United States efforts to decouple from China and implications for
Peru.
United States is implementing a series of measures to try to cut off its
dependence from China in certain areas, or to deny China access to certain
technologies. In this sense, US is enlisting the help of some of its allies, as
seen in the case of its effort to cut the flow of advanced semiconductors to
China, as in the formation of the Chips 4 Alliance. Japan and Taiwan seem
to be already on board in this idea. Netherlands, not a member of that
alliance, is also participating. Still South Korea has not officially joined the
Alliance.
What about Peru? Can Peru join in the effort to isolate China as US is
planning to do? What, if any, can Peru do in that regard?
In this article a look at that issue is given. First, a brief review of Peru
relations with China and US is given; second, in which areas could Peru
cooperate with US effort is analyzed; and lastly, it is seen if really Peru can
join that effort.
1. Peru relations with China and United States
China became, from the beginning of last decade, the biggest trade partner
of Peru. In 2022 Peru exports of goods to China were 32.9% of total
exports, while to US was only 13.6%. Imports of Peru from both China and
US were around the same proportion, 25% of the total for each one. Then,
Peru is quite dependent on the Chinese market for its exports, mainly of
copper, which account for 30.5% of Peru´s total exports, and China is the
destination for 73.6% of Peru´s copper exports.
Peru has Free Trade Agreements with both US and China. With the first
from 2009 and with China from 2010.
Regarding investment, at the end of 2021 there was a stock of 117.8 billion
dollars of Foreign Direct Investment, FDI, in Peru, of which around 32%
was from China. The amount of FDI from US in Peru, accordingly to US
data at the end of 2019 was a stock of 7.5 billion dollars.1
Probably US
investment is bigger than that amount, but not as big as of China.
According to Peru data, which is not reliable because it does not record all
FDI in the country, at the end of 2022 there was a stock of 30.19 billion
dollars of FDI, of which from US was 10.7% of the total, and from China
1
Office of the USTR: https://ustr.gov/countries-regions/western-
hemisphere/peru#:~:text=U.S.%20foreign%20direct%20investment%20(FDI,%2C%20manufacturing%2C
%20and%20wholesale%20trade.

3.7% of the total2
. Anyway, in the last years there has been no new US
investment in Peru, but China continues increasing its investment in the
country.
Regarding exchange of students and people, for many Peruvians US is still
the desired destination for study. According to US data, by July 2022, there
were more than 3,500 Peruvian students in US and almost 4,000 US
students in Peru3
. Data for China is not available but probably the number
of Peruvian students in China, and of Chinese students in Peru is quite low,
though in the last years it is increasing the number of Peruvians students
going to China, because, among other reasons, the Chinese government is
offering many scholarships to Peruvian students.
Regarding economic cooperation, specifically bilateral assistance, US has
been in the last decade the second largest contributor to Peru. According to
a report, from 2011 to 2019 Peru received 4.4 billion dollars in bilateral
assistance from the DAC of OECD countries, and from that amount 24.5%
came from US, being the second largest donor to Peru, after Germany
which contributed with around 28% of the total, and in third place was
Japan with around 14%.4
For bilateral assistance received from China there
is no available data, but probably is not meaningful.
For Peru, China is becoming more important in the economic aspect, but
still US is important for Peru in the political and military aspect. US has
provided armaments to Peru armed forces, and also Russia, but China not.
And Peru is in the America continent, where US is the most important
country for many Latin America ones, and certainly will remain that way in
the foreseeable future.
II. In which areas can Peru cooperate with US?
US competition with China happens in several areas. Regarding Peru
possible involvement in that issue, perhaps it could in the following ones:
1. Access to valuable raw materials, like lithium: Lithium is considered
a strategic material needed for industries like batteries, of electric
vehicles. This material is not abundant or easily to exploit, and in
fact a few countries hold most of the mineral that could easily be
2
See Proinversion: https://www.investinperu.pe/es/invertir/estadisticas-generales/inversion-extranjera
3
According to US Department of State: https://www.state.gov/u-s-relations-with-peru/
4
See MOFA: “Evaluation of Japan´s ODA to the Republic of Peru” page 22
https://www.mofa.go.jp/policy/oda/evaluation/FY2021/pdfs/peru.pdf

