How Chile’s relationship with China will evolve

China’s economic relationship with Chile will move toward more focalized investments as Beijing enters a new political and economic phase, according to experts.

“China wants to strengthen its position as leader of the developing world. This is as much out of necessity as it is out of opportunity,” Ryan Hass, foreign policy senior fellow at Brookings Institution said during a webinar hosted jointly by US think tank Inter-American Dialogue and Fundación Chilena del Pacífico, a public-private organization tasked with supporting Chile’s economic insertion into the Pacific Basin.

President Xi Jinping is expected to win a third term during the Communist Party’s congress next month, so he will be more open about his foreign policy ambitions for 2023, Hass said. 

However, China’s growth is expected to slow at the same time, which will force Beijing to prioritize certain investments, especially regarding infrastructure, he added.

Chile should look to diversify its economic relationship with China, Adrian Hearn, Latin American studies professor at the University of Melbourne, told the webinar.

“The key for that approach is to go beyond agreements with national governments, go down to a more local level,” he said. Hearn cited the example of Australia's Victoria state, which signed a deal last year to join China’s Belt & Road Initiative, although the agreement was scratched by the federal government.

Yet, local administrations, especially municipalities, have space for deals, as “that’s where the lived reality of social and economic conditions plays out,” Hearn said.

While Chile and Australia built their relationships with China on mining, Hearn said Chile has greater agricultural potential.

The rail, green hydrogen and fiber optics segments could also benefit from focalized Chinese investments, Chile’s former foreign affairs minister and current Chilean ambassador to the USA Juan Gabriel Valdés said.

He said China has increased its soft power by investing in scholarships and Confucius institutes in Chile to balance US influence. But Valdés highlighted that neither Beijing nor Washington is interested in violent escalation, so a cold war lens does not serve to analyze US-China relations.