Chile and China

What do Chinese investors expect from the Boric government?

What do Chinese investors expect from the Boric government?

The election of Gabriel Boric as president of Chile has raised important questions about how his future government, in which he promises to combat inequality and increase environmental protections, will deal with an economy that faces a slowdown in 2022.

One of these questions is how China's investments in the country, including ones in sectors such as energy, mining, infrastructure and telecommunications, would be affected.

BNamericas spoke with Carlos Salazar, a commercial engineer and master of international business and international politics from the Shanghai University of Finance and Economics, and who has served as an advisor to Chinese companies in Chile, about what entrepreneurs from the Asian giant expect of the next government.

The 35-year-old Boric, who was the candidate of the leftist Apruebo Dignidad movement, takes office March 11.

BNamericas: What sectors are Chinese investors most interested in today?

Salazar: Chinese investors have a priority interest in large-scale projects, in the areas of infrastructure in general, as well as in energy issues such as green hydrogen, and photovoltaic and wind power plants. In the same way, there are the issues of transport, roads, railways, ports, airports, and in general, projects that include a high technological component, such as communications, 5G and service platforms.

Other topics of interest are the assurance of agri-food supplies for the Chinese population, as well as raw materials, such as minerals. 

According to statistics published by InvestChile, during the first half of 2021, Chinese investments in Chile increased substantially. According to the portfolio of active projects, there was a 28% increase in the number of Chinese initiatives in the country, involving a total of US$24bn in 2021, versus US$18.8bn recorded in 2020.

It should be noted that Chile not only has a conducive business environment and the best competitiveness indices, but also access to clean energy and ease of setting up a company in the country. In addition, the country has an open economy, an export vocation and very high-level professionals.

These represent true pillars of our economy, which have made international companies, both from China and from other countries, bet on Chile, not only to expand operations but also as an operational base from which to grow in Latin America. In a general sense, the interest shown in Chile by the Chinese business community, makes our country a favorite destination for their investments. A good example is the Sinovac pharmaceutical company, which decided to establish a vaccine production center in the country, giving it certain comparative advantages over other Latin American nations.

BNamericas: Do you expect the interest of Chinese state-owned companies in sectors such as infrastructure, mining and energy to continue even if a Boric government increases environmental demands?

Salazar: The Chinese and their government are very smart people. Starting from this premise, they know that they need to continue participating in the world market in the aforementioned sectors. They gradually adapt to new circumstances, even considering higher and more demanding environmental parameters or requirements, since, in the long run, despite the higher cost, they know that it benefits the planet and of course themselves.

Finally, I believe that these arguments, among others, are more than enough reasons to maintain and strengthen the interest that China has in continuing to invest and generate business with our country.

BNamericas: What do Chinese businessmen expect from Boric in general?

Salazar: Chinese businessmen and also businessmen from other countries hope that Boric will not significantly change the rules of the game and continue to encourage international business, since in the long run it generates growth and wellbeing for the country.

In this regard, I believe that the new president, from what I’ve seen in his statements, is very clear about it, and it is possible to seek approaches and agreements in which both parties can walk together in a climate of understanding and wellbeing for all. I also think that it’s important to emphasize that for China an international leadership role for Chile is interesting, in relations between Latin America and Asia. China values Chile's presence in world markets, and its activity as a promoter of economic, financial, technological and commercial relations.

BNamericas: What is the position of Chinese businessmen regarding the constitutional process ?

Salazar: In the short term, Chinese businessmen are the same as the entire Chilean population, that is, they are expectant of the results of the constitutional process. In this regard, this issue should be resolved in the medium term, but thinking positively, I believe that this is an opportunity to establish a constitution that represents our country in the long term, in this way the population and all businessmen interested in investing in Chile will have clear rules, taking more care of the environment and balancing the injustices presented by the current constitution.

Finally, I point out that I’m hopeful that the changes brought by the new constitution will be the response to deep needs among citizens and to the extent that they are written intelligently and that they are not absurd or radical things, they will be fully accepted by businessmen as well as by the entire population and, above all, [will be positive] for Chile's international relations, the country's institutional stability, of which it will serve as an example for other Latin American countries. Furthermore, I am aware that China observes the constitutional process as an opportunity to advance its governance capacity and as a way to solve the problems of the people, a task that China has pursued in its own country.

However, the issues pertaining to Chilean historical processes do not concern the Chinese state, the government or companies. As is well known, China's international policy is one of strict compliance with the principle of non-interference in internal affairs.

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