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Archives of Business Research – Vol. 12, No. 11
Publication Date: November 25, 2024
DOI:10.14738/abr.1211.17875.
Yang, G., Maolin, H., & Zhipeng, Z. (2024). Bilateral Cooperation Between China and Peru Under the Belt and Road Initiative --From
Strategic Layout to Future Prospects. Archives of Business Research, 12(11). 61-68.
Services for Science and Education – United Kingdom
Bilateral Cooperation Between China and Peru Under the Belt
and Road Initiative --From Strategic Layout to Future Prospects
Guo Yang
School of Humanities and Urban-Rural Development,
Beijing University of Agriculture, Beijing 102206, China
Hu Maolin
School of Management Science and Engineering,
Central University of Finance and Economics,
Beijing 100081, China
Zhang Zhipeng
School of Statistics, Capital University of Economics
and Business, Beijing 100070, China
ABSTRACT
In recent years, the bilateral relationship between China and Peru has developed
rapidly, especially with the advancement of China’s Belt and Road Initiative (BRI),
leading to significant progress in cooperation across areas such as economy, trade,
and investment. As a major country in Latin America, Peru holds unique advantages
in terms of its geopolitical location, resource reserves, and market potential,
making it a key partner for China within the region. This paper explores the
background of Sino-Peruvian relations, the advancement of the BRI in Latin
America, and the strategic importance of Peru's Chancay Port project.
Keywords: Belt and Road Initiative, Sino-Peruvian trade, Chancay Port, Latin American
market.
INTRODUCTION
The China-Peru relationship can be traced back to the 1970s, with bilateral economic and trade
relations gradually establishing and developing since then. With the acceleration of
globalization, particularly following the signing of the Free Trade Agreement (FTA) in 2009, the
bilateral trade volume between the two countries has grown significantly, rising from USD 7.7
billion in 2010 to USD 25.7 billion in 2022, showcasing a promising outlook for economic
cooperation between the two nations.
Under the framework of the Belt and Road Initiative, China has increased its investments in
infrastructure worldwide, aiming to strengthen the stability of global supply chains and ensure
the security of resource acquisition. As a crucial part of the global economy, the Latin American
region has naturally become a focal point of China's attention. Peru, being a key country in Latin
America with abundant mineral resources and a strategic location, has become increasingly
significant within the Belt and Road Initiative.
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Archives of Business Research (ABR) Vol. 12, Issue 11, November-2024
Services for Science and Education – United Kingdom
The Chancay Port project, as a pivotal part of the BRI in Latin America, not only marks the
deepening of Sino-Peruvian cooperation but also symbolizes a new peak in Sino-Latin American
economic collaboration. This project has not only enhanced Peru’s logistics infrastructure but
also created conditions that facilitate Sino-Latin American trade, injecting new momentum into
bilateral trade.
STRATEGIC SIGNIFICANCE OF CHANCAY PORT
Chancay Port, located along Peru’s Pacific coast, is one of the country’s most important ports
with considerable strategic value. Its construction and operation have not only enhanced Peru’s
logistics capabilities but also provided substantial support for China’s trade and investment in
Latin America. The completion of the port has significantly reduced the distance between Peru
and the Asia-Pacific market, cutting down both transportation time and costs. According to the
World Bank, improvements in port infrastructure can directly boost regional trade growth by
2% to 3%.
Moreover, the construction of Chancay Port carries broader geopolitical significance. As a key
component of the BRI, Chancay Port forms part of an interconnected network of port facilities
across Africa, Asia, and Europe. This network not only facilitates the entry of Latin American
exports into Asia-Pacific markets but is also expected to have a profound impact on the stability
and efficiency of global supply chains in the coming years.
Geopolitical Advantage and Impact on Global Supply Chains
Situated on the western coast of South America, Peru has a unique strategic location along the
Pacific, making it a natural gateway for Latin America to access Asia-Pacific markets. Amid
challenges facing global supply chains, the importance of this geographical advantage has
become even more pronounced. The development and operation of Chancay Port enable Latin
American, particularly Peruvian, exports to access Chinese markets more conveniently, while
also promoting the distribution of Chinese goods across Latin America.