exploited. Some countries in South America are well endowed with
lithium. The so-called lithium triangle, along the borders of Bolivia,
Argentina, and Chile, is said to hold around 60% of the world
reserves. But in fact, Peru also has lithium around that triangle5
.
Peru has lithium and it is said that Chinese companies could be interested,
as they are present now in those south American countries6
. US criticize
China involvement in the exploitation of theses resource, in particular, in
the lithium triangle7
.
But the perspectives for the exploitation of lithium in Peru is not good now,
among other reasons, because most of the mineral is situated in Puno, a
region that is home to many social protests, where local communities have
opposed other mining projects. Also, Peru government has not developed
any framework to exploit that resource yet8
. And there is only one company
interested in the exploitation of this product. American Lithium, a company
from Canada, is the owner of a lithium and uranium deposit in the Puno
region9
.
2. Peru adoption of the 5G technology
5G technology will be adopted by all countries. But still there is no data set
for that in Peru10
. It is known that Chinese companies, like Huawei, are the
leaders in this field. In Peru Huawei is establishing itself as a leader in
mobile technology and has cooperation agreement for example with San
5
See the interview with Walter Sanchez of Peru´s Ministry of Energy and Mining:
https://www.bnamericas.com/en/interviews/perus-take-on-the-future-of-lithium
6
See for example: https://asia.nikkei.com/Spotlight/Caixin/Why-Chinese-lithium-companies-are-
targeting-Bolivia
7
See for example https://news.usni.org/2023/03/08/chinese-actions-in-south-america-pose-risks-to-u-
s-safety-senior-military-commanders-tell-congress
8
As mentioned by the Ministry of Economy on march 10, 2023. See Diario el Comercio:
https://elcomercio.pe/economia/mef-estima-que-tasa-de-pobreza-de-puno-supera-el-70-por-cierre-de-
actividades-economicas-en-la-region-noticia/?ref=ecr
9
See https://gestion.pe/economia/empresas/canadiense-american-lithium-controlara-yacimientos-de-
litio-y-uranio-de-plateau-energy-en-peru-noticia/.
10
I could take to a former Vice Minister of Communications one month ago about this theme.

Marcos National University11
and other public and private universities12
to
foster human capital in those areas.
It is well known that US is pressuring some countries not to adopt 5G
technology from China. It has done it in Europe, in Asia, and is doing in
Latin America. For example, it is said that US pressed Ecuador not to adopt
Chinese technology for its 5G network in exchange for extending a loan in
January 202113
. Also, Chile government in 2020 decided to adopt a
Japanese proposal for building an undersea fiber-optical cable, instead of a
Chinese proposal that would have directly linked Chile with China, because
of US pressure14
. What will happen when Peru decides to adopt 5G
technology?
III. Can Peru join US efforts to isolate China?
As has been seen, Peru has important economic links with China. China is
its biggest trade partner, and around one third of Peru goods are exported to
that country. Also, China is already the main investor in the country.
In 2019, when Mike Pompeo visited Peru, he told the government that Peru
must be very careful when taking a decision to implement 5G technology.
He said that Huawei is an entity linked to the Chinese government and Peru
data could/would go directly to China.15
Many considerations will have to be taken when adopting 5G technology
from China´s Huawei. One of the concerns is for example about how
access to Huawei technology will be sustainable in the face of growing
sanctions that US is implementing against this company. US would cut off
completely access to US technology to Huawei soon16
.
11
From 2018 Huawei signed several agreements with my university to foster experts in science and
technology, in the information and communication technology. The last one was signed recently on
March 2023. See: https://unmsm.edu.pe/noticias-y-eventos/noticias/noticia-detalle/san-marcos-y-
huawei-promoveran-talento-digital-de-estudiantes-y-docentes#:~:text=futuro%20o%20el-,ICT,-
Competition%20de%20la and also https://viceacademico.unmsm.edu.pe/?news=sanmarquinos-ganan-
concursos-tecnologicos-de-huawei-por-cuarto-ano-consecutivo
12
See for example https://www.exitosanoticias.pe/actualidad/rectoras-exigen-mayor-presupuesto-
tecnologia-n93966 and https://puntoedu.pucp.edu.pe/institucional/centrum-pucp-y-huawei-se-unen-
para-fortalecer-la-maestria-en-gerencia-de-tecnologias-de-la-informacion/
13
See FT: https://www.ft.com/content/affcc432-03c4-459d-a6b8-922ca8346c14
14
See Nikkei Asia: https://asia.nikkei.com/Business/Telecommunication/Chile-picks-Japan-s-trans-
Pacific-cable-route-in-snub-to-China
15
See interview with Pompeo: https://elcomercio.pe/mundo/venezuela/venezuela-mike-pompeo-
salida-nicolas-maduro-tomando-entrevista-comercio-noticia-ecpm-626549-noticia/
16
See Nikkei Asia: https://asia.nikkei.com/Politics/International-relations/US-China-
tensions/Washington-halts-licenses-for-U.S.-tech-exports-to-Huawei and also this:
https://asia.nikkei.com/Spotlight/Huawei-crackdown/Huawei-s-rebirth-as-cloud-provider-faces-total-
U.S.-export-ban-threat

Besides this, in some circles in government and academy in Peru, there is
beginning to be a debate about how much Peru is being linked to China,
and what this will mean this in the face of confrontation between the two
big superpowers: China and US, and how will affect Peru decision in that
regard. Lessons are studied of, for example, how Australia and New
Zealand are dealing with that dilemma. Australia in particular, a country
much dependent in China market for its goods, had some problems when it
criticized China at the beginning of 202017
.
Anyway, still how Peru could or would help US intent on containing
China, if that is the case, and how would react to China response to that, is
not known. It is a theme not debated yet, but one that must be done. This
author is much interested in that theme and will continue writing about it18
.
March 22, 2023
17
See for example https://www.lowyinstitute.org/publications/chinese-coercion-australian-resilience
18
This author is talking to several policy makers about this theme now but still there is no formal
debate.