Xi visit to bolster ties with Chile
President Xi Jinping’s visit to Chile offers a chance to strengthen bilateral ties as China takes stock of the progress made to date and the challenges that lie ahead.
“As bilateral economic and trade ties have grown to such an extent that China is the country’s leading trade partner, that should be reflected via a strategic proposal to reinforce the relationship,” said Osvaldo Rosales, consultant and former director of International Trade and Integration at the Santiago-based Economic Commission for Latin America and the Caribbean (ECLAC).
Chile was the first country in South America to establish diplomatic ties with China and was among the first to recognize it as a market economy and to support its entry into the World Trade Organization. It was also the first Latin American country to sign a bilateral free-trade agreement with China in 2005.
Trade ties between the two boomed between 2001 and 2014, but “in 2015, exports in value dropped. It’s time to examine trade ties, not in terms of quantity, but in terms of quality”, Rosales said.
While seeing exports grow is always welcome, “the most important thing is the content of those shipments and this country is faced with a pending challenge due to an export structure that is too concentrated on few basic products”, said Rosales.
Copper, Chile’s main raw material export, represents 79 percent of the country’s exports to China. China, however, is also Chile’s second-largest trade partner for non-copper goods.
Thanks to the free-trade agreement between two countries, China is playing an increasingly larger role as a destination market for Chilean food products.
“Fruits, seafood and wine, among other products, have gained great popularity among Chinese consumers,” said Juan Esteban Musalem, president of the Chile-China Chamber of Commerce, Industry and Tourism, according to Chilean newspaper El Mercurio.
In 2015, bilateral trade volume reached $31.88 billion, which represents 25 percent of Chile’s foreign trade. The number of Chilean companies that exported to China increased from 477 in 2006 to 1,084 in 2015.
Thanks to the FTA, 97.2 percent of Chilean products can enter the Chinese market dutyfree, according to the General Directorate of International Economic Relations.
In order to better improve the export structure, “the challenge is for Chile, which should create a series of policies and tools to diversify its productive apparatus and principally, diversify exports”, said Rosales.
“We have to look at the quality of the relationship rather than the quantity. We can increase our exports to China by 10 percent, but it would be more interesting for both countries to work together to diversify our exports,” he added.
“The Chilean government must develop public policies helping SMEs (small- to medium-sized enterprises), such as providing funds for training, providing access to technology, modernizing their production techniques and help out with financing,” Rosales said.
“China can become a more effective cooperative partner for Chile” by promoting trade ties with its lesser-known regional markets, said Rosales.
China’s galloping science and technology could also help Chile’s development, said Rosales, noting its development of the world’s fastest super computer and goal to become a technological and scientific powerhouse by 2020.
New Chinese-developed technologies could be applied to Chilean agriculture, mining, fishing and forestry through “joint Chinese-Chilean firms ... to add value to Chile’s production and exports”, said Rosales.
“Selling more copper, wine and fruit to China is not enough to meet the challenge to Chile’s economy of recovering high growth rates, nor enough to reflect a more balanced export dynamic,” said Rosales.
This idea of cooperation on innovative development was echoed by another Chilean expert.
Latin American countries like Chile “have to learn the full extent of the significance of the transformation China is undergoing”, said Chile’s former ambassador to Beijing, Fernando Reyes Matta, noting that innovation in China is “proposing the need to make progress in new areas of knowledge and science ... towards development”.
Innovation is the key of “the development model China has adopted, whose main foundations are tied to advanced developments in science and technology”, said Reyes, adding Latin America should take note and develop the kind of talent necessary to generate patents.
Today’s global economic crisis makes it even more urgent to think creatively and outside the box, said Reyes.
A greengrocery offers fruits, coal and firewood in Temuco, host city of the 2015 Copa America Chile in Temuco, Chile.