ZgG-
ghP_Xp9rXMPN07jiPIisIr_dggoLyDaUSYg1k27aqqMS3YTt8n0w 21 de febrero 3pm.
Notonlythat, Peru´seconomyhas beenpracticallythe mostaffectedinthe worldin2020. The
Peruvianeconomyfell almost12%thatyear9
.Anothermajorreasonto urgentlygetvaccines
for Peru.
So far,onlyone millionChinesevaccineshave arrivedinPeru,fromthe Sinopharmcompany,
and there isa contract for 37 millionmore toarrive inthe course of the year(of a total of 38
millionthatwasagreedwiththatcountry). See Table below.
6 https://www.thedialogue.org/blogs/2021/02/how-china-ranks-its-partners-in-lac/
7 https://iepa.org.pe/raep/index.php/ojs/article/view/152
8 For a detailed analysissee: https://asiapacifico-carlosaquino.blogspot.com/2020/07/peru-y-
latinoamerica-frente-la-pandemia.html
9 https://www.bbc.com/mundo/noticias-55418674
8. Source: https://www.facebook.com/CancilleriaPeru/photos/a.771856589562239/3720650081349527/
AndHealthMinisterOscar Ugarte declaredonSaturday,February20, that at the beginningof
March anothertwomillionChinesevaccineswouldarrive,fromSinopharm, andprobablya
millionvaccinesfromPfizer10
.
Then, alsointhe subjectof vaccinesChinaisincreasinglyimportant,infact,itis the only
countryfrom whichwe have receivedvaccines,andwhichhasassuredvaccinesforhalf of the
Peruvianpopulation,atatime whenmostdevelopingcountriesinthe worlddonothave
secured vaccines.
6. Conclusions.-
The relationshipwithChinaisincreasinglyimportantinvariousaspects.Onthe subjectof
trade,it isour largestpartner(28% of the total),onthat of investmentitislikelytobe soon
the most important (andalready aquarterof all foreigndirectinvestmentcomesfromChina),
on the political anddiplomaticside there isaveryclose relationshipandof the highestlevel,
and inthat of vaccinesitisour greatestsource andthe onlyone secured sofar.
There isa veryoldrelationshipwithChina,andthe immigrationof citizensof thatcountryto
Peru,the oldestinSouthAmerica,hasmade Peruthe seatof the largestcommunityof that
countryin LatinAmerica.AndChinaisthe fastestgrowingeconomy,andwill be the world's
largesteconomybythe endof thisdecade11
.
Due to all of the above,we needtocarefullymanage ourrelationshipwiththatcountry,and
try to getmore outof it,somethingthatstill needstobe done,andthe latteralsorequires
knowingmore aboutthiscountry.
February21, 2021
10 El Comercio newspaper, page 13, sunday 21 february, 2021.
11 https://www.slideshare.net/carlosalbertoaquinorodriguez/el-resurgimiento-de-asia-241612909