ANALYSIS-Scandal tests Peru’s China ties as U.S. scrutiny intensifies

Acting President Jeri faces impeachment efforts after meetings with Chinese businessman Zhihua Yang Uproar highlights Peru’s deep economic ties to China amid rising U.S. pressure Public support for Jeri has plunged as Peruvians wary of corruption By Marco Aquino LIMA, Jan 27 (Reuters) - A scandal surrounding undisclosed meetings with a Chinese businessman by Peru’s acting president has shone an unflattering spotlight on the key copper exporter’s ties to China at a moment of heightened U.S. scrutiny of Beijing’s footprint in the region. Jose Jeri, who took office in October after the removal of former President Dina Boluarte, has denied any wrongdoing in the three meetings he acknowledged holding between December and January with businessman Zhihua Yang. The businessman owns Chinese import shops and holds a concession for an energy project. He has also previously been named in congressional investigations as allegedly providing logistical support to Chinese firms suspected of corruption. The controversy has coincided with a stepped-up U.S. influence campaign in the region aimed at curtailing China’s deep ties in Latin America. “It wouldn’t be surprising to see the Trump administration questioning China’s investment in Peru. It did so in Mexico and Panama, and potentially using pressure tools to nudge Peru away from China,” said Martin Cassinelli, a trade and investment analyst at the Atlantic Council think tank. The case, dubbed “Chifagate” by the local media, has prompted opposition lawmakers to file impeachment motions seeking to oust Jeri, who is tasked with completing the current government’s term through July. The public prosecutor’s office has opened a preliminary investigation into Jeri for alleged influence peddling, which he has denied. Peruvians will head to the polls to elect a new president on April 12. Peru, which has seen seven presidents since 2018, has nonetheless enjoyed one of the strongest growth rates in Latin America thanks in part to steady mining income. Washington’s recent capture of Venezuela’s President Nicolas Maduro, an ally of China and Russia, sent a message that it aims to exclude extra-regional powers from the Western Hemisphere, analysts said, a stance that places additional pressure on governments like Peru’s as they navigate internal crises. “Criticism of a Chinese businessman is also, practically, criticism of China,” said Jhon Valdiglesias of the Center for Asian Studies at Peru’s National University of San Marcos. “I think it definitely casts a shadow over all relations with China,” he added. Still, disrupting Peru’s deep China commercial ties won’t be easy. A free trade pact, signed in 2009, propelled China to outpace the U.S. as Peru’s top trading partner starting in 2015. According to government data through November of last year, China accounts for 33% of Peru’s trade, compared with 14% with the U.S. China also controls one of Peru’s largest copper mines and buys about 70% of the country’s output of the metal. Chinese firms own Peru’s largest power generators, and in late 2024 began operating the Chancay megaport, creating a new direct South America–Asia trade route. Former Peruvian ambassador to China, Juan Carlos Capunay, said the South American country’s economic relations with Beijing are “perhaps among the best structured administratively and politically” in recent years. “We have several key instruments that sustain them, including a free trade agreement in force with China,” he said, adding that would make it a challenge for the U.S. to dismantle or even weaken in the long term. Even so, the Chifagate scandal has put a spotlight on some of the seamier aspects of the relationship. “If Peruvians, who up until now looked favorably upon Chinese investment projects, are to question the credibility of that investment, new Chinese investments and government contracts will be less welcome by a society sensitive to allegations of corruption and undue favoritism for foreign companies,” Cassinelli said. Representatives of China’s embassy in Peru did not respond to a request for comment. Support appears to be eroding for Jeri, whose approval rating has dropped from 51% to 41% since the scandal broke, according to polling firm Datum Internacional. As many as 78% of Peruvians responded to an Ipsos poll over the weekend that they perceive signs of corruption in Jeri’s meetings with the businessman.