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Chile-China: Strategic Partners Francisco Silva March 2014

Chile-China: Strategic Partners Francisco Silva March 2014. LATAM has Two Different Stories with Two Different Models. Mexico USD 1.178 B. Good macroeconomics Good Institutions Flexible exchange rates Investment grades Deep financial markets. Brazil USD 2.253 B. Colombia

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Chile-China: Strategic Partners Francisco Silva March 2014

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  1. Chile-China: Strategic Partners Francisco Silva March 2014

  2. LATAM has Two Different Stories with Two Different Models Mexico USD 1.178 B • Good macroeconomics • Good Institutions • Flexible exchange rates • Investment grades • Deep financial markets Brazil USD 2.253 B Colombia USD 370 B Peru USD 197 B Chile USD 268 B 2

  3. Chile and the Andean countries have outperformed… 3 Source: IMF. Per Capita GDP, PPP adjusted (1990 = 100).

  4. …and they are NOT only a Commodity Story 4 Source: IMF and Bloomberg.

  5. Chile: Institutional Strength is KEY 5 Source: HeritageFoundation, WorldEconomicForum. # out of 180 countries.

  6. … and Financial Development Financial Strength Index based on Moody’s index of financial system strength, based on a numerical scale assigned to weighted average bank ratings by country. Source: Betancour, C. De Gregorio, J. Jara A. “Improving the Banking System: The Chilean Experience”. BIS Papers. No. 28, 2006.

  7. Chile’s Macro: Low Inflation and steady Growth 7 Source: IMF.

  8. And (like China) Low Levels of Debt 8 Source: IIF, CIA, IMF.

  9. Good Macroeconomic Policies are Rewarded with Low Interest Rates CDS 5y (points) 9 Source: Bloomberg, 11/18/2013.

  10. Good Environment for Doing Business Macro Management The Global Competitiveness and Ease of doing business index 10 Source: World Bank, WorldEconomicForum .

  11. China’s Participation In Chile’s Trade Of Goods has Increased Dramatically… Source: Central Bank of Chile.

  12. …and Now China is our Main Exports’ Destiny By main destination (% of total exports) % of total exports to Asia 2013 12 Source: WorldTradeOrganization (2012).

  13. Chilean Exports to China so far is Mainly Commodities % of total exports to China 2013 Source: BCCh.

  14. And we Keep Looking Towards Asia Western Hemisphere Asia 1993-94 1996 1998 1999 2002 2003 2005 2006 2007 CurrentnegotiationswithIndia and JapanStudy for an FTA withThailand FTA MexicoEconomic Agreement Peru Economic AgreementsBoliviaColombiaEcuadorVenezuela Economic AssociationEU FTA ChinaEconomic AssociationP-4 FTA Central America FTA CanadaAssociationwithMercosur Partial Scope Agreement India FTA USA EFTASouth Korea EFTA: European Free Trade Association: Iceland, Liechtenstein, Norway, Switzerland.Note: TheP-4 group are: Brunei Darussalam, Chile, New Zealand, Singapore. Source: Dirección General de Relaciones Económicas Internacionales de Chile, 2006.

  15. INSTALLED CAPACITY (MW) AND AVERAGE SALES PRICES SIC GENERATION (BY TECHNOLOGY) • Looking Towards Asia: Energy is a Key Sector for Cooperation *Estimationfortheaverageenergy sales pricefromcustomerscontracts

  16. Looking Towards Asia: Infrastructure has Room for Improvement Quality of port infrastructure, WEF (1=extremely underdeveloped to 7=well developed and efficient by international standards)

  17. Looking Towards Asia: Construction and Real State

  18. Conclusion • So far the economic relationship between Chile and China has been highly beneficial for both countries. • The focus of this relationship has been mainly through commodity trade. • But they are many potential areas of further cooperation such as Energy, Infrastructure and Real State.

  19. ECONOMIC INDICATORS: Summary Source: Estudios Security.

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