What we do?

Over the past two decades, China has acquired a central role in the Chilean economy, becoming its main trading partner. Recently, Chinese foreign direct investment (FDI) has also shown accelerated growth, driven by the energy sector. Strategically, non-conventional renewable energy, lithium, and the lithium-ion battery industry have generated new expectations for economic diversification and more sophisticated production chains. Within these sectors, lithium stands out as a strategic opportunity, given that Chile possesses the world’s largest reserves of the mineral, a key element in its economic relationship with China.

Chilean environmental and social governance is characterized by high levels of regulation and increasing demands, which some see as a potential barrier to investment compared to conditions in other Latin American countries. The historical experience with copper mining—an activity deeply rooted in national identity and the main driver of Chile’s trade surplus—has generated debate about its economic and socio-environmental impacts. In 2023, the government launched the “National Lithium Strategy,” aimed at streamlining decision-making, regulating the future exploitation of this mineral, and redefining the role of the State regarding a resource critical to the global energy transition. Starting with only two private companies extracting lithium (one with minority Chinese participation), two state-owned companies with international partners have since joined the sector, and several proposals from private companies (some of them Chinese) are currently under evaluation.

In the energy sector, national strategy and private sector operations have facilitated significant progress in decarbonization, with long-term policies implemented by various governments. However, the installation of energy infrastructure continues to generate conflict, especially in areas with high levels of pollution. China is present in this sector primarily as an investor in electricity distribution networks and as a supplier and builder of wind and solar power generation infrastructure.

This report first analyzes the current state of Chile’s trade relationship with China; it then reviews the regulatory, political, and institutional frameworks of the mining, lithium extraction, and electricity sectors, highlighting China’s growing presence in these areas and the governance challenges associated with that presence. It concludes with answers to strategic questions from the Just Energy Transitions (JET) project.