Chile deepens economic ties with China amid growing dependency concerns

MEDELLIN, Colombia – In the northern Chilean port city of Mejillones, customers of the country’s largest electrical utility by clientele, Compania General de Electricidad (CGE),are concerned that they are being left in the dark.

Frustrated with the frequent power cuts in the region, a small group of protesters took to the streets on June 10 and blocked traffic, to demand an end to the blackouts.

CGE, which is controlled by China’s state-owned State Grid Corp – the world’s largest utility company – has said it has taken “various measures” to fix the problems and they “deeply regret the inconvenience caused”.

In 2021, State Grid carried out a US$3 billion (S$3.8 billion) takeover of CGE.

The June blackout, which CGE attributed to external factors, was the latest in a series of disruptions to Chile’s electrical grid, which is now more than 57 per cent controlled by Chinese state-owned companies, including China Southern Power Grid.

Chile’s blackouts are not solely linked to Chinese-owned firms – a power outage that affected 90 per cent of the population in February was attributed to a Colombian electricity distributor. But experts say they reflect China’s deepening influence in critical infrastructure in Chile at a time when the two countries are becoming more interconnected economically.

Chinese energy companies have boosted their presence in Latin America in the past few years, with investments particularly in logistics and telecommunications. China’s rising influence throughout the region has raised concerns in the United States, which traditionally has the most commercial influence over Latin America and access to its natural resources.

Chile was the first Latin American country to sign a free trade agreement with China, now its top trade partner, in 2005. Since 2015, Chile’s exports to China have increased about 130 per cent from around US$16 billion to US$37