Peru and the “America crece” initiative

It seems that Peru has not yet joined the “America crece” initiative.  As far as I know it is still being negotiated with the US so Peru can sign a MOU on that subject.

Eventually Peru will join this initiative, seen as an effort of the United States to compete with China “Belt and Road Initiative”, BRI. But so far the US initiative seems to be more of a declarative statement and a way to show that is doing something to counter China growing presence in the region, than a real attempt to do so.

The US initiative is different from the BRI in several senses. First, the BRI is a complete scheme to link China with countries in several aspects, not only in the infrastructure connectivity, but also, in the political, trade, financial, and people to people connectivity. The “America crece” initiative is more limited to promote private sector infrastructure investment in Latin America. Second, the BRI have the backup of many financial institutions of China, many of them government funds or linked to China, like the Silk and Road Fund, the AIIB, the BRICS Bank, and several of its state development banks.  And third, and the most important, is the scale of investment that China is investing (as seen in Asia for example) and willing to invest. Even if US government have stated that its agencies like USAID, the United Sates Trade and Development (USTDA), and the Overseas Private and Investment Corporation (OPIC) will participate in the initiative they do not have the financial muscle that China is willing to display in its BRI.

And lastly, it seems that US cannot offer what the region wants, but China can do. Latin American need markets for its raw materials that exports, but US buy less and less of that, as many of its manufacturing companies have moved abroad (to countries as China). For example, last year 2019 China, the biggest market for Peru goods, accounted for around 29.5% of total Peru exports, and that amount was an increase of 2% compared to the year 2018. In contrast, US accounted for only 12.5% of Peru exports, and the amount sold was 29.5% less than the figure of 2018. Latin America needs investment, and China investment is growing in the region, specially its investment in infrastructure, and Peru is a good example of that. Even before Peru joined the BRI last year, already China was investing more in the country in the infrasterucre sector. By the way, there are already 19 countries in Latin America that have joined the BRI, but as far as I know very few have yet joined the “America crece” initiative.

Lastly, China have manifested it willingness to open more its market, the opposite of US attitude of protectionism toward the region and the world.