In recent years, the trend of supply chain diversification has accelerated China’s efforts to
strengthen cooperation with South American countries, especially in the field of mineral
resources. As one of the world’s largest copper suppliers, Peru is a critical partner for ensuring
the stability of China’s supply of copper, zinc, iron, and other resources. The establishment of
Chancay Port allows China to import these essential resources more efficiently, thereby
enhancing the stability and competitiveness of China’s manufacturing sector.
Chancay Port’s Role as a Hub and its Potential Impact on Pacific Trade
In addition to enhancing Peru’s logistics infrastructure, Chancay Port exerts a “spillover effect”
on trade throughout South America. By upgrading port facilities and reducing shipping costs,
Chancay Port has attracted more export activities from neighboring countries, strengthening
the economic ties between South American countries and China.
According to economist Robert Baldwin’s theory of trade flow, improvements in a country or
region’s logistics infrastructure benefit its trading partners as well. This theory has been
validated in the Chancay Port project, with the port gradually integrating into global shipping
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Yang, G., Maolin, H., & Zhipeng, Z. (2024). Bilateral Cooperation Between China and Peru Under the Belt and Road Initiative --From Strategic Layout
to Future Prospects. Archives of Business Research, 12(11). 61-68.
URL: http://doi.org/10.14738/abr.1211.17875
networks and likely to emerge as a trade hub linking South America and the Asia-Pacific region
in the coming years, further advancing Sino-Latin American economic cooperation.
Furthermore, as part of the Belt and Road Initiative, Chancay Port connects with China’s
network of port facilities across Africa, Asia, and Europe. This global network not only promotes
Latin American exports but also reinforces the stability of global supply chains, particularly in
bulk commodity trade. Through this network, China can secure resources more effectively and
expand its global trade footprint via Latin American markets.
CURRENT STATUS AND HISTORY OF SINO-PERUVIAN TRADE
The bilateral trade between China and Peru is a significant component of economic cooperation
between China and Latin America. In recent years, as economic and trade relations between the
two countries have deepened, the scale of Sino-Peruvian trade has continued to expand. The
following sections will analyze the structure of Sino-Peruvian trade, the impact of the Free
Trade Agreement (FTA), and the bottlenecks and growth potential in bilateral trade.
Structure of Sino-Peruvian Trade: Flow of Raw Materials and Manufactured Goods
Peru's exports to China are primarily composed of raw materials, especially mineral resources.
According to the International Trade Centre (ITC), more than 70% of Peru's exports to China in
2022 consisted of mineral products, with copper concentrate, zinc, iron ore, and fishmeal being
the main products. Peru’s vast copper reserves make it a vital supplier to China. In 2022 alone,
Peru’s copper exports to China surpassed USD 10 billion, accounting for over 10% of global
copper trade.
Conversely, China’s exports to Peru mainly consist of manufactured goods, including
machinery, electronics, and chemical products. With the completion of Chancay Port, the
efficiency of transporting Chinese goods to Peru will improve significantly, further boosting
bilateral trade volume. According to forecasts from the Peruvian National Institute of Statistics
and Informatics (INEI), the trade volume between China and Peru is expected to exceed USD 50
billion by 2030.
Table 1: Main Commodities in Sino-Peruvian Trade and Trends in Recent Years
Year Peru's Exports to
China (Billion USD)
China's Exports to
Peru (Billion USD)
Major Export
Commodities
Major Import
Commodities
2018 95.6 63.2 Copper concentrate,
zinc, fishmeal
Machinery, electronics,
chemicals
2020 102.4 70.1 Copper concentrate,
iron ore, zinc
Machinery, electronics,
automobiles
2022 110.7 80.3 Copper concentrate,
zinc, fishmeal
Machinery, chemicals,
electronics
Impact of the Free Trade Agreement (FTA)
Since the China-Peru Free Trade Agreement came into effect in 2009, economic and trade
cooperation between the two countries has deepened. The FTA upgrade negotiations that
began in 2018 have covered areas such as rules of origin, customs procedures, trade in services,
investment, and e-commerce, opening up new opportunities for Sino-Peruvian economic
relations.