ECONOMY NATIONAL

Chile joined China’s Belt and Road Initiative five years ago. Here is what has happened since

Chile joined China’s Belt and Road Initiative five years ago in 2018. China has become Chile’s biggest exporter and importer in recent years. Here’s a look at the two countries’ partnership over the years.

Chile officially joined China’s Belt and Road Initiative, a transnational economic plan, in 2018. The Initiative seeks to strengthen China’s relationship with participating countries in five main sectors. These sectors are policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people exchanges.

In 2022, 39 percent of Chile’s total exports were to China, an increase of 5.3 percent from 2021, according to Chile’s Central Bank’s foreign trade 2022 fourth quarter report. Beijing has been Santiago’s largest exporter since the end of 2007, and Chile’s largest importer since the end of 2014.

But the most important trade between the two countries is something intangible, said Fernando Reyes Matta, Chile’s former ambassador to China from 2006 to 2010, who is now the director at the Center for Latin American studies on China at Andrés Bello University. “In the last 20 years, the most important product that China has exported to Chile is confidence,” he said.

About 30 years ago, Chileans believed that Chinese goods were cheap and low quality, Reyes said, but China has since improved the quality of its products such as computers, screens, and televisions.

As Chinese influence in the South Andean country continues to expand, Chilean politicians are taking sides between supporting China or the United States.

During the SAFE summit, regarding energy and transportation policy with the goal of bolstering America’s economic and national security, in Washington D.C., in March 2023, Chilean ambassador to the US, Juan Gabriel Valdés, sided with the US.

“We want investments from the US, Canada, and the West in Chile, in the lithium industry,” Valdés said. “We have excellent commercial relations with China, which is our main trading partner, but we want our strategic minerals, our strategic development to be associated with countries with which we share values and a long history together.”

Albemarle Corp., a US producer, is one of two operators of a giant salt flat in the Atacama Desert. The American corporation is one of the largest catalyst solutions and performance chemicals providers in the world.

SQM, a Chilean company which is the world’s second-largest lithium producer, has Chinese Tianqi Lithium Corp. as its largest shareholder. Much of Chile’s semi-processed lithium is shipped to China, where it is transformed into battery chemicals.

Niu Qingbao, Chinese ambassador to Chile, said Valdés’ comments were contradictory.

“The successive governments of Chile always have advocated for foreign policy based on pragmatism, openness, and diversity. And they are dedicated to providing a fair, transparent and non-discriminatory business environment for investors from all countries, including China, so the words of Ambassador Juan Gabriel Valdés do not agree with the policies and practices of the government of Chile, and therefore, I was very surprised,” Niu said.

Meanwhile, Foreign Affairs Minister Alberto van Klaveren took a more neutral stance. “With China we have many common interests and common values as well …. There are many interests at stake in that relationship,” Klaveren said in an interview with CNN Chile.

Chile will not join China as an ally to stand against the US, nor will the country join the US to stand against China, said Reyes. “Chile wants to practice the policy of multi relations,” he said.

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A decades-long partnership

China and Chile’s partnership dates back to the 1970s during the government of Salvador Allende, which made Chile the first South American country to establish diplomatic ties with China. Chile was also the first country outside Asia to sign the Free Trade Agreement with China in 2005.

By the end of 2007, China overtook the US as Chile’s largest exporter country. And by the end of 2014, China overtook the US as Chile’s largest importer. Since then, China has been Chile’s top exporter and importer, with the US coming in second.

But even as Chinese economic presence is tangible and influential in the South Andean country, on a societal level, Chileans still don’t understand much about China and its people, said María Montt, alternate director of the Millennium Nucleus on the Impacts of China in Latin America and the Caribbean. The Millennium Nucleus project studies China’s impact in the region on national and domestic levels.

Santiago’s relationship with Beijing has grown in recent years, but the exchange has only been centered around economic relations, Montt said.

Montt is also a history professor at Pontificia Universidad Católica de Chile (PUC). She specializes in the cultural and diplomatic relations between Asia and Latin America. She said students don’t get enough exposure to Chinese study on every level in the Chilean education system. It’s important to study the different facets of China, Montt said.

The impact of China is huge, she said. “Not only in Santiago, but also in provinces and regions because China could have distinct impacts from different industries.”

China also has been expanding its soft power through establishing the Confucius Institute via partnership with universities around the world to promote cultural and language learning. There is a Confucius Institute in Santiago in partnership with PUC.

“The Confucius Institutes only fills in one gap,” said Reyes. “I feel that it is only partial and in some way the things the Confucius Institutes talk about are not contemporary.”

The principal industry that China has to develop is the industry of credibility, Reyes said. China lacks transparency in showing the world how its societal and political system works, and Reyes has rarely seen Chinese officials speaking with media organizations in Latin America.

“China really needs to learn what the communication industry is in the contemporary world,” Reyes said.

Read more:

Chinese Power Lights up Chile

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