Chile's Economic and Political Relationship with China

Abstract

China's foreign policy has been characterized in the last decade by a heightened interest in reaching out to Latin America, particularly to countries rich in natural resources and with potential markets for Chinese exports, and Chile is one of these countries. The paper shows that even though the Chilean economy has benefitted from the signing of the FTA, it also faces potential risks. To continue to benefit, Chile needs to boost exports in other potential export sectors (value-added products or services) and should attempt to attract more Chinese FDI to Chile's export industry. The export of raw materials (particularly nonrenewable ones) is not always sustainable in the long term. The roles of the Chilean state and the private sector in attracting Chinese investment and enhancing diversification of exports of value-added products are crucial for the future of the economy of Chile and its relationship with China.