Peru - China: recover economic flows after Covid 19

Although unfortunately the pandemic is in full swing, showing the worst shortcomings and weaknesses of Peruvian society, it is crucial to plan the subsequent normalization of economic activities, greatly affected by the double strike of the pandemic and the global financial crisis aggravated by the event.

In fact, if Peru did not almost resent the US trade war against China in 2019, keeping its exports to both its main trading partners with little variation, this year there is already a drop in important export items, such as copper, due to the recession caused by quarantine in most industrialized countries.

China is the main trading partner of Peru and practically the main foreign investor; as well as the US They are our second trading partner, so a confrontation between these two countries would be catastrophic, even for all of Latin America.

Even though in Peru there is a resentment of some manufacturing sectors, such as textiles, clothing and footwear, in relation to the massive imports of cheap products from China; and there are social protests in relation to Chinese companies, in balance the growing economic ties with the Asian giant have been very beneficial, especially since the 2009 bilateral Free Trade Agreement:

- Ensuring international demand for our mining and agricultural products, which has allowed export earnings to rise consistently, even overcoming the deterioration in the terms of trade of previous decades;

- Ensuring the supply of capital goods and industrial inputs, vital for our companies, at much more competitive prices,

- Ensuring a supply of cheap consumer goods for the popular sectors, which has thus alleviated unfavorable employment situations.

- Increasing Chinese direct domestic investment for a total of US $ 30,000 million in the sectors: mining, gas, oil, electricity generation, port, logistics, engineering, banking, among others, in dimensions not achievable for traditional investor countries ( USA, Canada, UK, Germany, France). In mining alone, Chinese investment amounts to USD 11.7 billion. Las Bambas, the Toromocho expansion, and the Chancay Megaport are the flagship investments of the Asian giant

The benefits would be greater if the government's rejection by Pedro Pablo Kuczsinski in 2017 of the Chinese offer to take over the construction of the Brazil Peru-bi-oceanic railroad was not mediated, amid the North American government's alarm over the supposed “geopolitical advance” of China in the subcontinent.

The Peruvian government and business sector have so far remained cautious in the face of the anti-Chinese belligerent positions of some sectors of the US government; emphasizing the 50 years of diplomatic relations between both countries and their integral strategic alliance that has helped the country overcome the deep crisis of the last two decades of the last century.

May 06, 2020