Investment in Peruvian roads, rails to cut costs
Projects include the proposed Pacific-Atlantic railway to be built with China and Brazil
China's investment in Peru's infrastructure will significantly reduce transportation costs for mineral ores and crops produced by the country.
Peru's mountainous topography makes infrastructure key to its development, especially given its underdeveloped highways and railways, said Chu Yin, associate professor of public administration at the University of International Relations in Beijing.
"The total transportation costs take up 24 percent of the total value of the products, which has greatly affected their prices and competitiveness in the international market," Chu said.
The Pacific-Atlantic railway - initiated by China, Peru and Brazil - is key to cutting costs in the two Latin American countries. A feasibility study is underway and expected to be submitted to the countries within the year, according to Jia Guide, China's ambassador to Peru.
Newly elected Peruvian President Pedro Pablo Kuczynski has expressed his country's openness to Chinese investment in minerals and infrastructure previously, saying that his administration will reduce barriers for infrastructure investment, which is at the top of the new leadership's agenda.
In a September meeting with Ge Honglin, president of the Aluminum Corp of China, Kuczynski said that Peru welcomes CHALCO's expanding investment, exploration for minerals and extension of the industrial chain to mineral processing.
Other Chinese State-owned enterprises, including Shougang Group and China Minerals Corp, have launched mineral projects.
China imported $3.4 billion in minerals from Peru in the first six months of 2016. In 2015, China's investment in Peruvian minerals reached $19.1 billion, according to the Foreign Ministry.
Direct investment from China in 2016 is expected to be $15 billion and increase by 12 to 15 percent annually after 2017, with the majority in minerals and energy.
Peru has one of the soundest economies in Latin America, according to a report by the International Monetary Fund in July. It is expected to see a GDP growth of 3.7 percent year-on-year in 2016 and 4.1 percent in 2017.
Peru has received more than $14 billion in investment from more than 170 Chinese companies.
(China Daily 11/22/2016 page3)
