Chile is the first country to establish cooperative relations with China in South America, and also the first one to support China’s accession to the World Trade Organization. In 2005, Chile and China signed a free trade agreement. After that, China has become Chile’s largest trading partner, and Chile become China’s second largest partner in South America.
At The Fifth Chinese Enterprises Outbound Investment Forum, Chilean Ambassador Luis Schmidt said that Chile was regarded as a very attractive Investment destination for many countries because of its political stability, social progress, good macroeconomic performance. In 2010, Chile maintained a 5.2% economic growth rate, one of the fastest growing economies in Latin America.
Although Chile ranked third in Latin America as to accepting foreign direct investment, but investment from China has been kept low. According to Chilean Foreign Investment Committee Executive Vice President Matias Mori, foreign direct investment in Chile mainly went to mining areas, services, and electricity, gas and water with its main investor being Spain and Canada. Foreign investment from Asia accounted for only 0.2% of the total investment, and almost all from Japan. Although China is Chile’s largest trading partner in Latin America, and Chile is China’s second largest trading partner. However, the strong trade relations between the two countries have not converted to investment growth. Matias Mori said that in the process of rapid economic growth, China’s huge demand for resources makes Chinese enterprises to invest in Chile a wiser choice.
The outbreak of international financial crisis poses a serious challenge to macro economy and financial systems of developed countries. However, the good macroeconomic situation and the financial system have become an important factor to attract foreign direct investment in Chile. Fredrico Dietrich, Chief Representative of Chile Bank in Beijing, said Chile has good macro-economic policies, good investment environment and mechanism. Meanwhile, Chile is a very open economy, with its international trade accounting for 6.4% of GDP. With more than 60 free trade agreements, Chile is also taking the lead in the process of economic globalization. In addition, Chile’s capital market has developed very quickly, providing a good platform for corporate finance. In the past 10 years, the market value of the capital market in Chile has increased by 10 times, which means investors can make the most of capital market to conduct better investment.
To investors, Chile’s forestry has become one of great investment value. Forests accounted for 22% of the entire land area of Chile, a unique condition for Chile’s wood, paper and furniture. Forest area in southern Chile accounted for 31% of the entire Chile’s forest out of good natural conditions. According to Jin Long, Commercial Counselor of Chile Embassy, from the industry point of view, the price of wood within the world of forestry costs are growing, it pays to invest in Chile to offset rising costs.
In addition, in order to attract foreign direct investment, Chile introduced a specialized agency, Chilean Economic Development Board, whose main task is responsible for facilitating the investors, helping publicize and promoting the investment environment in Chile. Since the establishment after more than 70 years, Chile Economic Development Board has made tremendous efforts in providing information, service and technical support to investors, which proved to be of great convenience to outbound investors.