1. China and Peru relations
”5th World Forum on China Studies”,
Carlos Aquino Rodríguez
 Professor at San Marcos National University, Peru
 Specialist in Asian Economies
 Peru’s Official Translator of the Japanese languaje
 Master and Doctor course at Kobe University, Japan
 Visiting Professor at Asian Universities
 Chairman FEALAC Vision Group
E-mail : carloskobe2005@yahoo.com
Web site, Blog, Facebook

2. Index
 I. Introduction
 II. Peru and China old relationship
 III. State of economic relations: Trade, Investment,
Economic Cooperation
 IV. FTA agreement between Peru and China
 V. Chinese culture influence
 VI. Conclusions

3. I. Introduction
 On November 2nd, 2012 Peru and China celebrated forty
one years of modern diplomatic relations. On March 1st,
2013 it was the third anniversary since the Free Trade
Area, FTA, agreement between the two countries entered
into effect.
 China became in 2011 the biggest trade partner of Peru,
over the United States, which was the traditional dominant
partner, and given present perspectives that position will
continue in the future
 But Peru has a longer history of relations with China.

4. II. . Peru and China old relationship
 The first contact between these countries began in 1849,
when Chinese immigrants began coming to Peru. From
that year up to 1872 around 100,000 Chinese came to
Peru, mostly from the southern part, in present day
Guangdong province.
 Peru became the first country in Latin America to receive
Chinese immigration in a large scale
 Peru became in 1874 the first Latin American country to
establish diplomatic relations with China

5. III. State of economic relations: Trade, Investment,
Economic Cooperation
 After Peru suffered a long period of economic stagnation
and political instability, in 1990 the new government
introduced economic reforms that opened the economy to
foreign trade and investment, and at the same time
political stability was attained. So the economy began to
grow again.
 In 1993 the amount of Peruvian exports to China was only
of 140 million dollars, but in 2003 they reached 676 million
dollars. In the same period imports from China increased
from 90 million dollars to 646 million dollars. See table 2.

6. Graphic 1: Peru Gross Domestic Product growth, 1992-2012 (annual growth average)
Source: Peru National Statistics Institute http://www.inei.gob.pe/perucifrasHTM/inf-eco/cuadro.asp?cod=3842&name=pr01&ext=gif

7. Table 1: Peru main trade partners in the last three years, in million dollars
•Source: Peru’s Customs Office:
http://www.aduanet.gob.pe/aduanas/informae/BalContiZonaPais_01122012.htm
Country 2010 2010 2011 2011 2012 2012
Exports Imports Exports Imports Exports Imports
1. China 5,436 5,140 6,963 6,325 7,692 7,795
1. United 6,087 5,811 5,903 7,350 6,032 7,921
States
1. Switzer 3,845 118 5,937 150 5,062 154
land
1. Canada 3,329 539 4,232 583 3,358 588

8. Table 2: Exports from Peru to mains partners in Asia members of APEC (in million dollars) (FOB)
Source: Peru’s Customs Office:
http://www.aduanet.gob.pe/aduanas/informae/BalContiZonaPais_01122011.htm
Country/Economy 1993 1997 2003 2006 2008 2010 2011 2012
World Total 3,344.40 6,741.75 8,939.82 23,431.43 31,162.75 35,073.25 45,636.0 45,228.6
Australia 14.99 16.31 53.12 38.25 79.81 117.5 115.3 98.7
South Korea 59.36 91.50 176.34 545.27 551.69 894.9 1,694.9 1,527.4
China 140.84 490.06 676.96 2,267.27 3,737.24 5,425.9 6,961.4 7,692.4
Hong Kong 28.60 68.82 30.31 42.14 54.21 78.5 92.5 94.9
Japan 299.04 473.57 391.16 1,229.76 1,853.18 1,790.4 2,174.8 2,576.2
New Zeeland 1.50 - 3.72 7.59 12.60 13.5 18.4 25.5
Russia 9.90 9.48 14.18 25.61 21.74 57.9 79.5 85.1
Taiwan 118.78 159.11 147.28 415.03 596.11 293.0 368.8 260.9

