Peru will sign a memorandum of understanding (MOU) to join China’s Belt and Road initiative in coming days, according to a China’s ambassador said on last Wednesday.
The deal will make Peru one of a few Latin American nations to join the China’s policy. It also underscores the countries around the world are stepping into China’s orbit by promise of investment despite US objection.
Why the Belt and Road Initiative can help Peru
One of the biggest problems of many countries in Latin America, like Peru, is not enough infrastructure, especially of roads and railroads. Peru has a complicated geography, with the Andes Mountains dividing the country in the coastline facing the Pacific Ocean and Amazon region.
With development of roads, Peru can transport many products and natural resources from Amazon region to the port. China also suggest link the Pacific and Atlantic Ocean in Peru and Brazil by railway.
Allay fears over debt risk
Last week, China kicked off a three days Belt and Road summit in Beijing. China aims to make Belt and Road initiative sustainable and prevent debts risks. China also seek to allay western criticism that the infrastructure plan to boost trade and investment creates a heavy burden for some countries.
Chinese central bank governor, also highlighted that local currencies will be used for investments related to the Belt and Road plan to curb exchange rate risks. China will follow market principles and rely on commercial funds for Belt and Road financing.
China has overtaken US as Peru’s largest trade partner years ago, thanks to the imports of minerals. An increasing Chinese infrastructure investment in Peru can be a sign that Latin America countries become closer and closer to China.