A successful partnership: Political and economic ties with China are stronger than ever

The 40th anniversary of the establishment of formal relations between the governments of China and Peru was marked in 2012, underlining a longstanding relationship that has become increasingly important as time has gone on. In recent years bilateral relations have grown significantly. Trade between the two countries has increased sharply in recent years, particularly since the signing of a free trade agreement (FTA) in 2009. Two-way trade reached an all-time high in 2011, when China overtook the US to become Peru’s largest trading partner. Much of this is due to the country’s vast mineral wealth, as well as its position on the western coast of South America, both of which have attracted numerous Chinese companies hungry for raw materials and access to growing Latin American markets.

As one of just three Latin American countries to join the Asia Pacific Economic Cooperation (APEC) forum – the other two being Chile and Mexico – Peru has been positioning itself to become a centre for trade between Latin America and Asia. Public and private investments to upgrade coastal ports and inland transport corridors have been made with an eye to increase trade (see Transport chapter).

INCREASED CONTACT: On the sidelines of the APEC Conference in November 2011 in Hawaii, President Ollanta Humala met with his Chinese counterpart Hu Jintao to discuss how to further deepen the relationship between the two nations. Both leaders called for the continued strengthening of political contact, the deepening of economic cooperation, and trade and closer cultural exchanges, while Humala reaffirmed Peru’s support of the “One-China” policy. Hu previously visited Peru in 2008, and former Peruvian President Alan García also took a trip to China during his term. President Humala is likely to make an official trip to China in 2012.

Numerous other official meetings between the two governments have also taken place at lower levels. For example, Chinese Vice-Premier Hui Liangyu met with Peruvian Vice-President Marisol Espinoza in Lima in September 2011.

MILITARY TIES: Meanwhile, a Chinese military delegation, led by China’s vice-chairman of the Central Military Commission, General Guo Boxiong, paid a visit to Lima in November 2011, along with a member of the Central Politburo of the Communist Party and other high-ranking military officials. While in Lima they met with Peru’s former defence minister, Daniel Mora Zevallos, to sign two military cooperation agreements. This was the second such meeting in 2011, the first occurring in May when Jaime Thorne, the former Peruvian defence minister, travelled to China to meet Xu Caihou, vice-chairman of China's Central Military Commission, as well as Liang Guanglie, the Chinese defence minister.

Although political and military ties are strong and continue to expand, they are overshadowed by the economic integration between the two countries. China purchased $6.95bn worth of Peruvian goods in 2011, mostly minerals and fishmeal. Moreover, Chinese investments are predicted to total as much as $10bn over the next five years, all of which is part of China’s larger scheme to place an estimated 60% of foreign investments in Latin America by 2020, according to the Peru-China Chamber of Commerce.

40 YEARS: Celebrations of the 40th anniversary of diplomatic relations took place both in Lima and Shanghai on November 2 of 2011. The Chinese ambassador celebrated with former Peruvian Foreign Minister José Antonio Meier, while their counterparts met for a similar exchange in Beijing.

Although trade may gain the most attention, other aspects of bilateral relations, such as frequent military exchanges, are also important. Lima has one of the continent’s largest Chinatowns, known as the Barrio Chino de Lima – an important area for Chinese culture in the country. With investment and trade expected to keep growing, it appears likely that China-Peru relations will continue to deepen.