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China may displace the US as main trading partner of Peru

Andina | 14.12.2009

China may displace the US as main trading partner of Peru

Lima, Dec. 14 (ANDINA).- Asian Pacific affairs expert Carlos Aquino said it is likely that China will overtake the United States as the principal consumer of Peruvian goods in 2010.

Aquino recalled that China’s industrial output growth accelerated to 19.2 percent in November year on year and its exports fell 1.2 percent from a year earlier last month, their smallest decline since exports began falling in November of last year. However, its imports increased by 26.7 percent year-over-year in November.

"If we look at China’s figures, we see that it is the world’s largest importer and exporter. Despite the economic crisis, China continued to grow and that’s because it implemented a 580 billion stimulus package, equivalent to 6% of its GDP. This offset declining exports and expanded China’s domestic market,” he added.

Carlos Aquino, who works as a consultant on subjects related to Asia-Pacific countries, remarked that while the Chinese economy continues to grow at this pace, Peru will receive greater benefits.

"China will need more raw materials and 95% of our exports to that country are exactly raw materials. That’s important. There are also investments in various projects, especially in the mining industry, which make us predict that our exports to China exports will significantly increase in the coming years," he noted.

Peru-China FTA

On December 7, Peru’s government ratified a free trade agreement with China, noting that this decision "favors Peru’s interests." Peru is one of China’s major trading partners in Latin America.

The agreement -made by executive decree, without Congressional input as allowed by the constitution- will go into effect in January 2010.

The Peru-China free trade agreement was signed April 28 in Beijing during a visit by Peruvian Vice President Luis Giampietri.

The deal will lead to the gradual removal of tariffs on more than 90 percent of goods ranging from Chinese electronic products and machinery to Peruvian fishmeal and minerals.

Under the deal, the two nations also pledged to further open their service sectors and offer favorable treatment to investors.

China is now Peru’s second largest trading partner after the United States.

Peru is a major producer of lead, zinc, copper, tin and gold. Two-way trade totaled about 6.46 billion dollars in the first 10 months of last year, according to figures published by the Chinese commerce ministry.

 source: Andina