China and Peru jointly building a better future

Peru is the second-largest investment destination for China in Latin America, and about 36 percent of Peru's exports of goods were destined for China last year, consolidating China's position as the biggest trade partner of Peru and further deepening the trade and investment relations between the two countries.

In 2008, Peru and China signed a strategic partnership agreement to not only boost bilateral trade but also deepen cooperation in areas such as international relations, including cooperation in global forums, and align their trade policies.

In 2009, Peru became the second country (after Chile) in Latin America to sign a free trade agreement with China, with the agreement taking effect in 2010. And in 2013, the two countries signed a comprehensive strategic partnership agreement that elevated bilateral relationship to a higher level.

In September 2016, then Peruvian President Pedro Pablo Kuczynski visited China on his first foreign trip, which showed the growing importance of China-Peru relations for Lima. And former president Pedro Castillo, who succeeded Kuczynski, paid a visit to the Chinese embassy one week before assuming his post in July 2021.

Besides, incumbent Peruvian President Dina Ercilia Boluarte Zegarra met with Chinese President Xi Jinping during the APEC Leaders Meeting in San Francisco, California, last year, and paid a visit to China in June this year with a large delegation of ministers and businessmen during which the two sides signed several agreements.

According to figures given by Chinese Ambassador to Peru Song Yang during an interview in September, about 200 Chinese companies have invested about $30 billion in Peru. But according to a study by the American Enterprise Institute published in July, between 2005 and June 2024, China has invested about $31.8 billion in Peru.

More importantly, President Xi will attend the APEC Leaders Meeting in Lima and also pay a state visit to Peru from Thursday to Sunday.

Since Peru joined the Belt and Road Initiative in 2019, Chinese investments in Peru's infrastructure sector have significantly increased. In particular, China is building a seaport in Chancay, about 55 kilometers north of Lima, which will be the most modern port on the South Pacific coast of Latin America. Owned 60 percent by China's COSCO Shipping Corporation, the port will cost more than $3 billion and will be the gateway to Peru from Asia as well as an exchange and distribution hub for South America.

Peru's geographical location in the center of South America's Pacific coast makes it the gateway to Latin American markets for Asian economies, and the port of departure to Asia for Latin American countries.

Peru already exports more than half its goods to Asia, with over 97 percent of them being transported by ocean-going vessels. There are no direct maritime links to the Asian markets from Peru, or for that matter from any South American country. But thanks to the Chancay port, South American countries will now have a direct maritime route to Asia.

The other major Chinese investments by Chinese enterprises in Peru in recent years were made by China Three Gorges Project Corporation and China Southern Power Grid International, which separately acquired two companies which generated and supplied electricity to Lima. In 2019, China Yangtze Power International, a subsidiary of China Three Gorges Project Corporation, acquired Sempra Energy International for $3.59 billion, and in 2023 China Southern Power Grid International paid $2.9 billion to acquire Enel. Chinese companies have also bought other Peruvian electricity companies.

Moreover, Peru became a member of the Asian Infrastructure Investment Bank, contributing $154.6 million, the highest amount by a Latin American country, to the bank's fund. Only five other Latin American countries have contributed to the AIIB's fund: Argentina, Brazil, Chile, Ecuador and Uruguay. In fact, Peru's contribution to the AIIB's fund accounts for 84 percent of the total by Latin American countries.

China is also investing in training talents for 5G technology, with Chinese telecom giant Huawei setting up laboratories and research centers in universities such as San Marcos National University and National University of Engineering, two of the biggest and most prestigious universities in Peru.

Peru's railways and highways are other potential investment areas for Chinese companies. Every country needs to build modern infrastructure to boost its economic development. And Latin American countries need to improve their infrastructure to achieve higher growth — which they can achieve through the Belt and Road Initiative framework.

The views don't necessarily represent those of China Daily.

The author is an economist and director of the Center for Asian Studies at Peru's National University of San Marcos.