9. Trade
 China is the top export destination and the top trade
partner of Peru
 Peru’s Minister of Economy Mr. Luis Castilla said on
October 2011 that he “prays every day” for China economy
to continue growing at high rates because that way Peru
will benefit from that. If China economy reduces its pace of
growth there will be less demand for Peru raw materials,
prices, of specially minerals, will decrease, exports will
decrease and the country will be greatly affected
 Peru exports mainly raw materials while buys from China
mostly manufactured goods.
 It is an asymmetric trade relationship

10. Table 3: Main products exported to China, 2012
•Source: Peru’s Customs Office:
http://www.aduanet.gob.pe/aduanas/informae/XPaisPartMensual_01122012.htm
Product Million of dollars
Total amount 7,692.4
1. Copper ore 3,415.6
1. Fishmeal 885.5
1. Iron ore 852.7
1. Lead 805.7
1. Copper Cathode 684.1
1. Copper “Blister” 223.3

11. Table 4: Peru imports from main partners in Asia members of
APEC (on million dollars) (CIF)
Source: Peru’s Customs Office:
http://www.aduanet.gob.pe/aduanas/informae/BalContiZonaPais_01122011.htm
1993 1997 2003 2004 2007 2010 2011 2012
World 4,024.5 7,716.9 8,428.5 10,111.4 20,464.2 29,879.5 37,699.0 39,911.8
Total
Australia 17.3 33.0 28.1 46.8 67.5 75.0 110.6 133.1
South 99.4 230.2 277.7 296.5 522.3 1,044.2 1,490.6 1,647.4
Korea
China 90.4 195.9 646.5 767.9 2,474.2 5,115.3 6,321.5 7,795.7
Hong 12.2 17.0 15.1 21.9 16.5 22.8 15.7 20.6
Kong
Japan 303.6 417.9 367.4 358.8 790.3 1,366.9 1,307.1 1,499.3
New 45.9 - 16.2 23.3 22.4 56.4 67.8 119.0
Zealand
Russia 15.2 21.9 56.3 44.7 136.3 183.4 513.2 334.3
Taiwan 60.1 112.0 133.5 151.1 258.4 327.8 439.7 461.5

12. Trade
 Actually China is the biggest market for Peruvian exports.
China buys most of the iron ore, copper, zinc, fishmeal,
lead, tin, that Peru sells abroad. And China is the second
source of imports, after the U.S., but this year will be the
first.
 Most of the textiles and garments imported by Peru came
from China as are also toys, footwear, electrical appliances
and most of the consumer goods, and increasingly cars
 Cheap manufactured goods from China have helped
improve the living standards of many Peruvians, especially
of poor people.

13. Table 5: Main products imported from China, 2012
•Source: Peru’s Customs Office:
http://www.aduanet.gob.pe/aduanas/informae/MPaisPartMensual_01122012.htm
Product Millions of dollars
(fob)
Total 7,795.7
1. Mobile phones 525.9
1. Data Processing Machinery 417.7
1. Motorcycles 151.2
1. Vehicles 100.3
1. Phone equipment 90.2
1. Footwear 79.3

14. Investment
 Foreign Direct Investment (FDI) in Peru has increased a lot in the last
years
 China investment in Peru was nil up to 1992. That year, Shougang
Corporation ( 首钢集团 ) bought the state company Hierro Peru that
exploits iron. It was the first big sale of a Peruvian state company after
the government began in 1990 a process of economic reforms and
opening of the economy to foreign investment.
 China interest in securing sources of raw material was the reason
behind its decision to buy the Peruvian company. It was one of the first
biggest investments by a Chinese state company of a foreign asset.
Shougang paid around 120 million dollars for that. The mine that
Shougang bought is the only one that produces iron ore in Peru
 China investment is mainly in mining

15. Source: http://www.proinversion.gob.pe/0/0/modulos/JER/PlantillaStandardsinHijos.aspx?ARE=0&PFL=0&JER=1537
Graphic 2: Stock of FDI in Peru, million dollars

