Peru’s President Pedro Castillo prioritises China ties in first days in office
- China is Peru’s most important commercial partner
- Pedro Castillo was inaugurated as president on July 28
In his first week in office, Peru’s new left-wing administration under President Pedro Castillo has been quick to extend a friendly hand to China, the Andean nation’s most important commercial partner and the main buyer of its copper, a crucial source of tax revenue.
Castillo is poised to tilt Peru to the left after successive centre and right-wing administrations, although preserving a good relation with China has been a priority of all recent Peruvian leaders, analysts said.
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“This doesn’t have an ideological character, this has a pragmatic character,” said Jorge Heine, a professor of international relations at Boston University and a former Chilean ambassador to China.
In addition to China, Peru also has a free-trade agreement with the US and has been considered for decades a US ally.
Mining tax policy will be crucial to China, whose companies are important copper miners in Peru, the world’s No. 2 producer of the metal.
Castillo has said he wants to extract higher tax revenues from mining companies, and would potentially push to tear up the tax stability deals that prevent such hikes agreed with many miners.
Pablo de la Flor, who heads the National Society of Mining, Oil and Energy, said miners who enjoyed tax stability deals included China’s MMG Ltd and Chinalco’s Aluminium Corp and that the topic was likely to have come up.
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“I imagine that this should be a concern especially when the modification of the tax framework is discussed,” he said.
On the commercial front, Chinese ambassador Liang Yu met with Foreign Trade Minister Roberto Sanchez on Monday. In aiming to modifying their free trade agreement, Peru is hoping to cut red tape and push e-commerce.
“At present, the technical teams of Peru and China are working, through virtual means, in the optimisation of the Free Trade Agreement between both countries,” said the ministry in a release. “Bilateral relations with China are extremely important.”
