Chilean Dependence On China’s Commodity Demand: Is Chile Prepared For A Sudden Drop Of Chinese Demand?

The trade relation between China and Latin America reached a level in the lastdecade that made it fundamental for the high growth of countries like Brazil, Peru,Argentina, Venezuela and Chile. The United States and the European Union still remainas very important partners for the whole region, because of their high levels ofinvestment and trade. Nevertheless, the demand from China of specific raw materialslike oil, copper and iron ore has been a driving force for a stable economic growth inLatin America, giving to some countries a protection during times of crises and lowgrowth in the developed world.For Chile, this has been specifically thanks to the export of copper, and even whenthe Chilean products are now more diversified, there is still a big reliance on the redmetal. This thesis analyses if Chile is prepared to resist the hit of a sudden drop ofChinese demand of copper in case the economy of the Asian giant stop buying bigamounts of copper from the southern country.The investigation explores past and current economic models follow by Chile, itsexperiences in previous crisis in the XX century, and how has modified its owneconomy and legislation to confront new crises. To compare to a different case in theregion, it takes a deep look at the experience of Brazil, the biggest economy in theregion and current number one trade partner of China in Latin America. Unlike the caseof Chile, Brazil still displays a great involvement of the State in its economy with a biglocal industrial complex, but has seen commercial tensions rise recently with thecompetition of China.This research also will review recent debates about the Chilean economy and itsNeoliberal economic model, which has been publicly questioned, not because of itsmacroeconomic achievements, but due to a more demanding middle class that is callingfor a reduction of inequality and better education.