China and Peru agree trade deal

Peru and China have concluded a free-trade agreement during a visit by the Chinese president, Hu Jintao.

Beijing wants greater access to Latin American raw materials - mainly copper, zinc and iron ore - and lower tariffs on its exports to the region.

Mr Hu is on the final leg of a tour to Latin America designed to cement China's growing influence in the area.

Peru is the second Latin American country to complete such a deal with China, after Chile in 2005.

During Mr Hu's earlier stop in Cuba, China agreed to send more food and reconstruction aid to the island, and pledged to continue buying nickel and sugar from Cuba.

Mr Hu will attend a weekend summit of the Asia-Pacific Economic Co-ooperation forum in Lima.

Warm welcome?

Streets were closed and ceremonies held to greet Mr Hu, reflecting official enthusiasm for closer ties between two of the world's fastest growing economies.

"The two countries are very complementary and there are many areas for co-operation"
Chinese President Hu Jintao

Peru bets on China's muscle

"The doors of Peru are open to mining, port and infrastructure companies," said Peruvian President Alan Garcia after meeting Mr Hu.

"We know they will come here for our mutual benefit and they know how to share their skills and development with other people," Mr Garcia added.

Other accords on issues ranging from health to technology were signed including one to start regular commercial flights between the two countries.

"The two countries are very complementary and there are many areas for co-operation," said Mr Hu.

China's state-run Xinhua news agency reported this month that exports to Latin America grew 52% in the first nine months of 2008, to $111.5bn.

Peruvian worries

But many small businesses and workers in Peru are concerned about the deal with China, fearing floods of cheaper imports that could put Peruvians out of work.

Peruvian products such as textiles, clothing and shoes were left out of the deal, while only Chinese wood and tobacco were excluded.

Opposition lawmakers criticised what they described as China's ability to produce cheap goods because of its low level of pay to workers.

One Chinese tycoon, Jack Ma, the founder of Alibaba.com, was reportedly jeered by Peruvians who said they feared the inroads of cheap Chinese goods.

Correspondents said Mr Hu's trip to Cuba, Costa Rica and Peru was a demonstration of China's economic strength and its rising influence in an area previously seen as a diplomatic stronghold of Taiwan.