16. Table 6: Stock of FDI in Peru by country of origin, million dollars
Source: http://www.proinversion.gob.pe/0/0/modulos/JER/PlantillaStandardsinHijos.aspx?ARE=0&PFL=0&JER=1537
STOCK DE
APORTES AL
CAPITAL POR PAÍS
DE ORIGEN
(Millones US$)
País 2012 % % Acumulado
España 4,818.57 21.25% 21.25%
EE.UU. 3,012.47 13.29% 34.54%
Sudáfrica 1,740.17 7.67% 42.21%
Chile 1,643.90 7.25% 49.46%
Brasil 1,334.91 5.89% 55.35%
Reino Unido 1/ 1,314.93 5.80% 61.15%
Canada 1,276.23 5.63% 66.78%
Suiza 934.65 4.12% 70.90%
México 897.90 3.96% 74.86%
China 796.48 3.51% 78.37%
Italia 733.51 3.23% 81.61%
Colombia 569.32 2.51% 84.12%
Países Bajos 2/ 486.39 2.15% 86.26%
Japón 436.79 1.93% 88.19%
Noruega 402.82 1.78% 89.97%
Otros 2,275.31 10.03% 100.00%
TOTAL 22,674.35 100.00%
*Stock actualizado a
diciembre de 2012.
1/ Incluye
Dependencias
Británicas y
Territorios Británicos
de Ultramar.
2/ Incluye Territorios

17. Investment
 In the last years Chinese companies have announced and
are carrying out big investment. For example currently
Chinalco Aluminiun Corp. is investing 3.5 billion dollars in a
copper mine called Toromocho, in the central part of Peru.
Another big investment is the project Pampa de Pongo, of
the Nanjinzhao Group Co. Ltd. for 3.28 billion dollars that
will produce iron.
 According to statistics by the Ministry of Energy and Mines
of Peru, by January 2013 there is an amount of 54.68
billion dollars of investment mostly being currently carried
on the mining sector, of which investment from China
accounts for 22.35% of the total, or 12.21 billion dollars,
the biggest one.

18. Graphic 3: Approved investment (and currently carried on) in the mining sector, by country, in million
dollars
Source: “Cartera Estimada de Proyectos Mineros” Updated January 2013, Ministry of Energy and Mines
http://www.minem.gob.pe/minem/archivos/file/Mineria/INVERSION/2012/CEP%20SETIEMBRE%202012.pdf

19. Investment
 Lately Chinese investment in the fishing sector is active.
The reason is that China is the main buyer of Peruvian
fishmeal. On March 13 this year China Fishery Group
Limited (CFGL) bought 9.9% of shares, valued at 54.8
million dollars, of Copeinca, one of the biggest Peruvian
companies in the sector producing fishmeal. Peru share in
world export of fishmeal is around 41% and China is the
main world importer of that product with a share of 41% of
the world total
 But some Chinese investment has run into trouble,
especially and notoriously Shougang Corporation. Since it
began operations, every year, and sometimes two or three
times per year, they have had trouble with its labor union
that had gone on strikes very often

20. Economic Cooperation
 In the last years China has given some money as
economic cooperation to Peru and lately scholarships to
Peruvian students to learn Chinese language. Also it has
established several Confucius Institutes with Peruvian
Universities to foment Chinese culture and language.
 The Industrial and Commercial Bank of China (ICBC)
established an office in Lima in the year 2012 with a capital
of 50 million dollars to lend companies in Peru who want to
buy goods from China
 China is a member of the IADB

21. IV. FTA agreement between Peru and China
 Peru has a FTA in effect with China from 2010. Peru
expects to sell products with more value added to China.
 The FTA agreement was initially opposed by some
companies in Peru that were afraid of competing with
China. In the agreement sensible sectors to China
competition in Peru like textiles, garments, footwear were
exempted from the lowering or elimination of tariffs
 But Chinese imports are, for some Peruvians companies,
unfair competition because of dumping and subsidies.
 A representative case is of Chinese shoes, which even if
they have antidumping duties imposed on them from the
year 2000, have came to dominate the market for imported
shoes.

