Present state of China economic relations with Peru

China became in the year 2011 the biggest export market of Peru and its biggest trade partner, over the United States, and this situation continued last year. Exports to China increased from 100 million dollars in 1990 to 400 million in 2000 and are projected to reach around 7,600 million dollars in 2012.  Imports also increased and last year Peru registered its first trade deficit with China when imports are projected to teach 7,800 million dollars.

Relations between Peru and China are quite old. Peru became the first country in Latin America to receive large scale immigration from China: from 1849 to 1872 nearly one hundred thousand Chinese workers came to Peru. Thus Peru is now home to the largest community of Chinese origin in Latin America. Also in 1874 Peru became the first country in Latin America to establish diplomatic relations with China.

In 1992 Peru became the first country outside Asia to receive the largest Chinese foreign investment, when Shougang Corporation bought the state company Hierro Peru for 120 million dollars. Now China investment is growing very fast and could become the largest in Peru the following years.

From 1990 when Peru economy opened to the world and implemented economic reforms, foreign trade and investment from abroad has increased. Especially since the year 2000 when foreign demand for Peru commodities increased, and the price of them, Peru economy has been growing at high rates, becoming the fastest growing economy in Latin America, at an average annual rate of 6%.

Much of the reason for that is said to be because of China´s demand for Peru iron, copper, fishmeal, among other commodities. 95% of Peru exports to China are commodities. So Peru has to some extent become dependent of China appetite for commodities, to the point that a slowdown in China´s economy it is said could affect Peru growth, as was pointed out by the Minister of Economy of Peru when in October 2011said that he prays every day for China economy to not slowdown.     

Economic relations are also expected to increase since a Free Trade Agreement come into effect three years ago. In March 2013 it will be the third anniversary of China Peru Free Trade Area agreement coming into effect.

Relations between the two countries are good but there have been some frictions like the fact that trade is asymmetric because Peru exports mostly primary good but imports from China manufactured ones, also because complaints by some Peruvian companies that Chinese companies do dumping or engage in unfair trade, and some frictions caused by some Chinese investment, mostly in the mineral and petroleum sector, that encounter opposition by some local people.