China’s quest to control critical mineral and battery metal supply chains is a global project. But the CCP’s playbook recognizes that all politics is local. To that end, Beijing is cultivating the mayor of Lima, Peru, Rafael Bernardo López Aliaga Cazorla – not only the leader of Peru’s capital city, but also in the filed to run for president of the country. In Peru, Beijing is demonstrating how advanced its tactics are and how extensive its presence is at the local level. By extension, Beijing is demonstrating the degree to which Washington risks overlooking the subnational battlegrounds of the U.S.-China competition.
The CCP leverages subnational influence to win access to resources, including critical minerals, everywhere from Myanmar to Manitoba. The mining industry has complex, localized regulations and permitting processes. These make subnational politics a particularly fruitful, and necessary, arena for critical minerals competition. And Beijing plays this game according to a well-practiced playbook: The goal isn’t just directly to curry favor with local partners. China also builds and activates local networks, composed of well-connected entities steeped in the local environment, that advocate for China and its champions on Beijing’s behalf.
In this effort, China has increasingly prioritized Peru – especially as critical minerals and battery metals take center stage in the U.S.-China industrial competition. Beijing’s overseas direct investment in Peru totaled over 1 billion USD between 2020 to 2023. In particular, China has targeted Peru’s copper. Copper is a critical input across industrial uses, including those central to the energy transition that China leads globally. And Beijing is the market maker for copper, just as it is across the basket of other critical minerals and battery metals: China is the world’s largest consumer of copper and holds a majority share of global copper processing. China has cornered overseas supply hubs, like the DRC and Chile. Beijing’s exploits in Peru further strengthen the Chinese stranglehold on global flows and pricing power across commodity markets.
Securing access to mineral supplies can be messy business. The CCP is fine with that. Beijing has no issue forging ties with military juntas or with despotic theocracies. In Peru, the game revolves more around politicians and businessmen, among them Lima’s mayor. López Aliaga has risen through the ranks of Peru’s political circles over the past 15 years after first joining the Lima City Council in 2007. He has worked at banks and as an entrepreneur financing rail endeavors. He now leads one of Peru’s political flanks and holds the governing post as the head of the country’s capital city. López Aliaga’s successes in business and in government make for a potent political message. His rail successes, for example, align with a clear vision for economic development.
Less clear – to his Peruvian constituents or those observing from afar – is López Aliaga’s proximity to China.
Yet the money trail suggests that China’s ties to López Aliaga may run deep. One of the standouts in Peru’s copper mining industry is Minera Las Bambas. Its production has been great for Peru and the rail sector. PeruRail, in particular, has seen its cargo and freight revenue rise to new heights of over 65 million USD per year thanks to increased copper concentrate being shipped from Minera Las Bambas. López Aliaga is a co-founder of PeruRail and one its largest financial backers. Minera Las Bambas, the mine in business with PeruRail, appears to be an Australian-domiciled entity. But the mine is actually a Chinese-owned joint venture counting State-owned mining giant China Minmetals as its majority backer.
China’s mining presence in Peru is a direct boon for López Aliaga. This leaves an influential Peruvian political leader aligned with and linked to China, its resource project, and the broader Belt and Road Initiative of which it is part. Beijing thus claims a powerful beachhead in Peru.
But all of this is under the radar. This beachhead does not at first glance appear to have ties to the CCP, or to foreign interests. Peru’s political class can carry China’s water in Lima – and perhaps beyond – without generating blowback for Beijing.
The Lima case is far from anomalous. The same Chinese industrial policy system that propels overseas investments also shapes and guides its subnational influence campaigns. China works strategically to find points of industrial and subnational influence in its target ecosystems. China then directs capital investments and State-owned firms toward those points of leverage, aligning with and amplifying its influence efforts. Beijing does all of this targeting local ecosystems that U.S. foreign policy risks overlooking, and through indirect means that avoid local or international scrutiny.
China’s approach poses risks for countries like Peru. Mineral resource rich countries have a generational opportunity afforded by the energy transition. But China is prepared to subvert this opportunity. Beijing’s subnational influence campaign is positioned to strip countries like Peru of the economic and social development opportunities the current moment offers.
This Peruvian story of subnational influence also implicates U.S. interests. Washington is ramping up to compete with Beijing. American strategy has to recognize that the battlefield extends well beyond the United Nations and formal diplomatic channels. It also extends well beyond Chinese State-owned enterprises and national governments. The fight is underway, being waged through proxy forces, at subnational levels everywhere from Lima, Ohio to Lima, Peru.
Nate Picarsic and Emily de La Bruyère, Senior Fellows, Foundation for Defense of Democracies; co-founders, Horizon Advisory
This article was originally published by RealClearDefense and made available via RealClearWire.
