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Viewing cable 06LIMA965, PERU'S EXPORTS TO CHINA INCREASE 51 PERCENT

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Reference ID Created Released Classification Origin
06LIMA965 2006-03-13 16:24 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXRO7073
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHPE #0965/01 0721624
ZNR UUUUU ZZH
R 131624Z MAR 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 9132
INFO RUEHBO/AMEMBASSY BOGOTA 3103
RUEHQT/AMEMBASSY QUITO 0114
RUEHLP/AMEMBASSY LA PAZ 3100
RUEHSG/AMEMBASSY SANTIAGO 0281
RUEHCV/AMEMBASSY CARACAS 9159
RUEHBU/AMEMBASSY BUENOS AIRES 2301
RUEHBR/AMEMBASSY BRASILIA 6566
RUEHBJ/AMEMBASSY BEIJING 0363
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION 0002
RHEHNSC/NSC WASHDC
UNCLAS SECTION 01 OF 02 LIMA 000965 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/AND, WHA/EPSC, EB/IFD/OFD 
TREASURY FOR OASIA/INL 
COMMERCE FOR 4331/IEP/WH/MCAMERON 
USDA FOR FAS/ITP/FELDER 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EINV PGOV PREL PE
SUBJECT: PERU'S EXPORTS TO CHINA INCREASE 51 PERCENT 
 
REF: A) 05 LIMA 4539     B) 05 LIMA 3743     C) 05 LIMA 436 
 
1. (SBU) Summary.  In 2005, the Peruvian Government 
successfully improved its trade relations with China, 
witnessing an increase in both exports to and imports from 
China over 2004 levels.  China is now the second most 
popular destination for Peruvian exports and imports, with 
exports to China increasing by 51 percent and imports from 
China increasing by almost 37 percent.  In comparison, 
Peru's exports to the United States totaled $5.2 billion in 
2005.  The GOP predicts that 2006 exports to China will 
exceed $2 billion.  End Summary. 
 
Exports are A-Risin' 
-------------------- 
 
2. (U) 2005 was a stellar year for Peruvian exports -- total 
exports increased 36.7 percent, from $12.4 billion in 2004 
to $17 billion, according to the Ministry of Trade 
(Mincetur).  While the United States continues to be the top 
destination for Peruvian exports (with $5.2 billion exported 
in 2005), China is now Peru's second largest trading 
partner.  Since 2003, Peruvian exports to China have 
increased by 198 percent -- the fastest increase among 
developing countries in the world. 
 
3. (U) Exports to China in 2005 totaled $1.86 billion, a 51 
percent increase from the $1.23 billion exported in 2004. 
The Chinese market received 11.2 percent of Peru's total 
exports last year.  Mincetur officials predict that Peruvian 
exports to China in 2006 will exceed $2 billion.  According 
to Esteban Whuking Leon, Vice President of the Manufacturing 
Committee at the Association of Peruvian Exporters (ADEX), 
Peru exports primarily raw materials and primary products to 
China, including minerals and agricultural products. 
 
--------------------------------------------- -------------- 
        Top Six Peruvian Products Exported To China 
--------------------------------------------- -------------- 
Product              2004   2004   2005   2005    Percent 
                      USD  million  USD  million  Change 
                     mill   kilos  mill   kilos    Kilos 
--------------------------------------------- -------------- 
Fish Meal           425.7   810.2  585.5  1049.1     29.5 
Copper Concentrates 408.0   585.0  502.7   583.0    - 0.3 
Molybdenum           47.0     2.0  220.8     7.0    250.0 
Iron Concentrates    95.4  4300.0  142.1  4100.0    - 4.7 
Lead Concentrates   104.0   196.5  139.8   198.6      1.1 
Copper Cathodes      80.0    27.5  124.7    34.0     23.6 
--------------------------------------------- -------------- 
Source: PROMPEX 
 
4.  (SBU)  In 2005, a record 269 Peruvian companies exported 
products to China, up from 190 companies in 2004.  GOP and 
ADEX officials attribute this to improved commercial 
relations between the two countries, as well as the 
expansion of the Sino-Peruvian Business Council (CEPECHI) in 
Peru.  Wuking Leon also noted that the new Chinese 
Commercial Counselor Zhang Jisan, who arrived in early 
January, has also sought to promote Chinese-Peruvian trade 
relations.  Zhang Jisan, who replaced Li Haitong, speaks 
Spanish, which has improved the ability of the Chinese to 
link up with several Peruvian firms.  One of the first 
things Zhang did upon his arrival was arrange a low-key 
visit of several Chinese businessmen to Ica, approximately 3 
hours south of Peru and a Peru's primary agricultural 
district.  They met with local agricultural producers to 
discuss the possibility of exporting asparagus to China. 
 
Increased Demand for Chinese Products 
------------------------------------- 
 
5.  (U)  In 2005, China advanced from the third largest 
market for Peruvian imports to the second, surpassing 
 
LIMA 00000965  002 OF 002 
 
 
Colombia.  Peruvian imports in 2005 increased dramatically 
from $12.5 billion from $9.3 billion inQ04, an increase of 
34.4 percent.  Imports from China also increased from 7.6 
percent ($768 million) of all Peruvian imports in 2004,  to 
8.5 percent ($1.06 billion) in 2005. 
 
--------------------------------------------- -------------- 
          Peruvian Imports from China, 2004-2005 
                     USD millions 
--------------------------------------------- -------------- 
Product                 2004     2005       Percent Change 
--------------------------------------------- -------------- 
Recording, Image        34.5     33.5        -  2.0 
 And Sound 
Telephones              25.6     21.1        - 17.6 
Memory Units            16.8     17.7           5.4 
Radio Receptors         16.1     22.5          38.9 
Motorcycles             14.4     19.1          32.6 
TV receptors            10.1     20.5         103.0 
--------------------------------------------- -------------- 
Source:  SUNAT 
 
Comment: Seeking to Diversify Trade Mix 
--------------------------------------- 
 
6. (SBU) We have heard from several GOP officials and export 
representatives that China views Peru as the "gateway" into 
South America.  Although China has not historically taken a 
strong interest in Peru, the recent Chinese investments in 
the oil and gas sector (ref A) and enhanced trade relations 
indicate that Peru is becoming more important.  We expect 
that as China increases its imports of raw materials and 
traditional products from South America, that it will seek 
to further deepen relations with Peru, perhaps by investing 
in infrastructure projects to enhance shipments of these 
products through Peru.  The Chinese view Peru as a source of 
commodity products; the Peruvians, however, have expressed a 
desire to shift away from commodities, emphasizing increased 
trade of agricultural products.  While the Chinese have only 
recently begun to import Peruvian agricultural products, the 
newly arrived Chinese Commercial Counselor is looking to 
promote agriculture trade in exchange for the sale of 
Chinese machinery in Peru. 
 
STRUBLE