Can Peru keep both China and US onside in an increasingly volatile environment?

Last weekend’s US raid on Venezuela has shone a spotlight on the wider strategic concerns in play in South America, including the US-China rivalry in countries such as Peru.\nThe country is a key hub for mineral exports to Asian markets, but it has tried to maintain a balance between Beijing and Washington.\nChina had funded a strategically important port on Peru’s Pacific coast, but it had remained “broadly aligned” with US interests, analysts said. Washington also regards it as part of its “western hemisphere backyard” when it comes to law enforcement and anti-drugs operations.\nDespite Peru’s increasingly chaotic politics, diplomatic observers said there were fundamental differences with Venezuela that reduced the chance of outside intervention.\nJiang Shixue, director of the Centre for Latin American Studies at Shanghai University, said the likelihood of Peru becoming a “second Venezuela” remained low. “Lima has not adopted a strongly anti-American stance and it is unlikely to do so,” he said.\nFollowing the abduction of Nicolas Maduro and his wife, Cilia Flores, Peru called for a “prompt political solution and democratic transition” in Venezuela, but avoided direct criticism of the United States.\n“While the Trump administration may exert pressure on other hostile Latin American regimes, such as Cuba, Peru stands apart as a resilient, albeit imperfect, democracy with functioning institutions and a government broadly aligned with Washington’s interest,” Diego Barnuevo, a market analyst at London-based fintech company Ebury, said.\n“This is evidenced by Trump’s intent to designate Peru as a major non-Nato ally.”\nMeanwhile, China’s economic presence in Peru is tangible but controlled, according to Alicia Garcia‑Herrero, chief economist for Asia-Pacific at Natixis, an investment bank.\nThe strategy was not full-scale penetration but focused on “mining and infrastructure,” she said.\nGarcia‑Herrero also noted that trade between Peru and China remained relatively small – roughly US$35 billion in 2024 – and its strategic priority was far below that of countries such as Mexico, which recorded around US$120 billion in the same year.\nChinese firms accounted for 95.5 per cent of Peru’s iron ore export market in 2022, with cumulative investment exceeding US$15 billion, according to Fundacion Andres Bello, a non-profit research organisation.\nChina’s flagship investment in the country is the Chancay port, built by China’s Cosco Shipping Ports and Peru’s Volcan, with a total investment of about US$3.5 billion and inaugurated in November 2024.\n\n\nGarcia‑Herrero described the project as “a very important development” that could reshape Pacific shipping routes.\n“For some, it could even be used militarily. I’m sure the US is concerned because it reduces the relevance of past hubs,” she said, but projected that there would be no “worries about what may happen next”.\nR. Evan Ellis, a Latin American research professor at the US Army War College Strategic Studies Institute, said in a report that the Chancay port did not pose an immediate military threat and was unlikely to trigger any US action in the short term.\nA 2025 study from Shanghai Institutes for International Studies also noted that Chancay was a commercial port with no military function, and that the project was unlikely to alter US strategic posture in the Pacific in the near term.\nPeru’s economic growth is highly dependent on mineral exports and it is extremely outward-looking, making it sensitive to external financial, political and supply chain pressures.\nIt holds some of the world’s most important copper and silver reserves and, according to World Bank and Central Bank of Peru data, minerals account for over 60 per cent of the country’s total exports.\nThe Royal United Services Institute think tank has identified these reserves as among the key South American resources that are becoming core areas of competition between the US and China.\nGarcia-Herrero said Peru differed fundamentally from Venezuela, even though corruption had worsened and the political situation had become more volatile.\nThe country has had seven presidents since 2016: three were removed by Congress, two resigned to avoid similar fates, and one completed an interim term.\n“In Peru, resource extraction happens in the legal market. Venezuela is under active sanctions, so everything there is in a grey zone,” she said.\n“Even with increasingly populist governments, Peru is still a democracy and therefore China needs to play with certain rules.”\nPeru suffers from weak governance and persistent political turmoil, according to the Bertelsmann Transformation Index, a German think tank’s biennial assessment of democracy, market reforms and government performance. But unlike Venezuela, its state institutions continue to function, keeping the country far from systemic collapse.\nZhou Mi, a senior researcher at the government-backed Chinese Academy of International Trade and Economic Cooperation, also said there were major differences between Peru and Venezuela in areas such as resources, economic development and governance.\n\n\n\n\n“From the US perspective, its policies towards Venezuela and Peru are consequently entirely distinct,” he said.\nZhou said he thought Peru was “relatively open and fair to all its economic partners”. But he added: “Peru’s ability to maintain this balance depends on an international order that is widely accepted, where countries respect basic rules.\n“If certain nations use non-market forces, such as military power, to pressure others into adjusting their stance, that falls outside normal bounds.”\n