22. Number of imported Chinese shoes and share in the market of
imported shoes (in thousands –right hand-, and in %)
Source: Quarterly Dumping and Subsidies Bulletin of Indecopi, december 2011, pag 5:
http://www.indecopi.gob.pe/repositorioaps/0/5/bol/boletin_dumping_y_subsidios/Dic11CFD.pdf

23.  By December 31, 2012, the following products from China
have antidumping duties: several kinds of footwear (up to
the year 2016), a kind of stainless steel flatware (up to the
year 2016), several kinds of zippers (up to the year 2015),
several kinds of poplin fabric type (up to the year 2015),
several kinds of cotton fabric and mixtures with polyester
(up to the year 2014), a kind of cotton denim fabrics (up to
the year 2015), several kinds of plain weave fabrics
(subject to examination), several kinds of sandals (up to
the year 2014).
 In summary, at present, March 2013, 57% of antidumping
duties imposed by Peru are to Chinese products. There
are 8 duties imposed to China, two to United States, one to
Pakistan, one to Vietnam, one to India, one to Spain and
another one to Italy.

24.  Peru expects more Chinese investment, not only to exploit
raw materials, but also to produce manufactured goods for
the internal market that is growing, and also to produce in
Peru and from it to export to countries whom Peru has FTA
agreements. Peru has achieved FTA agreements with
major markets like the U.S., European Community,
Canada, most of Latin American countries, Japan and
South Korea.
 Peru is in negotiating in the Trans Pacific Partnership
agreement, TPP that will form a large free trade area
among them.
 Peru has formed with Chile, Colombia and Mexico the
“Alianza del Pacifico” or Pacific Alliance, of 4 Latin
American countries with borders in the Pacific Ocean and
they will have a free trade area among them

25. IV. Chinese culture influence
 It is said that perhaps 10% of Peruvians has some
Chinese origin.
 Chinese immigrants influence in Peru is well known in
several subjects and for example one strong is in food.
 Interest in China is increasing.
 Peruvian government has begun giving scholarship for
studying in China. CONCYTEC, the official institution for
science and technology is offering financing for studies of
Master, Doctor Course, special training and Chinese
language in Chinese Universities

26. IV. Conclusions
 China is an important economic partner of Peru. It is its
biggest market for its exports, and an important source of
investment. These two roles will increase in the future.
China’s need for raw materials will increase and its
companies are looking to control the source of these raw
materials.
 China economic growth at high rates is also important for
Peru, to the point as it was stated, that Peru Minister of
Economy and Finance “prays every day” for this to
continue. Also, Peru has big expectations on increasing
exports to the Chinese market thanks to the FTA, but this
will depend on creating goods suitable for their
consumers.

27.  Peru and China are nations experiencing robust economic
growth.
 They are middle-income countries with a growing middle
class, where internal demand is playing a bigger role in
fueling economic growth.
 Peru and China can strengthen their trade, investment and
other economic ties, and expand their people-to-people
exchanges.
 It is important knowing better each other to avoid
misunderstandings.’
 Need to know the Chinese market to sell more value
added goods and also to industrialize more the country.

28. Bibliography
 Carlos Aquino: “Ties good, but could be better” (about relations
between China and Latin America) , China Daily, February 10, 2012,
http://www.chinadaily.com.cn/usa/business/2012-
02/10/content_14579217.htm
 Carlos Aquino: “China and Peru relations after 40 years of diplomatic
links and two years of a FTA” April 24th, 2012, UNMSM
http://economia.unmsm.edu.pe/noticia/2012/PeruChina_24.4.12.pdf
 Jiang Shixue: “Understanding China relations with Latin America”
http://www.sinolatincapital.cn/Upload/2009929184158.pdf
 “El imperio chino superará al imperio español” http://acontecer-ahora-
es.blogspot.com/2010/08/el-imperio-chino-superara-al-imperio.html